PEOPLExpress Could Be in Service Soon

Last week, PEOPLExpress bypassed a lot of regulatory hurdles by buying out an existing airline rather than starting from scratch. XTRA Airways, which PEOPLExpress acquired, is a small airline that has previously focused on a variety of charter flights, including jaunts to gambling centers in Nevada. Although, as far as I can tell, XTRA has only two planes—both 737-400s—it has the necessary certificates to fly scheduled domestic and international routes, and PEOPLExpress can buy up a handful of older 737s pretty quickly.

But what the reborn PEOPLExpress—no connection to the original People Express airline other than the name—intends to do with its newly acquired authority isn't at all clear. When I last covered PEOPLExpress, I noted that the new airline plans to fly from a hub at Newport News Virginia to a handful of cities in the eastern U.S. at extremely low fares. And therein lies a potential problem: Obviously, Newport News or even the nearby Norfolk area isn't a big enough business or vacation center to serve as an airline's major origin or destination point. So the airline's plan is likely to run a hub-and-spoke system there, and so far, low-fare airlines have had a tough time sustaining a business model that relies on connecting flights for most of its business.

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I've seen some industry speculation that the PEOPLExpress folks have recognized the problems of a Newport News hub and are instead thinking about a hub with a more robust hometown air-travel market. The airline's website is really quiet about Newport News. On the one hand, a January press release noted that the airline had solicited "taxpayer assistance" from communities in the area to help finance the acquisition. On the other hand, in a later release, just days ago, the only mention of Newport News is that the airline is "currently based" there.

Recently de-hubbed Cincinnati and Pittsburgh come immediately to mind. The outcome will obviously depend on what sort of promises the airline has made to communities in the Newport News/Norfolk area. The final result is not at all clear, but the chances that PEOPLExpress will fly somewhere soon have increased dramatically. Keep watching.

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