The fastest-growing company in the history of aviation has a problem. It has designed a product so popular that it can't satisfy demand.
Candee Brock is being cross-utilized today. Wearing the brown and tan uniform of People Express Airlines Inc., she is checking bags for passengers leaving the North Terminal of Newark International Airport. Between tickets she talks about a day that changed her life.
March 25, 1981, was an unusually pleasant day in Buffalo, after a harsh, lingering winter. Candee thought she had things pretty well figured out. She had just quit her job as a dental hygienist and was enrolled to study business management at State University College at Buffalo. She was at home reading the Buffalo Courier-xpress and saw an ad announcing great opportunities as a customer-service manager for People Express "It seemed like it was written just for me," she says.
Candee drove to the Sheraton Inn Buffalo East, where the interviews were being held, took a look at the mob of some 12,000 applicants, and drove back home. "They'll never notice me in all those people," she recalls thinking. She considered doing some studying or maybe some errands around the neighborhood, but the ad wouldn't leave her alone. She drove back to the interviews.
On April 2, Candee arrived in Newark, N.J., and checked into the Holiday Inn North, where she would live for a month while she was in training. "When I first got to the People Express office," she says, "I found an empty terminal with garbage cans lying around. There were no planes; you had to imagine them flying in. I said to myself, 'We're going to land people here?' But a month later, I was at the check-in counter. The garbage was gone, the planes were here, and there was wallpaper on the walls, even if it was still wet."
When she is not checking baggage, Candee is team manager for 54 people in the accounts-payable and accounts-receivable section of the accounting department. She works 10 to 12 hours a day, five or six days a week, and says she would work more. She makes $24,000 a year and owns 8,400 shares of People Express stock, trading over-the-counter at $18.50 a share at press time. Candee is 25.
"I've grown a lot in two years," she says "My job has given me more confidence in every area of my life. Now I'm involved in the day-to-day operations of a very successful airline."
Indeed, "very successful" may beggar the truth. By all accounts, People Express is, quite simply, the fastest-growing airline in the history of aviation, a happy fact that flight attendants will sometimes announce at the end of a flight. Says John J. Dickerson Jr., general manager of New Jersey airports: "Fantastic is even an understatement. Their growth is a phenomenon all its own."
In one furious acceleration akin to the lift-off thrust of a Boeing 737, People Express rose, in just two and a half years, from relative obscurity to international prominence. From 250 to more than 3,000 full- and part-time employees. From three planes serving 3 cities with 24 flights a day to a fleet of 22 Boeing 737s, 10 Boeing 727s, and one 747 making 264 nonstop flights daily to 20 destinations, including London. From a loss of $9.2 million, including start-up costs, on $38.4 million in revenues to earnings of $1 million on revenues of $138.7 million in 1982. And the company recently reported revenues of $116 million and net income of $6.3 million for the first six months of 1983. People Express has carried some 10 million passengers and is currently the largest single airport operation in the New York metropolitan area.
And it has done all this despite a severe economic recession, withering price wars, a national air-traffic-controllers strike, and otherwise dismal conditions in the airline industry that have included bankruptcies and widespread operating losses.
"We have a unique problem," president and founder Donald Burr recently told a group of college educators. "We've designed a product which is so popular we can't satisfy the demand for it."
That product is a seat on an aircraft that flies between Newark and some other major city on the East Coast (and London), that is frequently available, and that is, above all, cheap. For example, the well-known Eastern Air Lines Inc. Shuttle between New York and Boston offers 15 flights a day during the week for $57 during peak hours and $42 off peak. The People Express shuttle between Newark and Boston offers 20 flights a day for $38 peak and $25 off peak. People Express passengers are ticketed on board or pay in advance through a travel agent. They pay to have baggage checked and for snacks and drinks on board. There are no free magazines, either. The most telling measure of the popularity of the Spartan treatment is called the "load factor." The load factor expresses with a percentage that portion of all available seats in any given time period that were actually filled by paying customers. In July, People Express's load factor was a stunning 83.6%, compared to an average load factor of 60% for the airline industry. "We believe," Burr says, "that if you respect people and give them a good deal, they'll use the hell out of it."
But Burr also says, "Being a commercial success is not enough. It's a derivative of doing other things well. The whole purpose of creating this enterprise in the first place was to create an environment which would enable and empower employees to release their creative energies." For Burr, the interplay of marketing, scheduling, and cost control has a beauty all its own, but the personal fulfillment of individual employees through the company's "people structure" offers something more. "People," he says, "are the glory and frustration of People Express."
