When Burr talks about the company's extraordinary success in controlling costs, he attributes it first to a state of mind, an attitude shared by everyone in the company that rejects waste, and secondarily to specific operating tactics. After years of experience, he explains, it is relatively easy to predict that by tearing out the first-class and galley sections on a 737, People Express could increase the number of coach-class seats from 90 to 118. Or that by innovative scheduling, it could keep the planes in the air longer -- 10.4 hours per plane per day versus an industry average of 7.12 hours per day. Or that by eliminating unnecessary free services it would save money. "But without the wholehearted, personal commitment of everyone involved," he says, "you could do all of those things all day and still fall on your face. That's why we thought longer and harder about building our people structure here than we did anything else."
As hokey as the term may sound, the socalled people structure has the drawing power of last call at a Saturday night beer blast. When People Express interviewers come to town looking for customer-service managers, hundreds, even thousands, of people show up. Only one applicant out of every hundred is hired. "The hiring process is extremely important," Lori Dubose says, "and it gets a lot of attention."
People Express hires for three categories: flight managers, another way of saying pilots; maintenance managers, who concern themselves with the physical well-being of aircraft, and customer-service managers, who do just about everything else, including such in-flight functions as baggage check-in and reservations and such staff functions as accounting. It should be noted, however, that with the company's program of cross-utilization, no employee does the same job all of the time. Every applicant in any category must first survive the jaws of an extensive screening before he or she is even offered the chance to attend training classes, which is not to be confused with a job offer, which it isn't.
Recruiters spend about five hours evaluating each individual's qualifications. They are looking for the right People Express "type," and they know exactly what they want. Seen in groups of five or six at the Holiday Inn North or the Howard Johnson Motor Lodge, customer-service managers-in-training shine with a cleancut, collegiate exuberance and a pleasant, if predictable, homogeneity. According to Dubose, this collage of personal attributes creates a memorable atmosphere of enthusiasm, confidence, and competence that keeps passengers flying People Express.
Hoards of people fall all over themselves for a chance to get grilled to a turn and live in a Holiday Inn during five weeks of training. If they win, they win big. By the end of their first year, customer-service managers draw a base pay of $19,500, but since the company offers not one, but two, profitsharing plans, they can receive an additional 15% of base pay. And while they are busy filling out deposit slips, they are protected by 100% medical and dental coverage. "We just didn't want them to have to worry about it," Burr says.
Then, of course, there is the stock. Every employee is required to own stock in People Express. Customer-service managers must purchase, as a condition of their employment, 100 shares at prices far below the market. If they aren't able to afford it, the company gives them an interest-free loan Since additional buying opportunities are made available throughout the year, employees generally end up with a significant investment. According to Dawsey, each employee owns an average of 2,500 shares worth about $46,000 at today's prices. "We're not sitting around here counting roses," asserts Burr. "This is capitalism. People are getting rich here. There are millionaires walking around here and tons of 24- and 25-year-olds worth $75,000, $100,000, $200,000. Tons of 'em. The only way I know to wealth in the long term is to own a piece of something and build it."
The early dreams of growth and wealth were sweet and full, and exceedingly fragile. Only three months after the first flights took off, it suddenly appeared that Burr's "piece of something" would never be anything more than a piece of wreckage People Express faced ruin. On August 3,1981, members of the Professional Air Traffic Controllers Organization (PATCO) went out on strike. The Federal Aviation Administration sharply reduced flights at 22 airports throughout the country, including Newark People Express, which had seven planes and 35 departures a day from Newark, was cut back a full 35%. Burr estimates that from August to October, the company lost $6 million from canceled trips and low load factors. In addition, the company was rapidly reaching the point at which it could no longer live up to the conditions of its agreement with Lufthansa. If it didn't have the cash to continue buying planes, the company would lose the $6-million deposit with Lufthansa. "We were bleeding at a terrific rate," says Burr. "It was gun-to-head time. We were going out of business."
Burr and his colleagues decided on a desperate strategy. They would fly planes out of Newark to Buffalo, Columbus, and Baltimore, all uncongested and unrestricted airports. Then they hoped to fly back and forth to Sarasota and West Palm Beach, Fla., bypassing Newark. But the company's research had failed to indicate whether there was much of a market for such flights. When the planes took off on October 25, no one even knew if there would be enough passengers to pay for the gas. What is more, this shot-in-the-dark meant the company had to abandon its original hub-and-spoke operation, which in turn meant that new support services, such as maintenance and commissary supply, had to be established. "We had to bet the company a second time," Burr says. "Who'd ever heard of a 'bypass' strategy? Nobody had ever done that before. We had to create a whole new airline and we had to do it overnight."
