London Express

Across the Atlantic for $149

The scene on an observation deck at Newark International Airport last Thursday night was steeped in irony. Newark-based People Express, the cost-conscious, no-free-food airline that is sometimes called the McDonald's of the skies, was throwing a bash for employees, passengers and anyone else who dropped by. Champagne flowed and tables were covered with such treats as candied kiwi fruit, Brie and salmon mousse.

The cheapskate airline had reason to be generous. The British government earlier that day had given People Express the final go-ahead to start cut-rate transatlantic service, and the passengers at the party were about to board a Boeing 747 for the inaugural flight to London. The one-way price: $149, or little more than half the lowest regular coach fare of $275.

"It's unbelievable," said People Express President Donald Burr, 41, who at the last minute decided to take the maiden flight. "We've been flying for only two years, and we have to pinch ourselves to realize we're starting service to London." His fellow passengers were equally ecstatic. Said Robin Raines, 28, an aspiring actress from New York City: "You can't beat this price. For once, I'm jet-setting." People plans to fly five 747 round trips between Newark and London weekly. The airline already has more than 35,000 requests for reservations.

When it first went into the air two years ago, People Express had only three planes serving four cities: Newark, Columbus, Buffalo and Norfolk. Now, in addition to its new London flights, People has 22 aircraft flying to 19 U.S. cities stretching from Portland, Me., to West Palm Beach, Fla. Its quick success has come from cutting frills and slashing standard fares, often by more than half. Like its domestic flights, People's trips to London will offer few free amenities. Passengers will have to pay $6 extra for a food basket that might contain a tuna sandwich, an apple, potato salad and a brownie. Those wanting to check baggage will be charged $3 for each piece.

People Express is one of a new breed of discount airlines spawned by Congress's deregulation of the industry in 1978. Others include New York Air, Midway Airlines in Chicago and Muse Air in Dallas. These newcomers have sparked a string of fare wars that along with the recession have crippled the entire industry. People is one of the few carriers that has been able to keep costs low enough to turn a profit. The airline earned $2.1 million in the first quarter, while the eleven largest carriers suffered a combined operating loss of $619 million.

One reason for the difference is that People's work force is lean and productive. The airline has only 52 employees per plane; many other airlines have twice that number. Staff members are willing to switch from job to job, helping out where needed rather than enforcing strict work rules. "Customer service managers," as the company calls them, may act as flight attendants one day and reservation clerks the next. People's people have good incentives: on average, each owns some $55,000 worth of company stock.

The new service to London fills a void left when Sir Freddie Laker's airline went bankrupt last year. The British entrepreneur pioneered low-cost transatlantic nights ($236 round trip) with his Skytrain service in 1977, but the airline eventually fell victim to high fuel prices, recession and price cutting by such larger carriers as British Airways and TWA. People Express hopes to avoid a similar fate by keeping its costs so low that it will always be able to undercut the competition. This file is automatically generated by a robot program, so viewer discretion is required.