New Startup Airlines Have Old Names, Give Old Ideas a New Twist

By Paul Riegler on 13 August 2014
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If you were reading news items about new airline startups and momentarily felt caught in a time warp, it would be understandable. Names such as Eastern and People Express are currently in the headlines – and what’s this about new all-business class startups flying from the U.S. to Europe?

This is in no small way due to major airlines reporting profitable quarters, some for the first time in years, thus causing new entrants to flock to the industry in an attempt to take advantage of the improved business climate.

Nonetheless, the nation’s runways are littered with the remains of failed new carriers and what was not a good idea ten years ago is unlikely to be a much better one today.

The original People Express flew from 1981 through 1987 and the new People Express made its inaugural flight on June 30, 2014, from its base in Newport News, Virginia. The new carrier, which is for the interim wet-leasing planes and crews from Vision Airlines, a charter airline, offers flights on Boeing 737s to Atlanta, Boston, Newark, Pittsburgh, and West Palm Beach. The airline, which recently experienced a service meltdown, received praise for its social media skills afterwards, an ability that older and larger carriers seem to lack. Mike Morisi, the airline’s president, wrote an honest and heartfelt apology to its customers for a “perfect storm” of delays and cancellations.

People Express is unquestionably following the ultra low-cost carrier model, with one way fares as low as $59, fees of $25 for overhead bin space for a carry-on bag, and $1 for a cup of coffee.

Eastern Air Lines, which stopped flying in 1991, is being revived and, in May, placed an order for ten Boeing 737-800 aircraft, a short- to medium-range narrow-body jet. Purchase rights for ten Boeing 737 Max 8 planes, a successor to the third-generation 737, were also part of the deal.

Eastern says it will begin operations in 2015, almost 50 years after the first 737 took flight. The airline will be based in Miami as was the original Eastern, and will initially fly charter routes to Latin America and the Caribbean.

The last successful domestic airline in the United States was Virgin America, which launched in 2007 and was backed by Richard Branson’s Virgin Group and U.S. investors. The airline, while popular with customers, has struggled financially over the years but there may be light at the end of the runway. It turned its first annual profit, $10 million, in 2013, and reported a 400% increase in profit for the second quarter of 2014 compared to the same period in 2013.

Meanwhile, several airlines including Independence Air (1989-2006) and Skybus Airlines (2004-2008) disappeared from the scene in roughly the same timeframe.

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