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People Express - Group4

People Express Airlines was founded in 1980 by Donald C Burr to offer cheaper and better airline service through a highly productive workforce, very low prices, and frequent flights. It aimed to be an exciting place to work through self-management, job rotation across roles, and profit sharing compensation. However, People Express struggled with overworked employees unable to gain expertise, customer dissatisfaction, and emerging competition from other low-cost carriers and major airlines responding with their own low-cost offerings. It faced bankruptcy in 1986.

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Uphar Mandal
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141 views

People Express - Group4

People Express Airlines was founded in 1980 by Donald C Burr to offer cheaper and better airline service through a highly productive workforce, very low prices, and frequent flights. It aimed to be an exciting place to work through self-management, job rotation across roles, and profit sharing compensation. However, People Express struggled with overworked employees unable to gain expertise, customer dissatisfaction, and emerging competition from other low-cost carriers and major airlines responding with their own low-cost offerings. It faced bankruptcy in 1986.

Uploaded by

Uphar Mandal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PEOPLE EXPRESS AIRLINES

Presented by Group 4:
Ankur PGP10132 Shaloo PGP10046
Shivangi PGP10172 Uphar PGP10121
Shalini PGP10170 Kulbhushan PGP09089
Introduction
Congress deregulated the airline industry in 1978 and restrictions
on new entrants, new routes, and fares had been phased out

Founded by Donald C Burr in 1980 to try and develop a better way


for people to work together

In 1980, the airline industry was offering a homogenous and


undifferentiated product

Burr wanted People Express to be different by attracting superior


service-oriented people

Very low prices and very high frequency of flights are its other
marketing tools
Don Burr (Founder, President and CEO) background story and PE’s timeline
Joined National Joined Texas
Aviation International PE began service Revenues were
President
Corporation Airlines nearly $1 billion
 Studied • Joined as
aviation Chairman of the
industry executing
committee

1965 1972 1973 1976 1979 1980 1981 1984 1985 1986

Became Became Chief Resigned and set Fastest growing Faced


President operating officer off to find corporation in bankruptcy
People Express U.S. history
(PE)
Six precepts of
Business Strategy 2.0 People Express

Services: Commitment to the growth and development of our people

To be the best provider of air transportation

To provide highest quality of leadership

To serve as a role model for others

Simplicity

Maximization of profits
Cost cutting
Business Strategy 2.0 method

The company bought used aircraft at low prices from other carriers

It flew its aircraft about 10.35 hours a day, compared to the industry average of seven

They eliminated galleys and first class to increase number of coach seats

Their work space was low cost: It had no ticket counter and people shared office

They had no tie up with airline, hotels or automobile reservation

PE avoided the expense of offering free food, drinks and baggage service
Business Strategy

To provide both better and cheaper airline service, and be an exciting and rewarding place to work

Marketing Stool: highly productive workforce, very low prices and very high frequency of flights

A fully unbundled product positioning as a smart choice for savvy, thrifty and busy travellers

Added low priced seats and eliminating all 'frills’. Airlines served as a means to get from point A to B

Low-cost Headquarters set up in Newark, New Jersey used for multiple purposes
HR Policies
Business Strategy 2.0
Organizational Structure – Eight managing officers with Eight general managers
followers by flight managers, customer service managers and maintenance manager

Self management and governance – people were expected to be self managed and
participative in governance, essentially contributing towards policy

Cross Utilization – it was founding premise that employees and managers were
rotated to keep low cost and lower staff to operate

Staffing – people were recruited on versatility and conforming to the arms open policy
of company, irrespective of background

Compensation – keeping base salaries low and high dividend and profit sharing where
sum was according to time spent in people express
Business Strategy
Business Strategy 2.0 2.0
To develop new hubs creating a competitive nationally comprehensive route system

Acquiring a hub by buying another airline

To sell aircraft and raise cash for development of computerized reservation and yield management
system

Burr acquired Frontier Airlines out of Denver by outbidding his former boss Frank Lorenzo

PE raised some if its prices which, unlike the last time, proved unsuccessful

Despite mounting problems within the company & uncertainty in the industry, People Express Airline was
expanding at a very rapid pace

The sale of Frontier airline to United fell amidst labour difficulties which could have generated $200 million
Dave Ulrich HR Model
Future/Strategic Focus

STRATEGIC PARTNER CHANGE AGENT


• People can choose where the wanted to rotate, if available
• Minimum Hierarchy (3 Levels)
• Formation of “Structure Group” & “Team Manager” to solve
• Self Management (Everyone was Manager) control problem
• Aligned to “inch by inch cost saving” strategy • Creation of “Ops” group with a teams of 300 people
• Job Rotation and Cross-Utilization • Enhance leadership and development programs
• Internship Program

Processes People

ADMINISTRATIVE EXPERT EMPLOYEE CHAMPION


• Recruitment Process: Series of Interviews & Exams • All opportunities were open to company’s people only

• For CSM positions, Recruiting service professional • Base salaries different was relatively small minimum
• Equity Ownership and Other Compensations
• Orientation program on company’s philosophy
• Incentive Program

Day-to-Day/ Operational Focus 9


Problems
Business Strategy 2.0

Employees were overburdened Not able to gain expertise due


Demand > Production
with workload to cross-utilization

Fewer opportunities for self


Not good at maintenance
management and growth
Problems
Business Strategy 2.0

Customer dissatisfaction Other low cost airlines started Major airlines became
“People’s Distress” emerging concerned

Frontier became a loss


Frequent flyer programs Variable pricing
making company
RECOMMENDATIONS
Business Strategy 2.0
People Express should have retrenched non profitable routes

Build a solid financial model

Focus on serving your core customers

Develop a closer working relationship with travel agents

The idea that People began with in having its employees rotate through
various jobs must be modified
Business Strategy 2.0

THANK YOU!

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