Postscript – PeoplExpress

News reports on September 25 advised that the new PeoplExpress had lost half of its fleet on September 19 (consisting of two planes). The next day the company succumbed to subsequent operational challenges, resulting in cancellation of all service and stopped answering its phones. The company advises that it will “relaunch” October 16.

A few other commentators have observed that a company selling tickets without owning or directly operating the equipment used to fly the routes shouldn’t be called an “airline.” Whatever PeoplExpress might be, the media miss the point of an experiment so poorly conceived, planned, and operated.

One leased plane–down from two. A schedule with routes from Boston to New Orleans. Very few contingency plans–and inadequate one at that.

If this were a travel agency project, the criticism would be intense.

Sources:

PeoplExpress Starts Operations June 30, 2014

PeoplExpress is a strange concoction. I paid a bit of attention to it a couple years ago because Newport News is about 20 miles from where I live. The more attention I paid, the less interested I became. Rather than a brave aviation experiment, PeoplExpress seems more of a case study in failed business planning and development practices.

Here are but a few:

The essential marketing strategy for the company has never been clear, apart from reliance upon what I refer to as the “Doctrine of Cheap Things.” This being that, if you sell something cheap enough, some people will buy it, regardless of whether it adds any real value. The on-line travel seller’s market is also filled with such outfits.

There are frequent references to the company’s customer-friendly intentions, and a “cheap with a smile” attitude, but no one has ever explained how precisely this is going to work. Delivering the same or a similar set of miserable customer services as most every other aviation company, but doing it with a better attitude, seems to be an amazingly shallow strategy. If the company is somehow expecting service enhancements, it’s never been clear what these might be, how they will be affordable within a “cheaper is better” business model, and why this approach might be sustainable.

As many others more qualified that I have remarked, the company’s fleet and operations strategy simply doesn’t make sense. In this context, that which doesn’t make sense usually doesn’t work either. There are exceedingly rare exceptions, but that’s a poor way to plan a business.

The business planning failures are even more striking, especially when you consider them in the context that they do contain some partial logic–but you have to have been there to appreciate it.

PeoplExpress appears to have been contrived by a very small group of people who shared some basic assumptions. None of these appear to have been validated either by the marketplace (one assumes that the service launch in a few days will be part of that exercise), or by adequate research and planning.

One is that there remains some value and goodwill in the PeoplExpress name. I’ve never met, or even heard of, anyone apart from the management team who believes this. Most travel industry people old enough to remember People Express Airlines have the opposite, or at least conflicted, recollections.

Another is that Newport News is a logical place to base an airline.

In a way, it is. Some commentators have remarked that there is no logic in trying to complete with a perfectly adequate and well-served airport in Norfolk. There is–but only if you live here.

I never fly from Norfolk–never. I’ll drive to Richmond, which is somewhat further (and just as well-served), or occasionally to Washington, which is a lot further. The reason is that there is no good way to get to or from Norfolk International from this part of the Virginia Peninsula. It can take 30 minutes, or three hours. There’s no way to predict and it’s a miserable trip on a good day. That route is notorious in local thought and urban mythology. If there were such things as trolls, local people would be assuring you that they are found in abundance underneath the bridge that forms part of the route that you have to travel.

If you’ve ever spent an hour in a car stuck in traffic in a tunnel underneath the Chesapeake Bay, you’ll understand what I mean.

However true that may be, it’s an inadequate business strategy. It’s usually a fatal mistake to base strategy on what you personally find appealing–unless you’ve been able to prove that large numbers of other people happen to agree with you.

The 200,000 or so people in the direct service area for Newport News on this side of the water will probably agree that more service from Newport News / Williamsburg International is a good idea. The million or so people on the other side probably will not. No one has convincingly tested either of these assumptions, by the way.

Early on, PeoplExpress tried to get support from Norfolk to establish its base there–the idea was rebuffed. The company’s first business office was in Norfolk.

Newport News is a delightful airport to use because almost nobody uses it. As soon as it becomes busy, it is a far less attractive facility.

All this is why there is a market for good consultants. By that I mean equally aviation and business experts who will look at situations objectively and tell you the truth. There are far too few of these.

PeoplExpress is an idea that is so flawed in concept and execution that it’s impossible to rationalize how it even might succeed.

IATA’s New Distribution Capability (NDC)

This analysis appeared July 15, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


In an industry as diverse as travel distribution, there is rarely a shortage of controversial ideas. Recently, critical voices have been raised against IATA’s “New Distribution Capability” (NDC) initiative, variously asserting that its development was closed to most outside input, that it is unfair to travel agents, technology providers, and other stakeholders. It is claimed that the NDC harms consumer interests, and that its implementation requires unacceptable privacy compromises and financial expenditures from distributors and consumers alike.

Curiously, I’ve yet to hear the simplest and most concise justification for opposing the NDC from anyone:

It’s a fundamentally bad idea that probably won’t work.

As these posts must necessarily be brief, I’ll only touch on a few of the NDC’s strategic and business flaws–operational and technological shortcomings must await another discussion.

What Is the NDC?

According to IATA1 the NDC is a business and technological initiative best understood as a process that allows “indirect channels” to enable the same capabilities that exist on airline websites, while preserving an airline’s control of the product. It also proposes to enable product innovation, differentiation, and personalization by directly accessing expanded information as to a traveler’s purchasing profile and history.

The NDC’s “initial scope is the shopping process.” As an example of how this might work, supporters maintain that the NDC will modernize air travel distribution and benefitconsumers by giving them an experience similar to Amazon.

Perhaps, but the NDC mistakenly confuses multiple goals in a package that delivers capabilities few people want. It’s technical features represent one way, certainly not the only or necessarily the best, to enhance shopping data. Other intended benefits are more dubious.

Amazon is a poor service delivery model–air travel distribution has little to do with selling books or consumer products.

The personalized shopping experience, whether through Amazon or an airline, is largely a chimera without real-world application. Frequent Amazon shoppers are aware of the annoying and usually irrelevant suggestions the site continually offers–transferring this unhelpful dialogue to benefit air travel strains the imagination.

One Bad Idea Begets Another

IATA is criticized for failing to adequately consult with distributors and consumers as the NDC was developed–perhaps justly so, although interpretations disagree as to how meaningful the prior industry dialogue was. It’s worth noting that however worthwhile these discussions might have been, IATA isn’t obliged to hold them in any particular way, or to do so at all.

There is also a serious question as to who might participate. There are no industry-wide trade associations with adequate technology capabilities, credibility, and resources to represent even segments of distributors or consumers. Individual companies may have meaningful input, but are not in a position to speak for anyone else, or even their own customers.

Industry discussions to develop and refine technology policy are exceedingly rare–much more so that IATA’s critics would have us believe. Those who feel excluded would do well to upgrade the forums, expertise, and messages they might use to make meaningful future contributions.

Who Benefits?

Shouldn’t airlines know more about the consumer prior to booking so they can “personalize” the product offering, as the NDC promises?

If that were so, it should be easy to describe what that “personalization” would look like–but it isn’t. Beyond the vague “more like Amazon” promise, “personalization” sounds like a more technologically advanced bundling of the many obscure fees and charges no one likes or wants.

If the result isn’t higher consumer costs, what is it?

Many airlines have had access to personal data that were supposed to enable better offerings for decades (through frequent flyer programs, for example). The fact that these enhancements have been meager causes consumers to rightly question whether the new expense and privacy compromises the NDC imposes are justified.

The New Distribution Capability proposes to solve problems most consumers don’t see as problems and deliver ill-defined benefits they haven’t asked for and probably won’t appreciate–at an undetermined cost they are unlikely to embrace. Wholly apart from the clumsy way it has been developed and presented, this is not a formula for a successful project.

IATA was ill-advised to start down this path and its airline participants are likely to see more customer grievances, direct and indirect program costs, and few of the NDC’s promised benefits.

  1. International Air Transportation Association (IATA), NDC Update, November 2012, page 8.