People Express was the original low-cost airline — then it tried to be everything

People Express was founded in April 1981 by Don Burr, who resigned from Texas International. Based at Newark, it pioneered no-frills flying in the U.S.: all seats at the same price, $3 for bags, food sold separately, fares collected aboard. Initial routes to Buffalo, Columbus, and Norfolk expanded rapidly. By December 1981, it ran 42 weekday departures to 10 cities. In May 1983, it launched Newark–London Gatwick with a leased 747, offering $149 fares each way — every flight sold out instantly.

The airline grew explosively. By August 1985, it flew to 41 cities with 72 aircraft and 4,000 employees. But in 1985–1986, Burr made three acquisitions that loaded the carrier with debt: Frontier Airlines (Denver), Britt Airways (Midwest commuter), and Provincetown-Boston Airlines (New England and Florida). The acquisitions cost enormous sums and created operational chaos. Frontier's labor unions resisted integration, and its passengers were alienated by the shift to a low-fare mentality. The airline was losing money: $5.8 million in June 1985 alone.

Under debt pressure, People Express abandoned its core model. It added first class on 747s, a frequent flyer program, and replaced simplified pricing with revenue management. The strategy failed to attract enough business travelers. Meanwhile, legacy carriers built yield management systems that undercut People Express selectively on fares. In June 1986, it sought a buyer. On September 15, 1986, Texas Air agreed to buy the airline for $125 million. People Express ceased operations on February 1, 1987, merging into Continental.