Big Slick
Well-known member
- Joined
- Oct 18, 2004
- Posts
- 284
Hard Landing Excerpt:
Of all these low-cost carriers, People Express was, in early 1985, the greatest threat by far. But People Express was also perhaps the most vulnerable. Barbara Amster of the American pricing department considered People Express “the guys with the Southwest Airlines philosophy but without the brains of Southwest.” More aptly, perhaps, Don Burr and People Express had all the great ideas of Herb Kelleher and Southwest Airlines, but lacked their discipline. Either way, People Express had to die. As Crandall’s planning chief, Don Carty, would one day proudly explain, “We devised the fare structure that put them out of business.”
American had out – People Expressed People Express. Because he had no computer systems and no yield management, Don Burr would have to offer every seat on any given flight at the price Bob Crandall was offering on a fraction of his.
Within minutes of American’s announcement, all airline stocks plunged; investors braced themselves for the bloodiest fare war ever.
To Don Burr it was as if a bull’s eye had been painted over his likeness.
“This is it!” he cried, slamming the newspaper down on the desk of one of his marketing executives. “This is a shot across our bow! If we don’t invent a way to deal with this, we’re history! We’re going to be dead meat!”
And - whump! – just like that, the losses mounted at People Express. Twenty million dollars in a matter of weeks, a tide of red ink such as People Express had never experienced. The panic worsened.
Worst of all, Burr was dying at the thought that the mystique shrouding Peoples Express was now evaporating. The red ink forced him to withhold profit sharing. The stock price was plunging. Soon there were union organizers at his doorstep. Burr imagined his employees turning on him, the pilots in particular. He heard them referring to the precepts as “Kool-Aid,” – the poison spiked beverage that the demonic cult leader Jim Jones had used to conduct a mass suicide a few years earlier in the jungles of Guyana. Burr imagined his pilots in their cockpits asking one another, “Have you had your Kool-Aid today?”
Of all these low-cost carriers, People Express was, in early 1985, the greatest threat by far. But People Express was also perhaps the most vulnerable. Barbara Amster of the American pricing department considered People Express “the guys with the Southwest Airlines philosophy but without the brains of Southwest.” More aptly, perhaps, Don Burr and People Express had all the great ideas of Herb Kelleher and Southwest Airlines, but lacked their discipline. Either way, People Express had to die. As Crandall’s planning chief, Don Carty, would one day proudly explain, “We devised the fare structure that put them out of business.”
American had out – People Expressed People Express. Because he had no computer systems and no yield management, Don Burr would have to offer every seat on any given flight at the price Bob Crandall was offering on a fraction of his.
Within minutes of American’s announcement, all airline stocks plunged; investors braced themselves for the bloodiest fare war ever.
To Don Burr it was as if a bull’s eye had been painted over his likeness.
“This is it!” he cried, slamming the newspaper down on the desk of one of his marketing executives. “This is a shot across our bow! If we don’t invent a way to deal with this, we’re history! We’re going to be dead meat!”
And - whump! – just like that, the losses mounted at People Express. Twenty million dollars in a matter of weeks, a tide of red ink such as People Express had never experienced. The panic worsened.
Worst of all, Burr was dying at the thought that the mystique shrouding Peoples Express was now evaporating. The red ink forced him to withhold profit sharing. The stock price was plunging. Soon there were union organizers at his doorstep. Burr imagined his employees turning on him, the pilots in particular. He heard them referring to the precepts as “Kool-Aid,” – the poison spiked beverage that the demonic cult leader Jim Jones had used to conduct a mass suicide a few years earlier in the jungles of Guyana. Burr imagined his pilots in their cockpits asking one another, “Have you had your Kool-Aid today?”
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