Newport News to be base of new discount PeoplExpress Airlines

A new PeoplExpress Airlines will start low-cost air service this summer from Newport News/Williamsburg International Airport, where the company will be based.

The new airline proposes to fly to Newark International Airport, as well as Pittsburgh, Providence, R.I., and West Palm Beach, Fla., and eventually other locations.

Starting with four aircraft, operations could begin as early as mid-July, Mike Morisi, the company's chief operating officer, said Monday.

Lured by tickets selling for 40 percent below current market prices, the new PeoplExpress hopes to draw passengers from the Peninsula, the Richmond region, Hampton Roads and northeastern North Carolina, Morisi said.

"People will get in the car to drive to get those kinds of fares," Morisi said.

The company intends to offer $69 fares to start, he said, "and no bag fees."

The airline said it intends to use 158-seat Boeing 737-400 airlines for its flights, which it is negotiating to purchase. The company plans to buy 14 used 737s in its initial order, Morisi said, and an additional 16 in 2014.

The company has leased 15,000 square feet of space in the old terminal building at the Virginia Peninsula airport for its corporate headquarters.

The company has filed its initial certification paperwork with the Federal Aviation Administration, it said in a statement, and will shortly file an application with the U.S. Department of Transportation to become a regularly scheduled passenger airline.

Following approval from the FAA and the federal Transportation Department, PeoplExpress said it will announce its plan to begin taking reservations.

The airline is working with the investment banking firm WR Hambrecht + Co. to complete the financing for the airline's startup.

The airline is not receiving financial incentives from the airport or Peninsula localities, said Ken Spirito, executive director of the Newport News airport. "We're certainly excited to have an airline hub and its operations here," Spirito said.

PeoplExpress' operations could mean 1,000 jobs for Newport News, Spirito said.

The FAA controls airline access to Newark Liberty International through a system of landing and takeoff slots. Morisi said PeoplExpress should be able to obtain slots at Newark available for new-entrant airlines.

The airline industry has been contracting as a result of the recession and mergers, which has tended to increase the cost of air travel.

Newport News is favorably located for an airline operation on the East Coast, the new PeoplExpress' target market area.

"As airfares go up, there's room for a low-cost carrier (in the U.S. airline industry), but it's not as easy to be a low-cost carrier these days," said transportation economist George E. Hoffer at the University of Richmond.

"I certainly wish them well," Hoffer said, "but it certainly seems a heroic effort."

The namesake of the new PeoplExpress operated in the United States from 1981 to 1987, and was at one time the fifth largest domestic airline.

"With the recent decline in airline service due to mergers and consolidations, we have had to travel farther out of our way to get anywhere. Flights are more expensive and the many ancillary fees make flying a hassle," Morisi said.

"We will eliminate most fees for items such as checked bags and seat assignments aboard our fleet of Boeing 737-400 aircraft," the PeoplExpress official said. "Passengers will be seated in a single cabin with 158 seats with a pricing structure that is significantly more affordable than regional service provided by feeder airlines."

PeoplExpress will be sandwiched in Newport News between two Southwest Airline operations.

Discount carrier Southwest is moving into Richmond International Airport as it takes over low-cost carrier AirTran Airways. Southwest, the nation's largest carrier of domestic passengers, already serves Norfolk International Airport.

"We're not going to compete with them on any routes with the exception perhaps of Orlando," Morisi said of Southwest and other major carriers. "We're going to do our very best to stay out of their backyards."

What PeoplExpress wants to do, he said, is "stimulate a market that typically drives, that otherwise wouldn't fly."