Dogfight starts over Atlantic as People Express sells $149 London flight
The American cut-price airline People Express claims to be all set to open a highly profitable transatlantic service. But it is under pressure from major British and American operators to think again.
The ''fly smart'' airline plans to offer one-way seats at $149. The current one-way fare is $280 for standby and $348 for economy class.
People Express executives, who are in London pressing for British government approval for their service, say they will start taking bookings Monday and expect to start Atlantic crossings Friday.
Their high-pressure tactics have alarmed British Airways and British Caledonian and sent tremors through the boardrooms of the large US airlines.
The British Department of Trade, which must approve any license application, believes People Express is trying to use the atmosphere created by the general election campaign here to push its prospects. People Express chief executive officer Harold Pareti said the Thatcher government's preference for free business competition and ''open'' capitalism would work to his airline's advantage.
Trade Department officials are hesitating over the People Express license application, concerned the airline may have insufficient resources to mount a long-term transatlantic operation.
They cite Sir Freddy Laker's ''Skytrain'' fares on the now-bankrupt Laker Airways as an example of what can happen to a private airline in competition with the ''big boys.''
Sir Freddy, who had to close down his operation last year with huge debts, is mounting a legal suit in the United States against his former rivals, claiming they conspired to force him out of the skies.
The Laker case is another reason the British Trade Department is hesitating to flash a green light for People Express.
Mr. Pareti and other People Express executives believe Prime Minister Thatcher's political philosophy will tilt her in their direction. But Mrs. Thatcher is in a dilemma.
If she wins the election, she has said British Airways will be sold to private buyers. British Airways executives, who see the transatlantic market as a key to their airline's financial recovery, are saying privately that if the Prime Minister helps People Express, she will hinder British Airways.
People Express claims that with a 62 percent passenger load factor it will break even. With a 72 percent load factor, the profit would be close to $10 million a year.
Big operators such as British Airways, Pan American World Airways, and Trans World Airlines fear that People Express, if given the go-ahead, will cut into their charter flightbusiness. These are seats discounted by charter companies that usually have to be purchased several days before departure.
People Express says it wants to provide a walk-on service, as in its American routes, with passengers paying for seats by credit card or cash after they board the plane.