Bumpy landings: low-fare failures over the Atlantic

Source:
This story is sourced from Flight International
Subscribe today »

LAKER AIRWAYS

Pioneering budget airline Laker Airways collapsed in 1982 five years after Sir Freddie Laker launched his London to New York Skytrain service as the second designated UK transatlantic carrier under the new Bermuda II bilateral agreement. Initially a success, Laker placed orders for McDonnell Douglas DC-10s. There are several theories behind its spectacular bankruptcy: rival airlines in the UK and USA lowered fares to stifle the competitive threat posed by Laker as the recession bit others believe Laker borrowed heavily at too high a rate of interest.

PEOPLEXPRESS AIRLINES

The golden child of early 1980s US airline deregulation, PEOPLExpress became a high-profile casualty due to its inability to repeat its success as a smaller domestic operation on the transatlantic market. Founded in 1981 by Donald Burr, PEOPLExpress initially operated Boeing 737s and launched transatlantic services in 1982 with three leased 747s flying from Newark to London. The pressure of transforming a low-cost domestic airline with little competition to a long-haul service, battling with the majors on their doorsteps, was too much. The lack of a computer reservation system, a disastrous overbooking policy and capacity constraints at Newark, together with an ambitious but misguided 747 fleet expansion, led to customer complaints and financial problems. The airline was bought by Texas Air in 1986 and merged into Continental Airlines.