The throwback airline sold discount memberships to enthusiastic fliers before it had approval to take off, so now it has $10,000 less to work with.
May 11–Upstart airline PeoplExpress has yet to put a plane in the air, but it’s already been fined $10,000 by the U.S. Department of Transportation for marketing violations.
When the airline announced in February plans to operate a low-fare service out of Newport News/Williamsburg International Airport as soon as this summer, it started selling memberships to its “Club Travelati,” a discount program for customers for “ultra-low” fares.
More than 130 memberships have been sold, according to the consent order dated Wednesday.
The problem is that PeoplExpress doesn’t officially exist as an airline, because it has not secured federal aviation certifications. Federal officials basically said it can’t sell something it does not have.
Michael Morisi, president and chief operating officer for PeoplExpress, said he believed his discount club was within federal guidelines.
“We were very specific that it did not take effect until we got approval to fly,” he said.
That argument didn’t fly.
DOT says PeoplExpress violated two code sections “by advertising and selling club memberships offering future discounts on air travel without having first been granted the authority to engage in passenger air services.”
A settlement was reached to avoid litigation, according the consent order.
Morisi said his company is moving through the federal process to become certified and expects approvals in September or October. He anticipates delivery of one airplane in July with four more by September.
He declined to provide an update about numbers of flights or specific markets because “we’re under very tight restrictions about what we say” while going through the certification process.
In February, the plan was to start with a dozen daily departures from Newport News, growing to about 25 flights over several years. Possible destinations included Pittsburgh; Boston; Newark, N.J.; Providence, R.I.; and West Palm Beach and Orlando, Fla. Ticket prices would start at $69.
“We’re putting this behind us and moving on,” Morisi said.
Debbie Messina, 757-446-2588, [email protected]