Human Resource Management

Political: To permit more competition US congress de regulated the airline industry by phasing out restrictions on new entrant’s, routes and fares. People Express was one of the first to enter the highly competitive airline industry. These events lead Peoples Airlines to provide better and cheaper service to the customers. The big players in the industry were still recouping from their losses due to deregulation, fuel shocks and the air controller strike. This provided PE a perfect opportunity to pitch their new competitive model in the industry.

Economic: In the early 1980’s due to recession many pilots and other staff had been laid off by other airlines giving PE and abundant pool of people to choose from. It also helped PE to buy used aircrafts at low prices. These were tailored to suit the typical customers that PE airlines was targeting. By picking people diverse backgrounds such as nurses, social aid workers and teachers. The limited financial support that the PE competitors had was ineffective in responding to the low fare challenges while maintain their status as full service operations.

Social: PE capitalized on the fact that many airline employees who were laid off. He recruited those who were eager to work and were ready to commit even at lower wages.

Technological: Through major gate acquisitions, the major carriers became increasingly aggressive threatening to lock PE out of key hub cities across the country. With a variety of travel agency and distribution programs, and with rapid development of computer aided variable pricing, the major players were able to match PE’s competitive prices.

American airlines continuously improved their computerized reservation system that could offer up to ten different prices for seats on the same flight. They were also able to study the history of how many seats would go at high prices so they knew roughly how many of them to offer at a competitive price (yield manager). Whereas PE without this Technogym...