In late 1982, People Express was experiencing significant problems with respect to human resource management. In part, these problems were caused by forces external to the company such as the air traffic controllers' strike. In part, these problems were a result of the company's success its growth was too fast to permit the acquisition of sufficient number of personnel who met the company's criteria. Unfortunately, these problems were also a function of the apparent inability of top management at the company to recognize their existence. At the same time, the company was attaining significant market share growth while most of the rest of the participants in the airline passenger industry were floundering.
Explicitly, the mission of People Express was to provide efficient, low cost, no frills air transportation services to the traveling public in the United States. Implicitly, Donald Burr and several of the other top executives at the company intended for People Express to become a major player in the American air transportation industry.
Donald Burr and his senior staff were the chief strategists at People Express. These same people were members of the company's board of directors; therefore, they had the power to make the decisions required to implement strategies they desired.
There were three segments in the passenger carrying component of the airlines industry at the time of the case. At the top, there were the major trunk airlines. In the center, were the regional carriers, and, at the bottom, were the local air carriers. There were many more airline companies in the bottom two segments; however, the passenger carrying component of the industry was dominated by the major trunk airlines. In late 1982, People Express was the dominant local carrier in the northeastern United States, and it was in a position to grow quickly into a major, as a minimum, or the dominant, as an optimum, regional carrier along the e...