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Why Boeing's 787 Is to Norwegian What Boeing's 747 Was to People Express

Stocks in this article: BAUAL

Updated with Boeing share price

NEW YORK -- As controversial low-fare carrier Norwegian Air Shuttle prepares to operate New York-London service, an inevitable comparison is with People Express, which first showed the world how attractive low-cost New York-London service could be --- and how it could be offered by jamming seats into the latest model Boeing (BA) aircraft.

On May 26, 1983, People Express began flying between Newark and London's Gatwick Airport with a leased Boeing 747-200 previously operated by Braniff, according to Wikipedia. One-way fares started at $149.

Using a Boeing 787 Dreamliner, Norwegian plans to start thrice-weekly service between New York Kennedy and London Gatwick in July, assuming it can gain regulatory approval, which is being contested.

Fares would start at 149 euros, or just over $240, less than half of the lowest competing fare. The carrier would also begin twice-weekly service to Gatwick from Fort Lauderdale and Los Angeles.

The most important factor in People Express' ability to offer low fares, and the most important connection between People Express and Norwegian Air Shuttle, is the carriers' aircraft, said Bob McAdoo, airline analyst for Imperial Capital and formerly chief financial officer at People Express.

People Express put about 450 seats on its Boeing 747, while Norwegian has 291 seats on its Boeing 787. By contrast, United (UAL) has just 219 seats on its 787.

The crowded seating "kept costs low," McAdoo said. "We started out with one 747 a day and went to two a day. We were able to put about 450 seats in it, which is why our costs were so low per passenger. It's the technology and the decision to pack the seats in so that you maximize the number of passengers on a plane, which enables you to have really low costs."

Some carriers put even more seats in a 747. Former Tower Air executive Bob Mann, now an aviation consultant, said Tower had 505 seats in a Boeing 747-100, partially because it removed the forward galley. People Express, by contrast, had a small premium class section, as does Norwegian Air Shuttle. 

People Express fares attracted large numbers of travelers, particularly students with backpacks. "We had people all over the place wanting to get on our plane," McAdoo recalled. "People would be on standby and they would wait in line for hours. We had more business back and forth to London than you can possibly imagine.

"It was a unique time," he said. "But this (Norwegian Air Shuttle) might be similar."

Norwegian spokesman Lasse Sandaker-Nielsen said the carrier expects its low fares to attract budget-minded travelers as well as business flyers.

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