Businessman plans new airline in Newport News

NEWPORT NEWS

A Chesapeake businessman unveiled plans Monday to launch a new low-fare airline at Newport News/Williamsburg International Airport by mid-summer during a lively, crowded cocktail party in the airport terminal.

Michael Morisi, chief operations officer of Airline Management LLC, said he's acquired the rights to use the name PeoplExpress, which was a popular low-cost air carrier in the 1980s.

He expects to initially provide a dozen daily departures from Newport News, growing to about 25 flights in the first few years using full-sized jets. Possible destinations include Pittsburgh; Boston; Newark, N.J.; Providence, R.I.; and West Palm Beach and Orlando, Fla.

Ticket prices would start at $69. Bags would not cost extra.

He said he expects to hire 350 employees the first year and 1,000 within three years.

The upstart airline is working on lining up financial backing, federal aviation certifications and aircraft purchases, Morisi said.

"In reality, it's not a done deal," Morisi said in an interview. "But we feel like it's a done deal."

Morisi and his partners approached Norfolk International Airport last year about basing operations there.

Wayne Shank, executive director of the Norfolk airport, said: "We listened to their case and did our due diligence and research, and after careful consideration we decided it was not an opportunity we could embrace."

Among the airport's concerns were the fact that the airline did not have Federal Aviation Administration certification and that they were asking for a "rather substantial incentive package," Shank said.

PeoplExpress has not asked for a public subsidy on the Peninsula, said Florence Kingston, Newport News development director and chairwoman of the Regional Air Service Enhancement fund, sponsored by Peninsula economic development authorities.

Ken Spirito, Newport News/Williamsburg airport executive director, said: "We feel comfortable with the plan they've put forth and the company they've engaged to finance the operation."

The airline is working with the investment banking firm of WR Hambrecht + Co., which financed the original PeoplExpress. Morisi said the financial package will likely include an initial public offering.

The airline has filed its initial certification paperwork with the Federal Aviation Administration and soon will apply with the U.S. Department of Transportation to become a regularly scheduled passenger airline.

Morisi said he's in the process of buying 30 Boeing 737s, which seat 158 passengers.

The airline has leased about 15,000 square feet of office space in the old airport terminal building for its corporate headquarters, which it will occupy this week.

In addressing hundreds who attended Monday's announcement, Morisi asked the question on many minds.

"Who in their right mind would start an airline today?" he said.

In the past decade, U.S. airlines have lost a combined $54.5 billion and failed to make money in seven of 10 years, according to The Associated Press.

Morisi said in an interview that existing airlines are carrying 20 to 30 years of costly infrastructure.

His main goal: "Keep our cost structure very tight."

Other goals: "We want to make flying fun again" and "This company will be all about the people."

Morisi worked at the original PeoplExpress as a team manager, opening new markets for the expanding airline. He was later chief operating officer of the charter airline service Leisure Air. Since then, he's worked in business development for a company associated with homeland security, owned and managed health clubs and sports properties, published a local high school and college sports magazine, and served as a strength coach for the Washington Redskins.

He has placed former PeoplExpress employees in key management positions. Morisi, the president and chief operating officer of the new airline, said the CEO cannot be identified yet because that executive worked for another airline with a noncompete clause.

Spirito said PeoplExpress will go a long way to filling a void when AirTran Airways pulls out next month.

AirTran has carried nearly half of the 1 million annual passengers for Newport News, with nine daily nonstop flights to Atlanta, Boston, Orlando and New York's LaGuardia airport.

Spirito said the new airline will fly to all those markets, except Atlanta.

"Ultimately, the consumer will drive the success of this new airline," he said.

The original PeoplExpress launched in 1981 as a no-frills carrier in four cities including Norfolk. Fares, which were as low as $19, were paid onboard, after take-off. It acquired Frontier Airlines in 1985, becoming the nation's fifth-largest airline. But by 1987, it was put on the market and bought by Continental Airlines, which dropped the name.

Like its predecessor, PeoplExpress will operate mostly in underserved cities. And like the original, the airline will have vested employees/owners, with a portion of compensation coming from profit-sharing.

"We believe the time is right to start this airline," Morisi said.

Debbie Messina, 757-446-2588, debbie.messina@pilotonline.com