They were a small airline that tried to go head to head against the big airlines at the same airports. American would schedule flights just before and just after People Express flights. Basically they could saturate any market People Express would try to enter. Also due to a lack of a sophisticated reservation system, they had too few seats available for the number of tickets sold. American and other airlines were happy to book them on their flights.
"all the employees had a stake in the action"
You're not kidding. I've heard accounts of how since they took cash fares ON the planes, the acounting was rather sloppy, and the cash that made it to the special room, was dumped in sacks on the floor till someone made time to take it to the bank!
Continental bought them and merged them into their operation... That is basically how Continental moved into Newark and it is through purchase of People Express that Newark is one of Continental's main Hubs...