Newly appointed Sun Country CEO Jude Bricker has announced a new direction for the discount carrier, and it might not be one that its current passenger base cares for.
If you’ve never heard of Sun Country, you’re not alone. The discount carrier plays an important role, however, in not only servicing the local hub but also connecting east-west traffic.
The airline suffers from the “jack of all trades, master of none” syndrome. It actually has a better coach class than many legacy carriers, with 31-33 inches of pitch and offers a first-class product for those who so choose.
Sun Country has a couple of factors working against it, though. Most of its traffic comes from leisure passengers who are unwilling to pay the higher prices that business passengers will for non-stop flights and frequent connectivity. Unless your origin or destination is Minneapolis, chances are that you’re going to be connecting there. Very few cities on the map have service to an airport other than MSP.
The other problem is costs. An airline with so many connecting passengers will necessarily have planes spending a lot of time on the ground, waiting for those passengers to come in from another city. As the old saying goes, a plane at the gate generates no revenue. A major carrier like Delta or American can afford such inefficiencies, since they have passengers who are often paying more. Sun Country, though, needs better utilization* from its fleet, since its fare base is lower.
Where We Go from Here
The new CEO has decided that the airline can no longer be a “tweener.” It has to go full we network carrier, like Delta, or full ultra-low cost carrier (ULCC), like Spirit. And it has decided for the latter.
Over the next several months, you will probably see several changes at the airline which will be good for its bottom line, but possibly bad for passengers. While the owner has spoken out against nickel-and-diming customers while maintaining a high-touch service, that statement is inconsistent with the ULCC model. ULCC carriers generate revenue by charging ancillary fees and have a less-tenured workforce, which increases revenue and cuts costs, respectively. And those 31-33″ seats? Think more like 29-30″ in the future.
The airline has another problem, though, and that’s its route map. Above, I showed you the route map for Sun Country. Here is the route map for Spirit Air:
If you were flying anywhere, except to or from Minneapolis, which would you be more likely to choose? Exactly. Spirit was built from the ground up to be a ULCC, which focuses on point-to-point flights (no connections), which are less costly to operate and tend to generate premiums, since non-stops have fewer competitors.
Sun Country is going to have a hard time doing that. So much of its network is already devoted to Minneapolis that it will take years to build up critical mass anywhere else. Sun Country may not have that much time.
It’s too bad that a carrier that delivered good service on a decent product is going to be forced into change, but such are the times.
Beginner’s Hint: “Utilization” refers to the number of hours per day that a plane is actually in the air. High utilization is important for low-cost carriers, because you are paying expenses whether the plane is on the ground or in the air. Might as well have it in the air, generating revenue.
Utilization is the “secret sauce” that allowed Southwest to become the dominant force that it is. The airline was able to offer lower ticket prices because its planes spent more time in the air, meaning that it could complete more flights than its competitors.
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