Flight Plan

Flight Plan

Sun Country rebrands under the tails of the two best airlines in America. It should look up.

I love the airline business. I’ve followed it since I was a kid and find it endlessly fascinating. There’s something about its utter complexity, moving so many people on tight schedules through conditions beyond human control. Perhaps that’s why, over the decades, it’s been a brutal business for investors and executives alike.

Its capital- and debt-intensive nature hasn’t helped—an Airbus A321 will set you back a cool $75 million at a volume discount. Nor has its nature as a business that’s intensely vulnerable to economic fluctuations—such as the price of oil or the state of the economy. Air travel is considered a frill that many discard when money is tight.

That’s why so many once-innovative brands (Pan Am, Braniff, Northwest) are now historical asterisks. Today’s airline business is smaller and more conservative than what those of us around after deregulation in 1979 remember. In general, there’s a sameness to the airline experience.

This month, the reimagined Sun Country Airlines will show itself off, as more of us look south in search of vitamin D. Still largely a local carrier (ownership is now out of state), it is nearing the end of its conversion to an “unbundled” airline, where every aspect of the flying experience is fee-based, from using an overhead bin to an assigned seat, while the base ticket price is often lower than what’s available from establishment carriers.

It’s the business model du jour for leisure airlines, where no aspect of the customer experience trumps a low entry price. (For more on Sun Country’s transition, see my Q&A with its CEO, Jude Bricker.)

Sun Country’s evolution (new paint scheme, new routes, upgraded technology, eliminating first class) is notable, but it is following a path proven by Spirit and Frontier in the current marketplace. Also notable is that Sun Country is not modeling on the two greatest success stories of the current aviation age—Delta and Southwest.

Delta built a better mousetrap. Specifically, then-CEO Richard Anderson flawlessly merged NWA into DL 10 years ago and then aimed higher. Today, Delta is the leader among North America’s “network” or hub airlines. Delta operates the same business as American or United, or Northwest or Continental in days of old; it just does it better. (Conflict of interest note: TCB’s parent company publishes Delta’s inflight magazine, Sky, and is a vendor to the airline.)

Anderson set out to rebuild Delta around the strengths of its two halves (Northwest and legacy Delta). Northwest operated efficiently, was technically innovative, and managed its finances well. Legacy Delta had Southern hospitality and powerful hubs in New York and Atlanta—the latter the most successful in domestic aviation, while the former was underdeveloped with limitless potential.

Anderson’s goal was to create an airline that not only dominated longtime regional monopolies (the Midwest and Southeast), but was a carrier of choice in markets (NYC, LA) where corporations pay a premium for global access and convenience.

Delta today commands a substantial revenue premium over its primary competitors because it is better. Delta is on time, where AA and UA are not. It treats its customers well with greater consistency. Its planes offer more amenities. And it has leveraged technology to make flying easier, ahead of peers.

Southwest came late to the Twin Cities and maintains a relatively modest presence at MSP’s Terminal 2, even today. It is neither a traditional hub carrier nor an unbundled discounter. In some ways, it is the aviation expression of American egalitarianism.

Southwest’s business model is unique. It charges nothing to check bags, use an overhead bin, or procure a specific seat. Need to cancel or change your ticket? There’s no $200 penalty. Its friendly, informal employees take the sting out of the crowded, oft-dehumanizing air travel experience.

And despite pressure from Wall Street to unbundle, Southwest has stuck to its model, correctly imputing that the root of its appeal is that the price of a ticket buys you everything you need to get to your destination and buys everyone the same experience.

Delta and Southwest epitomize the basic drivers of success not just in aviation, but business in general. Delta knows its customer and executes. Southwest understands that the key to success is the integrity of a business model that has turned customers into raving fans.

Bad airlines have profitable quarters. But the ones that thrive do something different or better. Sun Country struggled for decades largely due to a lack of access to capital to keep up with a changing industry. That’s changed. But if it is to emerge from the shadows of other airlines and fly high, it must follow Delta or Southwest’s contrail: It will need to be better or different in a way that travelers recognize and appreciate.

The airline has a committed employee base, an efficient home airport terminal, and ambitious leadership. It will be interesting to see how high Sun Country can fly.

Adam Platt is TCB’s executive editor.

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