LAS VEGAS -- Minnesota-based leisure carrier Sun Country
will transition toward an ultralow-cost (ULCC) fare model beginning in January, CEO
Jude Bricker said at Boyd Group's International Aviation Forecast Summit on Monday.
The company will also begin broadening its Minneapolis-based
network to include more origin cities next summer.
Sun Country plans to implement fees for checked bags
starting in January, Bricker said. The fee has not yet been determined.
The carrier will eventually charge for seat selection, but
plans to continue to offer free water and soft drinks for all passengers.
Sun Country's move toward an ultra-low-cost model comes as
the carrier has struggled with low single-digit profit margins over the past
few years, even as network carriers have posted double-digit margins and
ultra-low-cost carrier Allegiant has posted margins as high as 35%.
It also comes on the heels of the July hiring of Bricker,
who came to Minneapolis from Allegiant, where he was chief operating officer.
"The way to get a low fare is to charge for the
optional services that we are otherwise giving away for free," Bricker
Sun Country currently flies 45 routes, with most of them
going from Minneapolis to warm-weather leisure destinations in the U.S., Mexico
and the Caribbean.
Bricker said the carrier won't make a full move to the ULCC.
It will maintain a first-class cabin on its fleet of Boeing 737 aircraft, but
will reduce the 12 first-class seats to six and scale back the first-class food
Overall, Sun Country will increase the number of seats on
its 737-800 aircraft from 162 to 180. In so doing, it will decrease the
standard space between rows, called pitch, on coach seats from 32 inches to
between 29 and 30 inches. Slim-lined seats will be put in to lessen the impact
of those reductions, Bricker said, and a mid-level product with 32 inches of
pitch will be offered on all flights.
Bricker said that reconfiguring Sun Country's 22 aircraft
would take about a year.
He acknowledged that changing the carrier's product will
upset some of its customer base in Minneapolis, but said that change is
"The biggest risk is doing nothing," Bricker said.
"It's not working."
Along with the changes in aircraft and service, Sun Country
will diversify its network beyond Minneapolis.
Bricker said the carrier would add routes to its some of its
existing warm-weather destinations from other midsized Midwest origins, such as
Cincinnati, Milwaukee and Indianapolis.
In addition, Sun Country will leverage the flexible lease
deals it already has in place on a portion of its 737 fleet to jump in and out
of high-demand leisure markets in-season. For example, Sun Country will likely
fly from Los Angeles to Hawaii next summer, Bricker said. And it plans to run
routes from major Northeast markets to Florida during the 12-week season
between February and Easter.
Expanding outside of Minneapolis-St. Paul, explained
Bricker, will leave Sun Country less vulnerable to Delta, which has a hub in
the Twin Cities, and less vulnerable to the growing Minneapolis presence of
Frontier and Spirit.
"We have to diversify," Bricker said. "Ninety-five
percent of our network originating in Minneapolis isn't a defensible position."
Sun Country, he said, won't grow as quickly as the other
ULCCS have, in large part because those carriers have already filled in the
U.S. map with low-cost service.
Plans call for Sun Country to increase its fleet size from
26 aircraft to 55 in 2022.
The carrier also plans to maintain a significant presence in
the GDSs, differentiating it from Bricker's former employer, Allegiant.