LAS VEGAS — In his first public appearance since becoming CEO of Sun Country Airlines, Jude Bricker used his remarks at the Boyd Group’s International Aviation Forecast Summit to share his vision for an airline that’s been around since 1982.
The goal is to bring the carrier closer to ultra-low-cost competitors like Spirit Airlines, Frontier Airlines and his previous employer, Allegiant Air.
The Minneapolis-based carrier currently has 22 aircraft in its fleet — 16 Boeing 737-800s and six -700s — flying to 44 leisure destinations.
“We have an interesting ability to bring in 737-800s from a deal with Transavia, so we can peak up seasonally, allowing us to double our ASMs in March compared with the previous September with most of our traffic out of Minneapolis-St. Paul,” said Bricker. “We have U.S., Mexican and Caribbean leisure destinations that can be the foundation for future growth. We also have a really good charter operation.”
But Sun Country has underperformed compared to other airlines, Bricker admitted. “Sun Country has been left behind, but that’s what makes me excited about this opportunity. We have assets we can build on to close the gap with our competitors and have a valuable enterprise,” he said.
Sun Country has a really good operation, said Bricker. “We’re not faced with operational difficulties that Spirit has today with its pilots,” he said.
Many of the airline’s ASMs are in support of the charter program, allowing it to offer bespoke scheduling, said Bricker. “We do really well with on-time completion and customer complaints and we want to maintain that in our transition,” he said.
Sun Country has a strong local brand in Minneapolis-St. Paul, said Bricker. “We’ve been mainly focused on MSP leisure customers,” he said. “One of my big challenges in our transition is making a company that makes money by maintaining the brand that worked so hard to build in this community.”
The airline has good employee relations, said Bricker. “Sun Country signed contract a few years ago with its pilots and flight attendants,” he noted. “This give us a clearance period to do what we need to do without worrying about with contracts, unlike Spirit,” he stated.
“We’re not moving away from our charter business, but it won’t grow as fast as our scheduled service. We’re the fifth-largest charter in the country, serving as a premier charter operation for the NCAA and the military, along with casino flights to Las Vegas and Gulfport, [Miss.],” said Bricker. “This is an annuity business that keeps our planes busy year round. It’s especially valuable during our seasonal troughs in September.”
Sun Country has a nice terminal at MSP, said Bricker. “We share Terminal 2, where we use eight of the 14 gates, which is a nice set-up for O&D traffic,” he said.
What’s exciting is the small changes we can implement relatively quickly, said Bricker. “We already have $500 million a year in revenue a year, with low single-digit operating margins, so it won’t take a lot to create long-term revenue,” he said. “We want employees to have a financially sound employer.”
Sun Country will continue to focus on leisure customers out of MSP, said Bricker. “But we will also dense up our aircraft. We have a first class product in high demand, but the current cost to provide it isn’t justified,” he said. “Today we give away a lot of amenities on our aircraft, and our catering costs are $2 million a year. We need to revisit and reevaluate what we do for cost and make sure it is something our customers want to pay for.”
The airline will shrink first class and have a 32-inch pitch economy section up front, said Bricker. “So we’ll also have a section in the cabin for those who care most about airfare,” he said.
There are examples out there for Sun Country to follow, said Bricker. In 2006, Spirit underwent their change to [a ULCC]. Frontier underwent theirs in 2012, and both are now successful enterprises,” he noted. “They have 200-plus aircraft, strong balance sheets and order books with lots of growth and efficient aircraft.”
Sun Country will continue to focus on used 737s, said Bricker. “We currently fly them 10 block hours a day. But we can peak them up in the March period and draw them down in the September period,” he said. “We have six 737-700s and will transition to all 737-800s that will have 180 seats, with six in first class. It will take about a year to get through that transition. We don’t have to spend a lot of capital and we’ll get a good return.”
But Bricker said the airline can do some of what Spirit and Frontier have already done that has worked. “We’ve done things like lowering airfares and adding ancillary revenue. The results have been striking,” he said.
There is demand in the leisure space for a first class product, defined as a big seat, said Bricker. “Today for those customers on a Denver-MSP flight they get a fruit/cheese tray, a three-course meal, snacks and free drinks,” he said. “There’s still a place for a first class seat. We’ll still have one and still offer a free meal, but it might not look like what you can get today.”
Thanks to his time at Allegiant, Bricker noted his belief in the segmentation of an aircraft cabin. “We intend to do the same so we can offer something for everyone. If you want to sit in a premium seat, you need to buy it. We have a great opportunity here by investing in a great cabin with things like power in seats,” he said. “We want to have a better onboard product and a higher product offering. For us, this will happen in the third or fourth quarter of next year.”
Sun Country will start charge for things it used to give way for free, Bricker stated. “Southwest doesn’t have bag or cancellation fees and that works for them. But for leisure providers, the main barrier to travel is the airfare, and we need low ones,” he said. “And we do that by charging for things. If you want a bag, you pay for a bag. If not, you get a lower fare. Ancillary revenue helps boost products offerings.”
The airline has great reliability with used aircraft flying routes with passenger and charter passengers, said Bricker. “We have access to GDSs add online travel sites, providing predictable seasonal service on leisure destinations, including Mexico, the Caribbean, Florida, the U.S. Southwest, Hawaii and Anchorage,” he said. “We can load capacity in GDSs, but Allegiant doesn’t participate in them.”
The Northeast to Florida market is lousy on most of the year, said Bricker. “But for 12 weeks in the spring, it’s fantastic. The same can be said for summer traffic to Hawaii and Anchorage. We can peak up and trough down under traditional patterns, which will allow us to maintain our fare premium compared with our ULCC competitors.”
The big story for Sun Country is to remain differentiated, said Bricker. “We have great service from motivated employees because we friendly crew because of our stable labor environment,” he said.
Sun Country is launching an app so customers can do their own self service, said Bricker. “Our customers don’t want to talk to us.”
Leisure passengers demand some modicum of comfort, said Bricker. “We can differentiate our cabin and give the people what they want,” he said.