Sun Country's strategy: adapt, overcome, persevere

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: April 13, 2014 - 9:45 AM

The Twin Cities-based airline can’t depend solely on winter traffic, so it tweaks its offerings as it fights larger competitors at MSP.

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For Sun Country Airlines, Minnesota’s bitter winter was a blessing.

After a mostly weak 2013, strong passenger bookings from December through March to warm and comfortable vacation spots kept the airline strong.

But being in the black doesn’t mask the stiff competition that Sun Country faces in the bare-knuckle world of low-cost airlines where even big-boy legacy carriers sometimes vie for the budget-minded traveler. Nor does it lessen the carrier’s strategic dilemma as it tries to balance its interests among leisure, business and charter service.

“We’ve always survived on our ability to adapt to a changing world, and that’s what we continue to do today,” said CEO John Fredericksen in an interview last week. For example:

• When charter flying for the military dropped off as deployments declined, Sun Country picked up charter service between Florida and Cuba for Cuban-Americans and Cuban citizens who now have more freedom to travel between the two countries for religious, educational and family reasons.

• When twice-daily service to Chicago’s Midway Airport didn’t pan out with business travelers as expected, the airline reduced flights to seven weekly over four days — Thursday, Friday, Sunday and Monday.

“We’re going to measure growth on what the marketplace tells us,” Fredericksen said. “We’re not in business just to grow.”

The Minnesota-based airline was launched in 1982 by former employees of Braniff International Airways, which was among the first U.S. carriers to succumb to the rigors of airline competition. Since then Sun Country has twice landed in bankruptcy.

The last year has been one of transition for the Mendota Heights-based carrier as it adapted to new ownership and new leadership and experimented with new routes in an effort to gin up additional business. Fredericksen replaced CEO Stan Gadek, who departed abruptly just over a year ago after navigating Sun Country through its most recent reorganization.

For Sun Country, 2013 was the carrier’s fifth consecutive year of profitability since near-catastrophic back-to-back losses in 2007 and 2008 when the airline was owned by since-convicted businessman Tom Petters.

A court-appointed trustee and successful reorganization in U.S. Bankruptcy Court put the airline on a serendipitous route to eventual ownership in 2011 by the Davis family of southern Minnesota. The family’s business interests range from Cambria quartz countertops to mortgage lending, protein supplements and one of the largest dairy-and-cheese operations in the region.

Marty Davis, Sun Country’s chairman of the board, said he is satisfied with the direction the carrier has taken.

“We’re comfortable with the size the airline is now,” Davis told the Star Tribune. “We can be nimble and move quickly.”

Sun Country has 19 aircraft in its fleet, up from 17 in 2012. And two more Boeing 737s are scheduled to come on line by the end of 2014 when the next winter travel season begins. The carrier’s workforce is at 1,275, compared with 850 just three years ago.

Sun Country’s strength is its vacation routes to popular destinations in the Caribbean and Mexico. But it also offers service to cities such as New York, Los Angeles, Boston, Dallas and Seattle, which also appeal to business travelers. Sun Country’s passenger traffic from MSP rose 27 percent overall for December, January and February compared with the same months a year ago. Figures for March, typically its busiest month, are not yet available but are expected to be good.

But, because of its size, Sun Country is in a difficult position to be all things to all travelers.

“Sun Country has to decide what it wants to be,” said Rudy Maxa, host of a syndicated national travel radio show. “It’s certainly not [low-fare] Spirit, I say happily. But it’s certainly not a full-service airline, either.”

Maxa said Sun Country operates best as an airline that serves leisure travelers and warm-weather destinations. Without multiple flights each day into traditional business destinations, it “will not be convenient” for business travelers who require more options and flexibility, Maxa said.

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