The grounding of the Boeing 737 Max aircraft is boosting Sun Country Airlines' bottom line — albeit in a roundabout way.
Sun Country, best known for ferrying Minnesotans to warm destinations in winter, operates a sizable business running charter flights for the U.S. military, casinos and professional or college sports teams.
That business has grown 16% in the last two years, largely due to the Max's grounding, Chief Executive Jude Bricker said in an interview earlier this week.
"We've had a lot of demand from the DOD," Bricker said, referring to the Department of Defense, "and, I think, that's because of the grounding of the Max, which has caused other airlines to cut their charter business."
Several U.S. carriers, including United, American and Southwest airlines, have Max aircraft in their fleets. Southwest's fleet is made up entirely of 737 variants and usually has an active charter business. A Southwest spokesman did not respond to request for comment on the impact the Max's grounding has had on its charter operations.
In addition to other airlines being constrained by smaller fleets due to the grounding, charter-flight customers tend to be more demanding and fussy. "They can be very challenging customers, and operations are really challenging," Bricker said.
If the airline is flying a college football team, for instance, the flight times could change due to different TV network schedules or game time changes.
Sun Country is now flying half of all domestic, military narrow-body flights. These charters could be military cargo or for moving servicemen and women. On a single day this week, the airline flew three DOD trips to Hawaii.
The fall is Sun Country's slowest season, with few major events to stimulate leisure travel, its bread and butter. That gives Sun Country room to ramp up contracts with sports teams.
Sun Country allocates between three and five aircraft for charters, depending on how busy its scheduled service is at any given time. Its overall fleet varies by season but is around 30 aircraft.
Charter flying is embedded in Sun Country's DNA. The Twin Cities-based airline began in 1982 as an operator of charter flights exclusively. It was a profitable model throughout the 1980s and early 1990s, until major airlines became better at managing seat capacities. This reduced the demand from tour operators for charter flying, forcing Sun Country to relaunch as a "scheduled airline" — industry parlance for regular, ticketed air service.
In 2008, with the nation in the throes of recession and households cutting travel from their budgets, Sun Country reduced its scheduled service. Its CEO at the time, Stan Gadek, started pursuing charter contracts again with the U.S. government and then with private entities.
The airline had gotten out of the charter business under Tom Petters, who owned Sun Country in 2007 and 2008 before being arrested and convicted of a massive Ponzi scheme that became the biggest business fraud in Minnesota history.
As Gadek guided Sun Country out of the collapse of Petters' business empire, longtime employees suggested it again offer charters, a business Gadek wasn't familiar with from his previous job as CFO at AirTran. "You need a customer who is going to pay for the fuel and that's the military or a sports team," Gadek said.
Within a week, the airline had a DOD contract. Months later, Sun Country hired several Northwest Airlines employees who didn't want to move from the Twin Cities to Atlanta for the merger with Delta Air Lines. Those new hires brought in knowledge of sports charters.
"The charter business was critical to Sun Country's turnaround. We pulled out all stops to make sure we were reliable and could perform the charters ... and it brought in much needed cash and bought us time to fix other parts of the business," Gadek said. "None of that would've been possible without the hard work of the people at Sun Country."
The Minnesota airline has been flying military and private charters ever since.
With fewer aircraft now available for charters due to the Max's grounding, the price airlines can charge for charter flights has gone up, making it a lucrative effort, Bricker said.
This fall, the airline also tried something new with its sole 737-700 aircraft — the oddball in its fleet of otherwise 737-800s.
It took 70 of its large, first-class seats, which were leftover from its recent aircraft interior renovation, put new leather on them and installed them in its 700 airplane. Sun Country now calls this its VIP airplane for private charter customers interested in a comfier, roomier flight experience.
"It has been a really great business for us," Bricker said.