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Sun Country cuts unit costs as growth drive continues

The transformation and expansion of US discount carrier Sun Country continues, with its chief executive saying his airline will expand 35% this year while reducing seat-per-mile costs to less than six cents.

"We've cut about 30% of our unit costs over the last two years. That is a pretty dramatic transition," says chief executive Jude Bricker, speaking at the Boyd Group International Aviation Forecast Summit in Las Vegas on 26 August.

"We will be cost competitive, at six cents or below, this year," he says of Sun Country's unit cost.

That figure could hit 5.8 cents next year, down from an average of 6.25 cents during the last 12 months.

A sub-6-cent unit cost would make Sun Country cost competitive with US ultra-low-cost carriers (ULCCs) Spirit Airlines and Allegiant Air, where Bricker previously worked.

Spirit and Allegiant each reported unit costs (excluding fuel and special item expenses) of less than 6 cents in the second quarter of 2019.

Bricker's business update comes about two years after he took the reins of the leisure-focused carrier, which private equity firm Apollo Global Management acquired in 2018.

Under Bricker, Sun Country overhauled its fare structure, added ancillary fees and embarked on fleet expansion and cost cutting. It expanded its network with new flights to Hawaii, the Caribbean and several destinations along the US East and West Coasts. The airline is based near Minneapolis.

"My management team saw an opportunity to change the business substantially and put it on the right path and make it a valuable enterprise," says Bricker.

About half of Sun Country's recent cost cutting reflects the addition of seats to its aircraft and the acquisition of more Boeing 737-800s, Bricker says.

Bricker's team expanded Sun Country's fleet from 22 to 30 737NGs. They have acquired more 737-800s in a move away from smaller 737-700s. The airline has also shifted to owning more aircraft and leasing fewer.

"When [you] own you can use the maintenance value of the aircraft for your own benefit, while if you lease it you have to return that value, typically, to the lessor," Bricker says.

Sun Country's third quarter available seat miles will increase 45% year-on-year, according to Cirium schedules data.

The fleet will soon hit 35 aircraft, and Bricker sees an opportunity for Sun Country to eventually operate 50 aircraft.

Bricker notes that some ULCCs operate aircraft up to 14h daily in an effort to squeeze maximum revenue out of expensive new aircraft.

But Sun Country aims to operate its less-expensive, used fleet 9.5-10h daily, and only on routes and at times where it can make money.

"When the flying is really bad, I think the most appropriate response… is not flying at all," Bricker says.

Sun Country has also updated its aircraft cabins, equipping them with free inflight entertainment, at-seat electric outlets and more-comfortable Collins Aerospace seats, says Bricker.

The airline has also shifted from a Sabre ticket distribution system to a Navitaire system and rolled out a new website.

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