Sun Country converts to a ULCC, as full service airlines increase pressure on the model
For most of its existence the Minneapolis based Sun Country Airlines has operated under the radar, offering seasonal flights to sun destinations and turning its attention to domestic services in the off season. It co-existed with Northwest, and then Delta, at the major airlines' Minneapolis hub, and built up a loyal following in the local market.
Sun Country has also served its time under US bankruptcy protection twice, and endured a fraud scandal that engulfed one of its previous owners. Since the beginning of the current decade, Sun Country’s operations have stabilised, but its profits and operating margins fell year-on-year in 2016.
In order to strengthen its financial position, Sun Country has adopted the ULCC strategy of product unbundling. Sun Country’s strategy shift occurs just as the ULCC model comes under close scrutiny by investors in the US, after Spirit Airlines has battled robust price matching in its markets and Frontier Airlines has put its planned IPO on hold.
As it works to transition its business model, Sun Country has signalled that its fleet could ultimately double in size, to 50 aircraft, and a distinct possibility is network diversification into larger metro markets to capture warm weather leisure travellers. Any significant shift in strategy for an airline is a major gamble, and even as Sun Country remains a small player, its product and network changes will garner ample attention.
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