Sun Country Boeing 737-8Q8(WL) (30683/1669) N809SY "Lake Nokomis" at Los Alamitos AAF (SLI/KSLI) on August 10, 2017.
(Photo by Michael Carter)
(Photo by Michael Carter)
Sun Country Airlines new CEO Jude Bricker told employees the carrier would cut costs, add fees and seats and look to expand its network beyond reliance on its hub at Minneapolis-St. Paul International Airport.Sun Country Airlines’ new boss is overhauling how it operates — and customers will eventually feel the changes.
Jude Bricker, who was appointed its chief executive last month, outlined his vision for the Eagan-based carrier in a memo to staff Tuesday. He praised Sun Country’s strong reputation, but he stressed the need to cut costs, increase revenue through fees and expand beyond its hub at Minneapolis-St. Paul International Airport.
Bricker’s formula mirrors the model of ultralow cost carriers like Frontier and Spirit airlines, which charge passengers for things like carry-on luggage and in-flight beverages.
Marty Davis, chairman and owner of Sun Country, hired Bricker, a former executive at Las Vegas-based Allegiant Air, in July after removing Zarir Erani from the CEO position.
Bricker’s memo to employees did not set a timetable for the changes. He stressed that Sun Country would protect its reputation of quality customer service, but he said changes are crucial for the airline to grow.
Under his plan, Sun Country will cut costs in a variety of ways and put more seats on airplanes, which provides more revenue opportunity but leaves less legroom for passengers.
The company is offering buyouts to senior employees, particularly flight attendants or nonunion full-time employees with more than 10 years of experience. The buyouts were framed as a way to give “long-tenured employees an opportunity to leave Sun Country if those individuals were not on board with the new vision,” according to a memo sent to employees Tuesday night by Dee Powers, the airline’s human resources director.
The airline is not offering buyouts to pilots. Sun Country and other U.S. airlines are coping with a shortage of pilots.
“The idea is just to buy out older, more expensive workers and replace them with younger, cheaper employees,” said Robert Mann, an aviation consultant and former airline executive. In doing so, Sun Country risks losing some of the people who built its service reputation.
“It’s a high-touch airline, so the last thing in the world you want to do is cut off the people who bring that level of customer service, which may very well be the 10-plus-year flight attendants,” he said.
Sun Country will also add new fees, including charging for overhead bin space. That means no more free carry-ons. The logic goes that an airline can lower the base airfare by taking away amenities included in the ticket price. Customers then have more choice on using — and paying for — the perks they want.
“Our customers are leisure travelers who are generally paying for their trip with their own money,” Bricker wrote in the memo. “While they value product and service, their behavior tells us that they care most about affordable airfare when making their travel decisions.”
Another key in Bricker’s strategy is to rely less on its hub at MSP, where it faces heavy competition.
The problem, as Bricker sees it, is that Sun Country isn’t a big legacy airline, like Delta, United or American, which build loyal customers through frequent-flyer programs and other incentives. And Sun Country isn’t as cheap as low-cost competitors like Spirit and Frontier. Being caught in that squeeze is one reason Sun Country’s financial performance is below its peers, he wrote.
Even if Sun Country reduces its costs per available seat mile by 20 percent, it will still be a more expensive airline to operate than Frontier, Spirit and Allegiant Air, Bricker wrote. But he suggested there was room for that by adding, “We’ll be different. We’ll continue to offer a better product.”
Because Bricker’s industry experience is chiefly at Allegiant Air, a no-frills specialist where he was chief operating officer, there’s little surprise in the direction he wants to take Sun Country.
“That’s his experience base, and that is what he does best,” Mann said. The consultant added that the challenge for Bricker is that too many changes could alienate Sun Country’s loyal customers.
Reached Wednesday night, Sun Country owner Davis stressed that this is not a downsizing and that the airline won’t become like Spirit. “We don’t want to nickel and dime customers. We want to stabilize it for long-term growth by finding the right rhythm between our pricing and customer service,” he said. “Jude very much recognizes the value that exists at Sun Country and we aren’t going to change that.”
Mann said it is easier to transition an airline gradually than to flip a switch and upend the model.
“Pivoting is so difficult. You have a brand reputation, and you have to be careful to walk away from it on the thought that you can create a better brand,” he added.
(Kristen Leigh Painter - Star Tribune)
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