Why Sun Country Airlines Shifted To A Low-Cost Model

Sun Country Airlines has transitioned to become an ultra-low-cost airline after its former business model was obviously not working and after being purchased by Apollo Global Management. Even though Sun Country is now an ultra-low-cost airline, some quirks in its business model and services set it apart from other US-based airlines. In the first quarter of 2024, it was reported that Sun Country had generated a record revenue.

Sun Country Airlines background

Sun Country Airlines is based in Minneapolis-St Paul International Airport and operates flights to around 140 destinations in the US, Canada, Mexico, Central America, and the Caribbean. It focuses on providing low-cost fares to leisure travelers.

Photo: Ian Dewar Photography | Shutterstock

Sun Country Airlines was founded in 1982 as a charter airline taking vacationers to sun-soaked destinations. Between 1982 and 1999, it operated as a charter airline but started offering scheduled services in 1999. Between 1999 and 2008, its network expanded, and a mix of charter and scheduled flights was operated.

However, with the Great Recession of 2008, Sun Country experienced financial troubles and filed for bankruptcy. It then changed hands a few times but continued to serve leisure destinations and evolve its business model.

This changed in 2017 when it was acquired by Apollo Global Management (an American asset management firm mostly investing in alternative assets).

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Transition to ultra-low-cost airline

Under Apollo Global Management, the airline has transitioned to becoming an ultra-low-cost carrier that competes with Spirit and Frontier Airlines. The airline reconfigured its aircraft to add more seating and started charging passengers for optional services.

Photo: natmac stock | Shutterstock

Sun Country has phased out many complementary services (like onboard meals) as part of the transition. Still, it hasn’t eliminated all comforts.

Sun Country’s 737-800s offer free entertainment streamed to passengers’ devices (on most flights), relatively spacious interiors, full-sized tray tables, and in-seat power outlets in most seats.

Passengers can bring one under-the-seat item per traveler at no extra charge on all reservations (this can be a purse, backpack, or other such item). After that, passengers need to pay for the baggage (although the prices may vary based on the flight).

Still a hybrid airline

Sun Country Airlines says that it is “a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter, and cargo businesses.”

Sun Country states it believes this will help generate high growth, high margins, and strong cash flows with greater resilience than other passenger airlines.

The focus of the airline is serving leisure and visiting friends and relatives (VFR) passengers as well as charter customers. It also operates a significant cargo fleet for Amazon Air.

“We optimize capacity allocation by market, time of year, day of week and line of business by shifting flying to markets during periods of peak demand and away from markets during periods of low demand with far greater frequency than nearly all other large U.S. passenger airlines.” – Sun Country

Photo: Austin Deppe | Shutterstock

The most remarkable airliner operated by Sun Country is a VIP-configured Boeing 737-800 registered N839SY. This was previously operated by Norwegian Air International and Norwegian Air Sweden before being transferred to Sun Country in 2021. While all its other Boeing 737-800s are set up to accommodate 186 passengers, this aircraft is only in a business configuration with 68 seats.

Sun Country is considered a rather peculiar airline that doesn’t operate like other US-based airlines. It is neither a traditional ultra-low-cost passenger airline nor a legacy carrier. Time will tell if the airline’s new business model proves to be a winning formula or not.

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Sun Country’s fleet

According to Infinite Flight, the airline is also expanding its network and is presently wet leasing Boeing 737-900ERs (soon to be delivered) in addition to at least 50 Boeing 737-800 Next Generation airliners already in their fleet.

Sun Country is expected to own the aircraft after the wet leases are up in 2026. The company is looking for other narrow-body aircraft with low operating costs that are suitable for a low-cost airline (like Boeing MAXs or Airbus A321neos).

Writing in 2018, Airlinegeeks noted that Sun Country couldn’t go for the new fuel-efficient aircraft like the Boeing 737 MAX (even though these save money on fuel). That is because the airline doesn’t operate a schedule as rigorously as Southwest or Frontier, which would justify the investment in the aircraft.

Photo: natmac stock/Shutterstock.

In 2024, Sun Country and Amazon signed an Amended and Restated Air Transport Services Agreement. This extended the contract to 2030 (with the option to extend until 2037) and increased the number of aircraft Sun Country will fly for Amazon. The deal will see the number of Sun Country Boeing 737-800 increased from 12 to 20. These are expected to be operational by the third quarter of 2024.