Low-Cost Sun Country Revives Twin Cities Competition

<B>Low-Cost Sun Country Revives Twin Cities Competition</B>

By David Jonas

The advertised relaunch this month of Sun Country Airlines is a significant step forward for a modest low-fare carrier just two years into scheduled operations. New planes are equipped with a first-time premium class product and will provide more frequent transcontinental service to several major business destinations on both coasts. Meanwhile, new Sabre connectivity ensures that Sun Country will appear on travel agents' proverbial radar screens.

" 'Relaunch' is just a fancy name for the evolution of the airline," quipped Bill LaMacchia Jr., CEO of Minneapolis-based Sun Country Airlines.

In recognizing the need to attract business travelers in the Twin Cities and battle for visibility against dominant Northwest Airlines, Sun Country not only developed the First Row premium product, but also rebranded its business travel program and built an agency program that offers private corporate fares. Available on the Sun Country Web site for enrolled companies, I-Fare is a one-size-fits-all negotiated fare in exchange for segment volume commitments. Formerly dubbed One Fare (BTN, Oct. 2, 2000), I-Fare has become much more dynamic with the transfer to Sabre. "Before, the negotiated fare we had for a the select group of people was just matched by the other guy," LaMacchia said, referring to Northwest. "But now we can move that fare up and down."

I-Fare essentially equates to 10 percent off each bucket, based on availability. "You may find matching fares in lower buckets," said David Banmiller, an industry veteran and new Sun Country president and COO, "but 10 percent off our walk-up fare, which already is 50 percent lower than brand X, can't be matched."

The agency program, Private Fares, establishes customized negotiated fares for each agency and may include overrides. "We realize that overrides are a form of survival for some travel agencies, many of which are working closely with corporations to ensure competition," LaMacchia said. Sun Country said that more than 1,500 companies are enrolled in its business travel programs.

Intended to drive corporate business, the First Row section onboard brand new Boeing 737 aircraft actually is eight seats in two rows--a two-by-two configuration--with additional leg room and seat pitch. "We recognized we could not call it first class because it really isn't a first class," said LaMacchia. "But travelers get early boarding, more space and fares that will be half of what many airlines charge for full fare coach."

With a larger fleet, Sun Country now offers double daily service to Boston, Los Angeles, New York JFK, Seattle, San Francisco and Washington Dulles. All transcon flights connect at the carrier's hub at the new Humphrey terminal in Minneapolis. In all, Sun Country offers service to 30 destinations.

The 737s, continuing to arrive, already have improved fuel efficiency and other benefits that come with fleet commonality. Sun Country expects its first quarter number to be about break-even, a notable accomplishment as most major carriers were deep in the red.

With GDS participation a logical next step, the carrier last week transitioned to the Sabre reservations system and, according to Banmiller, is taking advantage of "all the bells and whistles," including departure control and flight operations systems, revenue management and greater pricing flexibility.

Meanwhile, Sun Country's leadership hopes to make inroads with the U.S. Department of Transportation, already well aware of anticompetitive allegations aimed at Northwest. LaMacchia, however, said DOT had fallen short of what he had hoped when it chose not to issue competition guidelines. "It was like waiting for the Sadie Hawkins dance and having a girl knock on your door just to say hello, but not ask you to the dance," he said. "But they did at least say something and make it clear that this a hot issue."

And each new Administration brings hope for carriers like Sun Country. In fact, just one month ago, Banmiller spent his first official day in his new role meeting with DOT secretary Norman Mineta. However, the carrier must rely on its own product and affordable fares to survive. Though it may selectively interline with certain carriers, it has no plans to code share or otherwise align with any other airlines.

Still, those affordable fares are what consumers and companies want, Banmiller said, citing the current success of Southwest Airlines, AirTran Airways, Frontier Airlines and JetBlue Airways. "We are a great story for the business traveler and the corporate travel manager within their organizations," he said. "We can make them heroes with their CFOs.