EAGAN, Minn. - Last month, Eagan-based Sun Country got a new CEO. This week in a memo to staff, all signs are pointing to Sun Country changing course.
The airline is going from a pretty cozy carrier to an ultra low-cost carrier. Good move?
"Airlines are a good way to lose money so the joke has always been an airline is an industry where you start as a billionaire and you wind up as a millionaire," said George John of the University of Minnesota Carlson School of Management.
In figures compiled by the federal government, Sun Country's costs are already well behind that of Delta or Southwest. Cutting them more will be hard, but here's how ultra low-cost carriers do it.
"So the idea is you unbundle evertything, you quote the lowest possible fare and really the blame is ours, what do we do, we look at the screen from Orbitz and our eyes immediately go to lowest quote fare," John said.
The lowest fare that very often comes back to bite you when you learn you have to pay for literally everything but sit on your bum.
"So at end of the day, the amount of money you pay is considerably more. We call that in marketing drip pricing. Drip by drip. The sad thing is we are suckers for it. You can see from data we go to the lowest fare and forget about those add-ons."
"Sun Country has got to figure out what they are, it's easy to list. They are a small airline, based in MN. Start there," John added.
Geroge thinks Sun Country could up a ticket price to gain revenue and stay away from cost cutting because cutting cost is cutting what makes them special.