Sun Country Airlines CEO Jude Bricker discusses the Minneapolis-based carrier's hybrid model integrating passenger, charter and cargo operations.
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Transcript
Aaron Karp: Hello, everyone. And thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm ATW and Routes Senior Editor Aaron Karp. Welcome aboard. And my guest today is Jude Bricker, the CEO of Sun Country Airlines. Sun Country is based in Minnesota and was founded in 1982 by a small group of former Braniff Airline pilots and flight attendants. It is a new breed of hybrid low-cost airline, really one of a kind, whose mission is to connect guests to their favorite people and places.
Sun Country operates over 120 routes and serves nearly 100 airports across the US, Canada, Mexico, Central America, and the Caribbean. It maximizes his aircraft and resources by operating scheduled service, charter, and cargo businesses. Jude Bricker joined Sun Country in 2017 and has led the transformation into a unique low-cost carrier with a diverse business strategy. Jude, welcome. And I'm looking forward to hearing directly from you about Sun Country.
Jude Bricker: Hey, Aaron. Good to chat with you again.
Aaron Karp: Thank you for being here. But first, a big congratulations are in order for Sun Country, as they have been named the 2025 ATW Market Leader Award recipient. This recognizes an airline that truly sets itself apart from its peers within its markets. Sun Country most definitely does that, and as the ATW editors concluded. Congratulations for winning this award. So, why don't we start out about what attracted you to Sun Country in the first place? How did you get there and what were your thoughts when you first arrived?
Jude Bricker: Well, it's potential. I mean, I think the airline had a great operation, a great brand here in the Twin Cities. And all that I've done here since then has really kept those key capabilities intact. And so, it was a transformational couple years for us. But the people that were here and the talents that already existed at Sun Country, were invaluable in keeping Sun Country relevant in the community and making it what it is today. So, there was a couple of things that I felt like we could enact pretty quickly and would have a material impact on the success of the airline. In 2017, Sun Country was the worst performing airline based on pre-tax margin of all the 11 at that time, public carriers. I'm counting Frontier and that, which went public later.
And what happened? So, I said, look, we can lower costs, we can densify the airplanes. We can put an ancillary model in place. We can schedule around leisure, customers, and we can own our assets. And we did all those things. We still had a strategic problem of what to do when there was low demand periods, which are inevitable in leisure carriers. And that was solved for the most part in 2019, which was effective in 2020 when we brought on cargo. And cargo is encounter seasonal, but it's absolutely stable. And we operate the same level for cargo every day of the calendar. And that allows us to have the variability in our scheduled service, which differentiates our model from other airlines in the US.
Aaron Karp: And talk about that business strategy, because it is quite different than other carriers, in that you're operating the scheduled service, the charter service, and the cargo service all at the same time. And I think you integrate them all into one airline and a one smooth operation. And in particular, your passenger scheduled service, you really moved around flights and timings, depending on time of year and demand. Could you just talk about that business strategy, how it makes you efficient?
Jude Bricker: I think the innovation that Sun Country brings to aviation is that we look at a day of scheduling airlines independent from any other day. And we say, what's the best thing a plane can do right now, and then the second-best thing and the third? And either we run out of airplanes and are fully allocated or we run out of things to do and planes sit idle. And then we build the next day. So, every day is different from every other day. We're purely focused on matching our capacity to demand. And that's the secret sauce. What goes into being allowed to leave airplanes grounded is that you have to have other things to do. For us, that's our charter and cargo business. It also just generally having really low fixed costs, sitting here in a hangar that we converted into our headquarters, that we had already occupied when I got here.
We own all our own aircrafts, so we can consume the maintenance when we choose it to be worth consuming. We have just a particular focus. All airlines are cost conscious, but we're particularly focused on fixed costs and trying to reduce those. So, we carry very little debt. We think about that in the way we run the business. We're trying to be really efficient here at headquarters. And the goal is to allow that flexibility where we don't have to fly airlines. The vision, which is unattainable, is that scheduled service can be zero or 100% and anywhere in between. And in all those circumstances, be it COVID or post-COVID, where we saw this massive increase in demand, we can be successful in all those environments. And mostly, that's panned out.
We had the best margins in the industry in '20, and then '22 and '23, so 2021 and '23. Last year, we were second to Delta. So, things are very good. And we continue to have more and more opportunities. I think going forward, this capability, being the most differentiated and relevant, I think can be imported or applied to any major market as a source of traffic in the US, that has these really high variances between peak and off-peak. And so, the addressable market is really, really wide for Sun Country.
Aaron Karp: And how do you determine how to move the aircraft around and how to switch your schedule to meet the demand of the moment?
Jude Bricker: Yeah. I mean, we have a lot of predictive analytics that go into where we think the demand is on any given market and in any given point in time. And then where we can't be specific on a flight, we use proxies, so later flights. If you're thinking about a morning bank, all our planes wake up in Minnesota, leave for the day. In many cases, they'll do a trip to the East Coast, come back, do a trip to the West Coast. On full days like that, or they'll go to the Caribbean and come back and that's the end of the day. A flight leaving at 8:00 has a higher revenue profile than a flight leaving at 5:30. And so, then we use proxies like that to estimate the best thing that can be accomplished at that moment in time.
Oftentimes, it just comes down... like many airlines, this time of year right now, is a really good time to be operating out of Minnesota. We need to get every bit of capacity into the network as we can. So, the puzzle becomes more this time of year, how to fit as many flights in the day as we can. In off-peak periods like May, we have surplus capacity, surplus airplanes, and we're just trying to figure out the best way to maximize their application when we have slack in the system, so we can move flights around the calendar, off day a week, and be really thoughtful about the way we build the network.
Aaron Karp: And could you talk a little bit about how you integrate the charter business into that? Because I know you're often using the same planes in the course of a few days. How does it work that you integrate the charter and scheduled passenger businesses together?
Jude Bricker: So, we're a single fleet operator. All of our airplanes are 737NGs. In fact, right at the moment, they're all 737-800s, even the cargo airplanes. And so, integration happens in many different ways. Our pilots fly all three segments of the business. So, when we think about a pairing, so a pilot leaving the base and coming back at the end of a day or several days, they can do all kinds of flying during that period of time. And we work real hard to optimize that for the pilot benefit and for our own. The second thing is the way we schedule in consideration of charter opportunities. So, think about fall football, which is reliably happening. And so, we have a lot of schools that we routinely deal with, but we may not have the schedule of their football program when we schedule the airline for scheduled service.
So, we'll schedule an airplane into Vegas, to use that example, on a Thursday. It's a really popular flight. And we'll schedule it home on a Sunday. So, there's at least 48 hours in the middle where we feel pretty confident there's going to be charter opportunities for that airplane. But when we build the schedule, we don't know what they'll be. And then we schedule in the airline. We fill those gaps as the charter demand matriculates. Another example would be we're the primary provider of Lyft for the Major League Soccer League here in the US. And so, we get their calendar. And so, we can schedule a plane in to position it for moving a team that we know there's going to be a need there. Then we move the team and then we can schedule it back. And that benefits us, because we can be really efficient with our assets. And benefits the customer, in this case MLS, because they don't have to pay to position airplanes, which is often a very costly input into any chartering of an airplane.
And then the third example is that we can even launch new markets and support. So, it's not uncommon that we'll get an ad hoc or a close-end charter that needs to go from, to use an example, New York, and we don't have a scheduled flight to put the airplane in there, but we'll schedule one anyway. And it's a very low hurdle rate to make it worth it to sell it as a live flight than as a ferry. And so, it's fully integrated into the operation with one exception, which is that we have a VIP charter. So, the airplane configuration is different from the other passenger airplanes that operates between Kona, and LAX, off FBOs, and flies you around.
Aaron Karp: And how about the Amazon business? How did that come about? How many aircraft are you operating for Amazon? What are the financial benefits?
Jude Bricker: Was bit fortuitous. I mean, I arrived here trying to solve a strategic problem of what to do with the airline during off-peak periods, because it was a limitation on how big we could make the good times by bringing on fixed assets like aircraft that hiring crews, et cetera. So, it was a strategic puzzle. And we can solve it through track programs and charter or we can solve it through other flying that's either counter seasonal or flat. So, I had been looking for a charter partner, I mean a cargo partner for a year or so. And Amazon, I knew they were growing up. They were building up their 737 operation. And I tried to sell them a 737 that we were getting rid of. And they said, "Well, oh, by the way, what's your operating results?" So, to get to what I said earlier, the airline has always been a really good operator.
And so, I showed them and they said, "Well, we really like that. We want to come out." This was Labor Day 2019. If you recall, COVID started taking hold in March of the next year. We signed a deal with them in December 2019. There was a lot of negotiation between Labor Day and then. And then the airplane started showing up April. And it effectively saved the company with its timing, because it had the snowball effect of being able to avoid any kind of material adverse change, language, and any debts that we had. It allowed us to get through COVID and still be profitable in 2020, on an EBITDAR basis in consideration of federal support, which is I think unique in the world perhaps.
And then it allowed us to go through COVID without raising any external funds. So, it was just invaluable. It was the best thing that we had going for us through COVID. And then after COVID, it started to become what we always wanted it to be, which is the stabilizing inputs into our network. And so, we operated 12 airplanes through the end of last year. Late last year, they came to us and asked us to take on eight more airplanes previously operated by Atlas. And the first of the eight of those have shown up. So, we'll finish this year with 20 total 737 passenger cargo aircraft. And they'll be fully operational by the third quarter we believe today. So, they're going through their transition process now.
The result of that for 2025, as we've talked about in the market, is that it's going to put downward pressure on our schedule service business, because the growth in airplanes is going to be faster than we can grow the pilot corps. And as a result, we're going to shrink the network until we can recover staffing levels to what is required. So, it is going to have some short-term impact on scheduled service. I think that's a positive as we sit here looking across the industry, and seeing some of the pressures that are becoming apparent because of recessionary risks and things like that. Delta reported, and they're pulling back capacity into the end of this year.
So, in contrast to that kind of pullback, we're actually growing. So, we still have the benefits of keeping our seniority in line and keeping costs in line, because of the allocation of overhead across larger and larger base. So, we have the growth cost impacts without having to go out and find new markets or expand utilization, or any of those things, that are really, really challenging in this current environment.
Aaron Karp: And how about the Amazon network? Could you talk a little bit about how the network is, where you're flying to, and how you utilize the cargo aircraft?
Jude Bricker: Yeah. I mean the cargo planes fly a repetitive schedule, which is dramatically different from how we schedule the rest of the airline. But importantly, Amazon schedules their airplanes. It's a CMI contract, so we get paid to operate them, keep them on the certificate, maintain them from the line maintenance perspective, insure them, et cetera. So, the network is largely their doing. It's public, so you can take a look. But we fly all over the country for them, and we fly in two month increments and then they rewrite the schedule. So, really, importantly for our own constituents is that we're one of the few carriers that can support that kind of variability.
We have a single crew base and a single type of aircraft, and so we have a big pilot group that can support them all over the country. And even a few international, well, San Juan, anyway. So, we fly everywhere, and we fly all across the clock, and we change it up however they'd like it to be. And we're working real hard together to try to make things more efficient, which has been good I think for both of us. We'll be a better carrier having worked with Amazon, not just financially, but also operationally.
Aaron Karp: You mentioned Delta. They have a major hub in Minneapolis where you're based.
Jude Bricker: They do.
Aaron Karp: What's the competition like? How do you view your competition with Delta?
Jude Bricker: They're about 70% of the seats in the market. They have a significant flow business. This is a base. And so, you kind of look at it, I think appropriately as point of origin passengers. So, we're competing with them for passengers out of the Twin Cities. And I think, generally, it's fair and I think they would agree that we're splitting the market between leisure customers and those that are on corporate contract or loyalty redemption customers. And so, a couple things. One is they've been really successful in Minneapolis before and after our growth profile. We obviously are super successful in the market. And the market today, which I think is an equilibrium, is that they're about 60% of those point of origin customers. We're half of the rest. So, we're 20% and then every other carrier is the rest of the service levels.
And so, we fly focusing on these leisure customers. Therefore, we fly these leisure patterns very focused on demand-driven dispatch. And so, we keep fares higher than you would get if it was a Spirit or Frontier. And I think that benefits Delta. And then Delta is a really good hub operator. And I think that attracts businesses to the Twin cities, which ultimately benefit us. So, I think there's a bit of symbiotic relationship here. We operate out of different terminals. We don't touch each other generally operationally. We work together with the airport to try to keep things running through the winters, which is important to both of us.
And when I got here, we used to have first class and I took that out. I did everything I could besides picking up the phone to say, "Hey, guys, we're going to go after a different segment of this Minneapolis demand profile, of this Minneapolis Twin city DMA. You guys shouldn't be threatened by that. And let's leave each other alone and serve this community to the best we can." So, I think it's worked out really, really well. Delta is a great, great carrier. They have a great product. And I think that makes us a better airline, because we have to fly a long way to get to the coast where most of our customers want to go. So, our average length of haul is almost 1,200 miles, in contrast to Southwest is 800, I think, and Allegiant similarly.
So, we have a much longer stage than most of the leisure carriers in the US, and so we offer a much better product. And we give away non-alcoholic beverages, on-board entertainment through Wi-Fi connectivity. We invest about 50% more in seat comfort, relative to Spirit, Frontier and Allegiant. And I think that pays off by our competitiveness with those carriers, but also as we comp ourselves to Delta, the dominant carrier in Minneapolis. And we want to be better than Delta's basic economy product. And I think we've hit the mark there as demonstrated by results.
Aaron Karp: And technology is rapidly evolving in aviation. What kind of technologies are you deploying and how are they helping the business be more efficient?
Jude Bricker: Yeah. I mean, the long-term exciting Frontier for me is AI-driven demand generation. So, this is mostly about customizing customer interaction. "Hey, Aaron, you went on this trip. We have this other destination market. I think you'd be really interesting." The level of personalization that we'll be able to deliver to the consumer is beyond anything we could do on a manual basis with agents or anything like that. I'm really excited about that. Today, though, we're predominantly focused on trying to make the operation better. This year, we have a big rollout for the way we roster crews, which is a migration from Line Bid into PBS. So, that's an algorithmic-driven rostering system that basically takes everybody's preference and then tries to satisfy as many as possible. It's vastly superior to us building lines, and then having them bid them out and trade around holidays or whatever, birthdays, anything that's specific to the pilot.
So, I'm really excited about that. We're working really hard on trying to make the customer experience operationally a lot easier and better, so we launched our app last year. And then we've been working really hard, generate more and more capabilities, to deliver more and more capabilities through the app, which I'm excited about. And so, I think we got just a lot of catching up, quite frankly, on the technology side before we get to personalization. But in the call center and then in our email system, we have some exciting launches that we're coming out with that happen to coincide with our co-brand partner changeover, which is going to happen in the third quarter as we AK'd a couple of weeks ago. We're going to a relationship with Synchrony. And so, there's going to be a lot of opportunity, I think, to change how we communicate with our customer, aligned with that loyalty shift.
Aaron Karp: Of course, a constant discussion in aviation is sustainability. And there's been some talk recently about some real challenges on that front. How do you view that and what are you doing to make sure that you can grow in a sustainable way?
Jude Bricker: So, let me answer the question as it relates specifically to carbon footprint. Sustainability can mean a lot of other things. We're a consumer of petrol. And I think my biggest obligation as we sit here today is to get the most out of every gallon of gas we consume. That means delivering the most passenger miles. So, full airplanes, dense airplanes, making sure that we're doing everything we can to mitigate fuel burn, high-speed tugs around the airport, single engine taxi, APU runs, et cetera. We need to do everything we can to try to get the most out of every drop of gas. And I think that's kind of where we're going to be for a while. I'm a believer in SAF. The issue with SAF today is that customers won't pay more for a SAF-powered aircraft. And so, SAF needs to therefore be the same price as petrol. And right now, we're not able to deliver that.
Further, I think just from my own study on the topic of SAF, I think that the infrastructure will compete with renewable diesel, which I think is three or four times the market for jet fuel. And so, my view, and we're all trying to reduce carbon footprint, it's infrastructure constraint. We should build that out and focus first on renewable diesel, until we optimize that production and then move into SAF. And there's a couple of startups that have some exciting technology around SAF. I think it's the way forward, because I just don't see hydrogen or electric powered. It's too heavy to really replace the efficiency of long-haul travel. So, as we sit here today, the most promising technology for our industry is SAF. We're capacity constrained and likely will be for the next 20 years.
Aaron Karp: Well, we're almost out of time. One final question. Just in general, when you come to work every day, what do you most like about your job?
Jude Bricker: Well, I mean, it's probably what you hear a lot. I mean, I love the people we work with. And Sun Country is special because we operate generally out of a single base. So, the people that I work with that run my company are all here with me, which is a challenge running an airline, because usually they're all over the country. And it's hard for a CEO or any leader in an airline to get out often and see their own direct reports, because they may be scattered all over the world. But here we're all right next to each other. It's a real operational feel.
Right behind me, about 300 meters, they're fixing airplanes. And over to my right, about 500 meters, we're loading airplanes with passengers and bags. And I get a lot of comfort of seeing the sausage being made, if you will. And I can be part of an integrated solution that I think is really exciting. And those people that are working on these airplanes making it happen every day are all around me. And I love that about this airline. I run a couple airlines. I've been part of a couple airlines. Run one other one. And this is definitely a unique feel here at Sun Country and the way we run our business. And I love it.
Aaron Karp: Well, that's a great place to end. Jude, thank you so much for your time. And again, congratulations on Sun Country being the recipient of the ATW Airline Market Leader Award for this year. I also want to thank our producers. And of course, always thank you to our listeners. Make sure you don't miss us each week by subscribing to Window Seat on Apple Podcasts or wherever you like to listen. This is Aaron Karp, disembarking from Window Seat.
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