Sun Country Knows It’s Not a Tech Company

The ultra-low-cost carrier hasn't had a mobile app in years. Also in today’s issue: Delta and United renew their fierce rivalry, and Singapore Airlines posts a record profit.

Dear readers,

Already in 2023, I have interviewed three airline executives who evangelized about how super apps could save the airline industry. Luminaries David Neeleman and Tony Fernandes told me they dream of apps that can offer anything in travel, and perhaps beyond, to the most loyal customers. Meanwhile, the chief commercial officer of Bonza, an Australian low-cost startup that sells tickets only on its app and has no website, teased us with promises of mobile-only revenue opportunities, like flash onboard discounts for booze available only through the app.

I wish this trio well, because if there's anything this industry needs, it is more profit-generating ideas that go beyond the nuts and bolts of transporting people from A to B or squeezing credit card companies for the last dollar. This visionary stuff is impressive, and surely the industry would be more boring if not for Fernandes and Neeleman. But I still found it refreshing when I interviewed Sun Country CMO Brian Davis this week to learn about the airline’s forthcoming new app and discovered that it will be — as shocking as this sounds — just an app.

That didn’t make Davis any less excited, however, and Sun Country treated this app announcement at the Aviation Festival in Miami as a big deal. The airline hasn’t had a mobile app since just after Apollo Global Management bought it in 2017, and Davis used our chat to let industry insiders know Sun Country is finally rejoining the 21st century.

How did it get to this point?

It goes back to 2017, when the airline was a mess and just about everything tech-related needed an update. Sun Country’s new owners prioritized other technology and killed its clunky mobile app. Even after the 2021 IPO, management invested in other ideas. Passengers have noticed it — one of the biggest questions they ask on post-travel surveys is "why don't you have an app?" — but Davis said Sun Country saw no evidence of revenue leakage.

"When we dig deeper and say, what would you want to do with that app, it's always things that we can do through the current web browser," Davis told me.

No one dreams of a Sun Country 737. Photo: Sun Country.

I like to play to an audience, so I tried to give Davis his Fernandes or Neeleman moment — a chance to think big and promise some app feature that would change the industry forever. Surely, I said, Sun Country will have at least one innovative feature that will boost ancillary revenue, like an in-app auction for seat upgrades, or wow passengers, like United's in-app flight simulator.

Davis sighed. "No," he said.

"We are very honest about our place in the customer's life,” he added. “Nobody comes to our website and buys a ticket because they're just at home daydreaming about the chance to fly on a Sun Country 737. It never happens. What happens is that they are sitting at home daydreaming about the chance to be at the beach, to reconnect with Grandma, to party in Las Vegas with their friends. We are realistic about our place in the journey. With these types of tools, we are not trying to wow the customer with the cutting-edge greatest thing."

As an airline business reporter — and not a tech columnist — I like Sun Country’s approach. Other airlines may call themselves tech companies that merely fly airplanes, but I have yet to see one deliver. Sun Country was the most profitable U.S. airline in the first quarter because it understands its niche is taking frugal Minnesotans on vacation. Understandably, it prioritizes cost control over all else, and until recently, it had other things on which to spend money.

But I have a question for all of you. Do you think Sun Country is missing out on revenue opportunities by not building a world-class app? Is merely having one enough?

Delta claps back at United over Tokyo

Who doesn’t like a nasty spat between two major global airlines conducted through regulatory documents?

I’m talking about Delta and United sparring in a new filing over rights at Tokyo Haneda. As you may recall, Delta wants to temporarily, for three years, be able to fly to Tokyo Haneda from any U.S. airport. Normally, that’s no problem, but Haneda is a throwback, as the Department of Transportation chooses which airlines can fly and from what airports. Switching is not permitted, unless Delta gets its carveout.

There’s often some flair in these documents. The lawyers involved seem to enjoy showing off their writing chops, as Delta’s attorneys did this week in a new reply to United, with sentences like, “United now flips where it previously flopped.” How clever!

Photo: Delta Air Lines.

Wednesday’s Delta filing was the airline’s second in this matter, a response to United’s objection to its initial request. In this one, Delta noted that American and Hawaiian also want the right to change gateways, and said United is unfairly standing in the way.

Delta asked whether United likes the status quo because it and joint venture partner ANA control almost half the traffic between Tokyo and the United States.

“United’s objection … reveals its protectionist posture and fear of competition,” lawyers for Delta wrote. "Instead of acknowledging the clear pro-consumer and pro-competitive benefits of affording U.S. carriers limited flexibility to serve a still-recovering and volatile market, as American and Hawaiian have done, United pledges allegiance to 'long-standing procedure and precedent' as a pretext to avoid competition and to make its joint venture with ANA – currently the largest U.S.-Haneda franchise – even larger. United’s thinking is outdated."

There are more zingers in this Delta filing, and you can read the whole thing if you want. But I’m less interested in every rejoinder, or even which airline wins, and more captivated by what this says about U.S. airline competition. For the foreseeable future, I suspect we will see more spats between United and Delta, the only two U.S. airlines fighting over the premium market segment. Delta is the firm leader, but United wants in.

It’s an interesting change. Not long ago, American and United led this premium segment, fighting over customers, corporate business and domination in Chicago. Now, American has let go much of its sales staff and shrunk its Chicago operation, while it focuses on the Sunbelt. Meanwhile, United and Delta spend considerable resources fighting each other. This may not be the last time the two airlines make their disagreements public.

Singapore Airlines posts record annual profit

My email inbox is filled with the news of airlines bragging about record revenue. But with costs creeping higher, I don’t see many references to record profit.

Singapore Airlines Group is the exception. This week, it reported a profit of about $1.6 billion U.S. in the fiscal year that ended on March 31, marking the highest profit in its 76-year history. This happened even though its capacity had only recovered to 79 percent of 2019 levels by March.

¹

Singapore is a well run company, but it's hard to know what to make of these results. It’s possible the airline has turned a corner because of structural changes both in Southeast Asia and in the airline industry. First, Singapore is booming as a business and destination, possibly supplanting Hong Kong as the banking ex-pat capital of Asia. Second, Southeast Asia tourism demand is booming at the same time Hong Kong’s airport is struggling to reassert itself as a massive connecting hub. And third, Singapore Airlines increasingly is a bigger player in the United States, thanks to new long-range airplanes. Singapore now flies to Los Angeles, San Francisco, Seattle and New York, not only flying nonstop customers but also taking people across Southeast Asia, including plenty of ex-Cathay Pacific passengers.

It is also possible to argue Singapore is merely the beneficiary of a major imbalance of supply and demand. As the company's earnings release stated, overall international capacity in the Asia Pacific region was only 58 percent recovered by March. If Singapore’s capacity was 79 percent recovered and industry was only 58 percent recovered, how could the airline not make outsized profits?

Other airlines are being lifted by the same trends. As my former Skift Airline Weekly colleague Jay Shabat

²

calculated last week, two of the world's three most profitable airlines in the first quarter were in Thailand — Thai Airways with a 31.4 percent operating margin, and Bangkok Airways with a 22.2 percent margin. Good for Thai, but I don’t think anyone considers Thai a world-class airline — it just flew to the right places at the right time. All that revenge travel.

I suspect Singapore is different, that its profit is real, and that the airline will continue to leverage new strengths. Do you agree?

That’s it for today. Have questions or comments? Want a discounted group subscription? Email me at brian@theairlineobserver.com

1. Singapore did take a $557 million U.S. hedging gain, which considerably helped the results. Singapore is still big on hedging, despite taking a massive loss in 2020 because of the practice.

2. Jay is an extremely sharp airline mind who would be better known if he posted more on social media. I highly recommend you connect with him and read everything he writes.