Sun Country takes on Northwest Airlines

Wednesday, June 2, 1999 | 11:05 a.m.

MINNEAPOLIS -- A former charter flight service is trying to take on industry heavyweight Northwest Airlines by launching daily scheduled service to 11 cities from the Twin Cities.

Sun Country Airlines is tiny compared to Eagan-based Northwest, which controls 80 percent of the seats in the Twin Cities market and operates nearly 500 flights each day from Minneapolis-St. Paul International Airport.

Sun Country has spent millions of dollars on new technology and marketing to prepare for the challenge. But some analysts remain unconvinced Sun Country can compete and believe the low fares to such destinations as Seattle, New York, Las Vegas and Los Angeles could be short-lived.

New air carriers have had trouble in the Twin Cities market.

Northwest's aggressive tactics are one reason, along with travelers' reluctance to part with the frequent flier miles and bountiful schedule offered by the big airline, analysts said.

"Sun Country just isn't allowed to make any mistakes starting out. They've got to find a very special niche and serve it extremely well," said Darryl Jenkins, a professor at George Washington University in Washington.

Northwest has long maintained that Sun Country has siphoned off price-sensitive customers with its charter flights.

"We consider them to be an even bigger competitive threat," said Northwest spokesman Jon Austin. "They've chosen to enter 10 of the largest cities we serve."

Sun Country owner Bill La Macchia Sr. said he believes in his business plan, which projects a profit for Sun Country this year. His management team, which includes company president Bill La Macchia Jr., will look at the numbers monthly, make changes as needed, and -- worst-case scenario -- find other uses for the airplanes if things don't go well here.

"Everyone's telling me that this thing is going to bleed," La Macchia Sr. said from his Milwaukee office, where he oversees Mark Travel Corp. and other business interests that helped him buy Sun Country in 1997. "These people don't know what our business plan really is. They can't see inside our peoples' heads."

Still, other airline heads, such as Roger Ferguson, president of Des Moines, Iowa-based Access Air, were skeptical. His strategy is to avoid major carriers or risk being trampled.

"I don't think Northwest believes in Nikita Khruschev's concept of peaceful coexistence," said Scott Hamilton, who watches the industry as editor of Commercial Aviation Report based in Redmond, Wash. "Northwest's more of a nuclear first strike kind of competitor."

The U.S. Justice Department sued American Airlines this month alleging American undercut discount carrier Vanguard Airlines. Northwest has been accused of the same behavior by Reno Air and Kiwi, both of which made fleeting attempts to cut into Northwest's Twin Cities market share.

But Jenkins' research suggests new airlines fail because of poor planning, bad cash flow and lousy management more often than from competition or even predatory tactics from major airlines.