Dirty Little Air War

Bully! Crybaby! Northwest and Sun Country brawl for control of the sandbox--and billions in local air-travel revenues

Not so, counters Northwest spokesman Jon Austin: In fact, it's Sun Country that needs to quit whining and take its lumps in the marketplace. "Sun Country has been spreading false information, and [the current] allegations sound like more of the same," says Austin. "Sun Country would like to construct a conspiracy that's all aimed at them. And I think they have burned through their credibility.

"Sun Country would very much like to cast itself as a little guy put upon by a giant conspiracy," he adds. "They ought to just put their product out and let folks decide whether they want to patronize them."

 

Brian Stauffer

A few months ago, a number of Sun Country executives needed to get together for a presentation. The company didn't have a meeting room large enough, so the big fish all trooped out to the hangar and mounted a precarious set of rolling stairs to one of the airline's four DC-10s, where the display proceeded while a staffer walked the aisles handing out sandwiches.

When Sun Country began flying in 1983, it couldn't have spared an aircraft to serve as a conference center--nor would its staff have needed one. The airline had one plane and all of thirty employees.

Among them was a pilot named James Olsen. He'd grown up in south Minneapolis near the airport, close enough to watch the planes take off, back when their tails said Northwest Orient. As a child he dreamed of flying for the airline. Instead he ended up with Braniff, a carrier that went belly-up in the early Eighties. Left jobless by the bankruptcy, Olsen approached some fellow budget-airline veterans who had opened a travel agency in Minnetonka. The agency, Main Line Travel (now known as MLT), specialized in the so-called gray market, buying seats from airlines and reselling them cheap.

A deal was struck: MLT would figure out where budget vacationers wanted to go, and a new airline owned by Olsen and other Braniff alums would fly there. For a while that meant going places where Northwest didn't have much of a presence, like Las Vegas. "Our first flight was January 20, 1983," Olsen recalls. "Six weeks later we were profitable. The first year we made $400,000 with one little plane."

In 1985 Northwest offered to buy MLT and Sun Country for $30 million--$5 million for the airline and $25 million for MLT. The agency's founders accepted the offer and sold MLT. The Sun Country folks resisted.

"We thought Northwest just wanted to put Sun Country out of business," says Olsen. "All of the ex-Braniff people didn't want to sell, because we thought we were getting ripped off." When Northwest sweetened the pot, many of the stockholders changed their minds. Olsen and another stockholder went to court to stop the sale. The case was on appeal when investor John Barry came along in November 1988 and offered to buy Sun Country. "He said he wanted to keep the airline private," Olsen remembers. "And so we sold to him at four times the amount Northwest had offered."

At that point 90 percent of Sun Country's business came from MLT. After the sale, the airline also struck deals with Chicago-based Fun Jet Vacations and other charter companies. The strategy paid off for a time: In 1994 Sun Country had pretax profits of $15 million.

But, Olsen says, it soon became clear that the carrier couldn't survive on leisure travel and package vacations alone--not at a time when the major airlines were muscling in on that business. In 1996 he started pushing the idea of inaugurating scheduled air service: He was convinced there was room in the market--especially in the two hubs Sun Country shared with Northwest, the Twin Cities and Detroit. The company was already flying to some popular Northwest destinations: Planes ferrying crews to Fun Jet's hub in Chicago had begun carrying passengers, and the low-cost tickets sold like hotcakes. "Northwest was going crazy," Olsen grins. "Little by little we found new ways to sneak in flights."

Still, he adds, Barry wasn't thrilled with the idea of spending his own money to turn Sun Country into a scheduled carrier. The airline began to languish, in part because Northwest's MLT was selling more and more tickets on charter carrier Champion Air, of which it is part owner.

Enter the La Macchias, a Milwaukee family with deep pockets and a successful charter wholesale company, called Mark Travel Corp., that specialized in flying people cheaply to Las Vegas, Mexico, Florida, and other sunny climes. In April 1997 Bill La Macchia Sr. paid a reported $41 million to buy a 75 percent stake in Sun Country from John Barry. La Macchia's 31-year-old son took over as CEO.

A former vice president of Mirage Resorts (he'd started out as a desk clerk at the Golden Nugget), Bill Jr. had learned his trade from people who understood that a 6,000-watt chandelier in the lobby makes a difference. But he quickly discovered that he was running an airline as frayed around the edges as downtown Las Vegas. Problems ranged from the picayune--the no-knee-room cabins, the overhead bins that wouldn't close, the 1970s-appliance color schemes--to the overwhelming, such as how to restore the business to profitability.

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