Sun Country Airlines Holdings, Inc. (SNCY): 5 FORCES Analysis [Nov-2025 Updated]

As a seasoned analyst who's seen a few airline cycles, you know that Sun Country Airlines Holdings, Inc. is walking a tightrope in late 2025, but their unique structure is defintely paying off. This hybrid carrier just logged its thirteenth consecutive profitable quarter, with Q3 revenue hitting $255.5 million, largely because the cargo operation-now fully deployed with 20 freighters for Amazon under a contract extended through 2030-and charter business together accounted for 40% of total revenue. Still, that diversification cushions a brutal reality: scheduled passenger ASMs fell 10.2%, and you've got new, higher labor costs after flight attendants and dispatchers ratified agreements earlier this year, all while the average passenger ticket price remains low at $143. To see how this balancing act holds up against the industry giants and market realities, let's break down the five core competitive forces shaping Sun Country Airlines' path forward.

Sun Country Airlines Holdings, Inc. (SNCY) - Porter's Five Forces: Bargaining power of suppliers

You're assessing the supplier side of Sun Country Airlines Holdings, Inc. (SNCY)'s business, and honestly, the leverage these key partners hold is quite significant right now. We need to look past the surface and see where the real cost pressures are coming from in late 2025.

Boeing/Airbus Duopoly Limits Aircraft Procurement Options

Sun Country Airlines' decision to maintain an all-Boeing 737 fleet is a double-edged sword. It definitely helps with crew training and spare parts commonality, keeping operational complexity low. However, it locks Sun Country Airlines into dealing with Boeing, given the Airbus duopoly in the narrowbody market. As of September 30, 2025, the total fleet stood at 45 aircraft in the passenger service fleet and 20 737 Freighters, with an additional five aircraft on lease to other carriers. Management noted in early 2025 that they have 'no current order book' and have secured aircraft streams through 2027/2028 by utilizing bought leases coming off lease between late 2025 and into early 2026, which temporarily mitigates immediate procurement power, but the long-term reliance on one major manufacturer remains a structural constraint.

Jet Fuel Price Volatility

Jet fuel is always a massive variable cost for any airline. While lower prices in Q2 2025 helped Sun Country Airlines' charter customers by reducing fuel cost reimbursements, the market remains volatile. For the third quarter of 2025, the company forecast its economic fuel cost per gallon to be $2.61. This figure shows the ongoing exposure to global energy markets, which suppliers can exploit when prices spike.

Labor Power is High

Labor power is high; you saw this play out clearly in the first quarter of 2025 with the ratification of new collective bargaining agreements. These agreements lock in higher costs for the near term. For the nearly 800 flight attendants represented by Teamsters Local 120, the deal provided an immediate 21% wage increase, with up to a 58% wage increase over the five-year term. Separately, the 32 Aircraft Flight Dispatchers, represented by TWU Local 592, ratified a contract that included a pay raise of at least 36%, with an average increase of 43%. These significant, front-loaded cost increases definitely shift bargaining power toward the labor groups.

Airport Operators Have Power

Airport operators, especially at key hubs like Minneapolis/St. Paul International Airport (MSP), exert considerable influence through landing fees and rent. In the first quarter of 2025, Sun Country Airlines reported that landing fees and airport rent increased by 14.3% year-over-year due to rate increases at those airports. Even in the second quarter of 2025, this pressure continued, with landing fees and airport rent rising 9.1%. This shows a persistent, non-negotiable cost escalation baked into the operating structure.

Maintenance, Repair, and Overhaul (MRO) Services

MRO services are specialized, and for an all-Boeing fleet, the pool of qualified providers for specific components is limited, which naturally drives up costs. While I don't have a specific MRO dollar amount for you, we can see the effect in the operating expenses. In Q1 2025, total GAAP operating expenses grew 5.5% year-over-year, and maintenance was specifically called out as one of the most significant non-fuel expenses that grew faster than the level of flying (block hours, which grew 5.8%). This suggests that component and service costs are outpacing the growth in the actual use of the assets.

Here's a quick look at the recent cost pressures from these key supplier groups:

The supplier power for Sun Country Airlines is concentrated in a few areas, making cost management defintely challenging. You see high fixed cost increases from labor and airports, and structural reliance on Boeing for aircraft.

Finance: draft 13-week cash view by Friday.

Sun Country Airlines Holdings, Inc. (SNCY) - Porter's Five Forces: Bargaining power of customers

You're analyzing Sun Country Airlines Holdings, Inc. (SNCY) and the customer side of the equation is complex because it's not one group; it's three distinct customer segments, each with different leverage points. The scheduled passenger customer, typical of the Ultra-Low-Cost Carrier (ULCC) model, is definitely highly price-sensitive. Switching between ULCCs or even to a legacy carrier for a leisure route often involves minimal friction and near-zero switching costs, meaning price is king for the base fare.

The data from the third quarter of 2025 really hammers this home. The total fare per scheduled passenger was just $143 in Q3 2025, which clearly demonstrates a low average transaction value for this segment. To be fair, that total fare is made up of a lower base price and the add-ons. Here's the quick math on that breakdown for Q3 2025:

This structure means that while the base fare is low, the ancillary revenue generation-think bags, seat selection, and other add-ons-is crucial. For Q3 2025, ancillary revenue per passenger was $65.81, which is a substantial 46% of that $143 total fare. This revenue stream offsets the low base fares, slightly reducing the customer's power over the total price they pay, even if they still have power over the initial ticket price.

Now, let's look at the other two groups where leverage shifts significantly due to contract structure. Charter customers-which include groups like military, sports teams such as Major League Soccer, and casinos like Caesars-often lock in capacity through long-term, high-volume contracts. This commitment increases their leverage over Sun Country Airlines Holdings, Inc. (SNCY) for those specific flights. As of a March 2025 update, about 74% of the charter business revenue was under long-term agreements, up from 47% in 2019. Charter revenue in Q3 2025 hit $58.7 million.

The cargo customer, Amazon Air, represents a single, powerful client relationship. This is a major source of revenue stability. Sun Country Airlines Holdings, Inc. (SNCY) has a contract extended through 2030, with options to extend further through 2037. Under this amended agreement, Sun Country Airlines Holdings, Inc. (SNCY) completed the deployment of its full fleet of 20 Boeing 737-800 cargo aircraft by the third quarter of 2025. This concentration of business gives Amazon Air significant, though contractually defined, bargaining leverage. Cargo revenue in Q3 2025 reached $44.0 million, representing a 50.9% year-over-year increase, and cargo and charter combined accounted for 40% of total revenue that quarter.

The power dynamics can be summarized by looking at the commitment levels across the business:

• Scheduled Passenger Power: High price sensitivity; low average fare of $143 (total Q3 2025).
• Charter Customer Power: Moderate to High; about 74% of revenue under long-term contracts as of 2024.
• Cargo Customer Power: High, due to single-client concentration and long-term commitment through 2030.
• Ancillary Offset: Ancillary revenue per passenger was $65.81 in Q3 2025, mitigating base fare pressure.

Sun Country Airlines Holdings, Inc. (SNCY) - Porter's Five Forces: Competitive rivalry

You're looking at a market where Sun Country Airlines Holdings, Inc. (SNCY) faces direct, often fierce, competition, especially in the leisure travel space. This rivalry is a key driver of strategy, so let's look at the hard numbers defining that pressure as of late 2025.

The competitive intensity with major network carriers like Delta Air Lines and other Ultra-Low-Cost Carriers (ULCCs) such as Frontier Airlines, Allegiant Air, and Spirit Airlines remains a constant factor in scheduled service markets. At the Minneapolis-St. Paul (MSP) hub, which is Sun Country Airlines' home turf, the landscape is shifting, defintely in their favor for the near term. Spirit Airlines is scheduled to cease flying from MSP in December, following JetBlue in October 2024 and Allegiant in August 2025. This pullback is creating what the CEO described as a "two airline market" with Delta Air Lines.

Here is a snapshot of the passenger market share at MSP based on late 2024/early 2025 data:

Sun Country Airlines' diversified model is a structural hedge against pure scheduled service rivalry. The growth in the charter and cargo segments lessens the reliance on revenue directly exposed to ULCC price wars. Consider the third quarter of 2025 revenue breakdown:

• Total Operating Revenue: $255.5 million.
• Charter Revenue: $58.7 million, a 15.6% year-over-year increase.
• Cargo Revenue: $44 million, a 50.9% increase versus Q3 2024.
• Scheduled Service TRASM (Total Revenue per Available Seat Mile): 10.6 cents.

The strategic response to market pressures is evident in capacity management. In the third quarter of 2025, Sun Country Airlines deliberately reduced capacity in its competitive scheduled service, signaling a focus on unit revenue and cargo build-out. This capacity reduction is a direct move amid rivalry.

• Scheduled Service Available Seat Miles (ASMs) decreased 10.2% in Q3 2025.
• Scheduled Service block hours decreased 10.9% in Q3 2025.
• The expectation for Q4 2025 scheduled service ASMs was a year-over-year decline of approximately 8 to 9%.
• For Q2 2025, scheduled service ASMs had already decreased by 6.2%.

The broader airline industry structure contributes to rivalry dynamics through high exit barriers. These barriers keep less profitable competitors in the market longer than they might otherwise remain. The global commercial aircraft backlog reached a historic high of more than 17,000 aircraft in 2024. This supply constraint, combined with other factors, means that keeping older, less fuel-efficient aircraft flying is common, costing the industry an estimated more than $11 billion in 2025 due to supply chain delays. Furthermore, aircraft lease rates have risen by 20-30% since 2019. In 2024, only 19 carriers ceased operations globally, indicating a relative stability or stickiness among existing players.

Sun Country Airlines Holdings, Inc. (SNCY) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for Sun Country Airlines Holdings, Inc. (SNCY) as of late 2025, and the threat of substitutes is a key area where their unique hybrid model plays a role. For the leisure routes that form the core of the scheduled passenger business, alternatives are definitely present.

Ground transportation (car, bus, train) is a viable, lower-cost substitute for short-to-medium haul leisure routes. When you look at a trip under 500 miles, the cost comparison swings based on group size and ancillary fees. For instance, domestic airfare for shorter flights can start around $150-$200 per person, including checked baggage fees, plus potential airport transport costs of $25-$50. Compare that to driving, where gas might cost approximately $0.14/mile, tolls $0.10/mile, and car depreciation another $0.10/mile for a mid-size car. For a group of three on a 500-mile trip, driving often remains more budget-friendly when you factor in splitting those per-mile costs.

All-inclusive vacation packages and cruise lines substitute for the end-to-end leisure travel experience that Sun Country Airlines Holdings, Inc. (SNCY) targets. These bundled offerings compete by offering price certainty and convenience, bundling lodging, activities, and sometimes even ground transport with the flight component, which can make the total trip cost more predictable than booking separate components.

The cargo business line (Amazon Air) faces fewer substitutes, primarily high-speed freight or dedicated logistics providers. This segment is a major differentiator for Sun Country Airlines Holdings, Inc. (SNCY). As of the third quarter of 2025, Sun Country Airlines was operating its full fleet of 20 Boeing 737-800 freighters for Amazon Air. Cargo revenue in Q3 2025 hit $44 million, marking a 50.9% year-over-year increase. Cargo and charter combined generated 40% of total revenue in that quarter, showing a strong, less-substituted revenue stream. Executives projected annual cargo revenue to double to about $215 million with the expanded fleet.

Low-cost carriers like Sun Country Airlines Holdings, Inc. (SNCY) compete directly on price, minimizing the substitution threat for the budget-conscious flyer, but the airline itself is actively shifting capacity away from this highly competitive area. In Q3 2025, scheduled passenger block-hour flying declined 11% year-over-year, a strategic move to support cargo growth. Sun Country Airlines Holdings, Inc. (SNCY) is planning to grow its passenger fleet back to 50 aircraft by 2027, suggesting a managed return to scheduled service competition.

Video conferencing and remote work are not strong substitutes for its core VFR (Visiting Friends and Relatives) and leisure travel segments. While business travel substitution is a known industry headwind, Sun Country Airlines Holdings, Inc. (SNCY)'s focus on leisure and charter keeps it somewhat insulated from the corporate travel decline. For example, Q2 2025 passenger revenue only saw a slight 1% decline despite capacity shifts.

• Sun Country Airlines operates 120 routes serving nearly 100 airports across its network as of late 2025.
• The airline plans to expand its passenger fleet from its current level to 50 aircraft by 2027.
• Q3 2025 scheduled service revenue passenger miles (RPMs) declined 9.6% year-over-year.
• The total fleet size, including freighters, reached 65 aircraft as of September 30, 2025 (45 passenger, 20 cargo).

Finance: draft 13-week cash view by Friday.

Sun Country Airlines Holdings, Inc. (SNCY) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a new airline trying to set up shop today, and the numbers show it's a steep climb. The capital required just to get off the ground is immense, even if Sun Country Airlines Holdings, Inc. has managed to keep its own outlay modest due to its unique structure.

High capital expenditure is required for aircraft acquisition, maintenance, and operational infrastructure.

A new entrant needs a fleet, and Sun Country Airlines Holdings, Inc. itself operates a fleet of 65 aircraft as of September 30, 2025 (45 passenger and 20 cargo). While Sun Country Airlines noted 'Minimal CAPEX outlay' for its 2025 cargo expansion because the aircraft were provided by Amazon, the general requirement for new carriers to acquire or lease these assets is substantial. Sun Country Airlines' strategy centers on operating mid-life Boeing 737s, but even securing those requires capital; they have five aircraft currently on lease to unaffiliated airlines, which they plan to bring into their own fleet between late 2025 and early 2026. A new competitor must secure financing for a comparable fleet size or face immediate operational limitations.

The cost of keeping those assets flying is also a factor. Sun Country Airlines reported maintenance expense increased 13.5% year-over-year in the third quarter of 2025 due to unplanned maintenance events. This illustrates the ongoing, non-negotiable operational cost structure any new entrant must absorb.

Significant regulatory hurdles exist, including FAA certification and route authority, creating a strong barrier to entry.

The regulatory gauntlet is time-consuming and complex. Any new U.S. direct air carrier must file evidence of aircraft accident liability insurance coverage meeting 14 CFR Part 205 requirements with the FAA Air Transportation Division. Furthermore, Sun Country Airlines Holdings, Inc. itself operates under specific FAA exemptions, such as Exemption No. 19483A for supplemental operations within the 48 contiguous United States and the District of Columbia. A new entrant would need to navigate securing its own FAA air carrier certificate and any necessary economic authority from the DOT for domestic and international routes, a process that requires providing suitable aircraft before certification is completed.

Sun Country Airlines' unique hybrid model is difficult to replicate quickly, especially the long-term, high-margin Amazon cargo contract.

Sun Country Airlines Holdings, Inc.'s model, which dynamically deploys resources across scheduled service, charter, and cargo, is not easily copied. The cargo segment, driven by the Amazon Air agreement, is a high-margin anchor. By the third quarter of 2025, Sun Country Airlines had deployed its full fleet of 20 freighter aircraft for Amazon. This cargo and charter combination generated 40% of total revenue in Q3 2025, with cargo revenue reaching $44 million, a 50.9% increase year-over-year. The amended Air Transport Services Agreement with Amazon extends through 2030, with options through 2037. A new entrant would need to secure a similar, high-volume, long-term contract to match this revenue stability and asset utilization profile.

Access to key airport slots, particularly at hubs like MSP where Delta dominates, is a major barrier.

Securing gate and takeoff/landing slots at congested airports presents a major hurdle. At Sun Country Airlines Holdings, Inc.'s base, Minneapolis-Saint Paul International Airport (MSP), Delta Air Lines is the dominant carrier, operating over 330 peak-day departures to 124 destinations. Delta is the only carrier at MSP offering nonstop service to Asia. The market shows a pattern of competitor exit: American Airlines is pulling out of MSP to New York in 2025, and Air Canada is ending service to Montreal in 2025. This concentration suggests slots and gate access are heavily controlled by the incumbent, making it difficult for a new airline to establish a meaningful presence.

New entrants would face immediate price wars from established ULCCs and major carriers.

The competitive landscape at MSP is characterized by incumbents aggressively defending market share, which translates to price pressure on any new entrant. When competitors temporarily drop fares to match rivals, residents often book them, but once the competition leaves, fares rise again. Sun Country Airlines Holdings, Inc. itself has seen its scheduled service ASMs decline by 6.2% year-over-year in Q2 2025 as it prioritized cargo growth. This suggests that in the scheduled passenger segment, established carriers can easily absorb short-term fare cuts to squeeze out smaller or newer competitors.

• Sun Country Airlines fleet size (Sept 30, 2025): 65 total aircraft.
• Cargo aircraft dedicated to Amazon: 20 freighters.
• Cargo revenue growth (Q3 2025 YoY): 50.9% increase.
• Delta peak-day departures at MSP: Over 330.
• Sun Country's passenger fleet target by 2027: 50 aircraft.

Finance: draft 13-week cash view by Friday.