Sun Country saved plenty

MINNEAPOLIS (AP) -- People who flew Sun Country Airlines from Minneapolis-St. Paul International Airport saved nearly $250 million during a two-year period, according to an economist's study.

The review by Severin Borenstein of the University of California-Berkeley studied flights on 18 routes that Sun Country flew year round from the Twin Cities airport. It found passengers saved $246.8 million from mid-1999 to mid-2001.

The figure represents the difference between the cost of tickets on Sun Country, including those matched by rival carriers, and the cost of trips of comparable distance that Sun Country didn't fly.

"I think it's clear from this and a lot of evidence in the airline industry that the presence of a low-fare carrier saves consumers a lot of money," Borenstein told the Star Tribune of Minneapolis, which commissioned the study.

Mendota Heights-based Sun Country ran out of money and closed Dec. 7. The airline began as a charter carrier in the early 1980s. It switched to scheduled service in June 1999 and grew to serve more than 30 cities from the Twin Cities before its collapse.

Northwest Airlines, which operates eight of 10 flights at the Twin Cities airport and is the chief beneficiary of Sun Country's collapse, dismissed the fare study. "We feel that, since Sun Country's fares were at a level that did not allow them to continue operations and were essentially unprofitable, all comparisons are irrelevant," Northwest spokesman Kurt Ebenhoch said.

But Borenstein said, "The fact that Northwest is still in business is more a sign that they were making money on routes where it didn't face this sort of competition."

Borenstein has been a consultant to the U.S. Justice Department and U.S. Department of Transportation on airline competition issues.

His study found as fares dropped, passenger traffic rose on many routes flown by Sun Country. The savings drew customers both to Sun Country and to rival carriers like Northwest who lowered fares in response.

For instance, 52,280 passengers flew between the Twin Cities and Milwaukee in the first three months of 2001, a period when the nation was falling into recession. But in the first three months of 1999, a time of strong economic growth shortly before Sun Country started scheduled service, only 28,800 passengers flew the same route. Passenger traffic between the two cities peaked at 68,480 in third quarter 2000.

Borenstein studied fare data from the U.S. Department of Transportation, which requires scheduled carriers to report cities of origin, destination, prices and mileage on a random sample of one of every 10 passenger tickets.

Fares will rise in Sun Country's absence, said Kevin Mitchell, chairman of Detroit-based Business Travel Coalition. "They will go up to historically high levels, somewhat tempered by the current demand situation," Mitchell said. "Sooner or later, those fares will rise back up."