Ultra-low-cost carrier Allegiant plans to acquire Sun Country Airlines in a $1.5 billion deal, pending federal approval, marking the first major U.S. airline merger of the Trump administration.
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The low-fare airline Allegiant will acquire low-fare competitor Sun Country Airlines in a merger agreement valued at $1.5 billion, the airlines announced jointly on Sunday.
The two carriers cited complementary route networks, the opportunity to expand international service, and other scheduling and frequent flier program synergies as benefits from the proposed acquisition. The airlines will operate as separate brands while the proposed acquisition is reviewed by regulators, with plans to eventually combine into a single operation under the Allegiant brand name once the transaction closes.
Both airlines operate according to what is known in the industry as an ultra-low-cost carrier (ULCC) model, meaning they keep base fares low by charging fees for seat assignments, carry-on and checked bags, and significantly restricting ticket changes and refundability.
Sun Country primarily flies Boeing 737-800 aircraft—a type not currently operated by Allegiant—from its main base at Minneapolis/St. Paul International Airport to leisure destinations in the U.S., Mexico, Central America, and the Caribbean. The airline also operates smaller bases at Milwaukee International Airport and Dallas-Ft. Worth International Airport.
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Las Vegas-based Allegiant operates a large fleet of Airbus aircraft, with Boeing 737 MAX aircraft on order, from a number of leisure travel destination bases, focusing on flying nonstop on small- and medium-sized cities where passengers would normally pay higher fares and have to change planes at big airline hubs to reach vacation destinations by air. Allegiant currently operates scheduled service only within the United States.
The acquisition is subject to approval by federal regulators including the Department of Transportation (DOT) and Department of Justice (DOJ) in what is the first proposed combination of two major US airlines in the second Trump Administration. During the Biden Administration, regulators successfully sued in federal court to prevent a planned acquisition of Spirit Airlines by JetBlue Airways, but did not make similar moves against an ultimately successful combination between Alaska Airlines and Hawaiian Airlines.
Allegiant is in the midst of an ongoing labor dispute with its pilots, which had been picketing around the country late last year. The pilots, represented by the Teamsters union, alleged Allegiants management team “continues to pour millions of dollars into failed resorts, stadium deals, and entertainment ventures,” while dragging its feet on negotiating a new pilot contract. Sun Country pilots are represented by the Airline Pilots Association (ALPA).
As part of the acquisition, unions representing workgroups at both airlines will negotiate terms, including which union will represent the combined workforce. Neither ALPA nor Teamsters had issued a statement regarding the proposed combination by late Sunday.
The merger comes at a time when the ULCC model—once the darling of Wall Street and the scourge of legacy airline competitors—has seen diminished returns. The model expanded quickly throughout the 2010s but stumbled in the inflationary post-pandemic environment as price-sensitive consumers dropped out of the air travel market, and the remaining consumers have shown significant interest in premium products such as premium seating or first class on legacy airlines.
Those airlines also fought back, offering similar stripped-down fares onboard their own flights, but with the added amenities of their more-inclusive onboard service, in-flight entertainment, global network connections, and frequent flier programs.
Combining the models of Sun Country and Allegiant could also prove to be something of a learning curve. The release detailing the merger says, “With access to Sun Country’s vast international network across Mexico, Central America, Canada, and the Caribbean, the combined airline will offer Allegiant customers access to expanded service from its small and mid-sized cities to 18 international destinations.”
This represents a departure from Allegiant’s current operational model, which transports all passengers and checked bags to their destination only on a non-stop basis—it doesn’t allow connecting flights, and if passengers happen to find one, they have to book separate tickets, transfer their own bags, and accept responsibility for missing their next flight in the event of any delays. Sun Country currently allows its customers to connect between its own flights and to partner airlines to reach their destination.
A successful acquisition would mark the end of the Sun Country brand, which launched operations from Sioux Falls to Las Vegas in 1983 with a group of employees from Braniff International, which had failed the previous year. The airline grew its business focused on leisure travel for customers escaping cold Minnesota winters, producing modest but relatively consistent profits throughout its four decades of service.