The Meeting Planners podcast source for what’s new and exciting in meetings and events industry
Interview with Airline Consultant Darryl Jenkins Airline Consultant by Mike McAllen.
Mike McAllen: Hi. Thanks for tuning in to Meetings Podcast.com. This is Mike McAllen with Grass Shack Events and Media. I wanted to just tell you to stay tuned till after the music at the end of this interview because I got an e-mail afterwards someone some questions. Actually, not just someone but Mitch (Birsner) from AARP had a few questions for Darryl and I just exchanged e-mails with Darryl and I wanted to make sure that you guys heard the questions. So tune in and I hope you enjoy the interview.
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Mike McAllen: Hi, Darryl. Thanks for talking the time to be on Meetings Podcast.
Darryl Jenkins: It’s a pleasure, young man.
Mike McAllen: And I wanted to also thank Eli Gordon from G Meetings in Florida who is a past student of yours.
Darryl Jenkins: Yes.
Mike McAllen: And gave me all your contact info and he said that he also took your class during the 9/11 tragedy and he said he gave something like 200 interviews in like 2 weeks.
Darryl Jenkins: Yes. It was time that it got really out of hand. I’d rather just sit back and be a farmer at this stage but that was quite a week.
Mike McAllen: Yes, I bet. I bet. So can you tell the audience a little about yourself so they – if they’re not familiar with you and your work?
Darryl Jenkins: Well I started out as a travel agent many, many, many, many years ago. I started doing airline seriously in about the time they deregulated when I was involved in airline pricing. I’ve been an owner of a number of travel agencies so I haven’t anything with travel agencies though since 1990 something like that. I moved to D.C. in 1988 and I’ve been involved in policy and stuff like that since I was a professor at GW and Embry-Riddle and taken a couple of years off from teaching and keeping myself busy with some interesting airline projects worked down a couple of mergers this year and some other things. I lived on a farm in Northern Virginia and I’m happily married.
Mike McAllen: Nice.
Darryl Jenkins: My wife, on the other hand, is not.
Mike McAllen: I’m sure that’s not true.
Darryl Jenkins: But she says.
Mike McAllen: So I guess the one question that came up for most of the people in the meeting planners world that I talked to before I was going to talk to you, they said – they just said, “What the heck is going on?”
Darryl Jenkins: A lot’s going on. We’re getting butts creamed with the jet fuel. Jet fuel’s the biggest event financially that ever hit the airline industry. What we’ve gone through this year in the doubling of the prices on jet fuel in very short time equivalent to going through five recessions in one year. That’s the financial impact. The airlines interestingly enough are probably – I’ve seen better management in the last year than I’ve seen in the previous 30 years. They were very quick in pulling capacity actually pulled in more capacity than I thought they would which gave them more control over pricing.
Now, I know nobody who pays for airline seats once they hear that because that means fares are going up but we needed to reduce the losses in the United States probably in about 95% of our domestic growths. We we’re losing money and that’s just about every single one of them and in some of the short hall ones where we might be bringing in $15,000 worth revenue per flight. We we’re losing $30,000 so we were making enough revenue just to cover our fuel fill and nothing else. So kind of (jarkony) in times and we’ve seen some really (jarkony) in measures. It’s not been a happy time to be employed in the airline industry or to be working with it. It’s been excessively harsh.
Mike McAllen: Yes and it must be – well I know everyone’s worried and the meetings were all just because of the, you know, the budgets are not going up and …
Darryl Jenkins: No, they’re not. And everybody wants to go for meeting, a scenario where it’s a leisure destination, San Francisco or Orlando. Places like that, Las Vegas and also the ones that have been hit harder is with the in terms of pull backs, you know, with Orlando for example has had almost 20% pull back in capacity and so while you still can get into there but certainly you’re going to have to pay much higher for it than you’ve ever paid before.
Mike McAllen: Right and the choices aren’t there. The options aren’t there for …
Darryl Jenkins: A lot, lot, lot fewer. On the other hand, the hotels are starving rowing the sea especially this fall, you know. The cutbacks starting this 2 weeks after Labor Day is when the fall schedules go in. and when that happens, we’re going to see a lot of hurting at a lot of different places. It’s going to be a really kind of interesting to see how hotels react to all of these and not only hotels but restaurants and run old car companies as well so we’re going to see repercussions all through the travel industry because of these pull backs in capacity.
Mike McAllen: Yes. Do you see the airlines making profits from all this scaling back of everything or are they going to find us …
Darryl Jenkins: No, but you’re going to have the loss. I mean, it’s a perfectly good question, kid. You’re not going to see any money being made, Southwest probably will. Allegiant, bless their sweet hearts Southern Vegas is probably the only airline I know in the United States maybe WestJet in Canada, they really has a long term strategy which is viable and the Southwest has a long term strategy.
They don’t have a girl strategy so see them pulling their horns and this weld to get control over the more and more of their pricing. And so I don’t see any money being made but I see losses being minimized. The airlines have done a really good job of increasing liquidity in some very interesting ways this year. So this is why I think I’ve seen better management. They’re more focused – they’re even more focused than I think they were after 9/11, 9/11 the assumption always was that given time, traffic would come back. So we’re pretty much on the long term trend in terms of people wanting to fly and what kind of mess this all up is cost being just totally whacked out of a proportion.
Mike McAllen: Yes.
Darryl Jenkins: So in the short run certainly over the next 2 years, this is going to be very difficult. We see oil prices coming down; they’re very volatile though even in a time of a day, you know. We might see the price down a buck a day but during that (hit pipe be) up and down …
Mike McAllen: Right.
Darryl Jenkins: … over a $3 range is just more volatility than I’ve ever seen. I think there’s a little bit of speculation playing a part in this but at the same time I’m going to try to come in on line and meet me coming on line. They’re very big consumers so I assume that price of oil is going to continue to go down and it will be a – reach somewhere around $90 which will be still – you know, historically high level and then will probably keep – we’ll see some increases in the day after that. So the dollar is gaining strength against the Euro that has a very, very big part of this.
Mike McAllen: Yes.
Darryl Jenkins: Not only Chinese and Indian demand but you know, our government just can so lousy these last days, years. Well we used to have a strong dollar, now we have a weak dollar and the weak dollar has been – is a big effect around this as anything else so we pretty get reasonably even the halfway intelligent person in there, the President. I have hope. I always have hope even at this old cranky HIFO that something good is going to yet happen before I’m comfortably did.
Mike McAllen: Yes. It’s interesting time. I wonder if you know, I keep wondering are they shooting themselves and to foot the airlines but I guess they have no other choice.
Darryl Jenkins: Yes. This is just – I mean, this is the hardest operating environment I’ve ever seen in all of our planning scenarios. We’ve never you know, we never even imagined. We never imagined the 9/11 and we never managed this you know and we even had plans and placers to go for $100 a barrel of oil because you know, we’ve been hearing about that for so long but a $150 a barrel of oil, good grief. You know, so we’re just kind of – you know, when you do a scenario planning, you have – you go when you eat tacos late at night so you have nightmares then you get up and you write your nightmares down and that’s kind of your worst case scenario planning but our worst case scenario planning wasn’t even – this never been as close to – it was really awful as they can get in airline world.
Mike McAllen: Well can you tell us a little bit about the Delta and Northwest merger. They were heavily …
Darryl Jenkins: Yes just a certainly closure, you know. I was a part of that.
Mike McAllen: Yes.
Darryl Jenkins: So I have a bias but it was a well-thought out deal. Richard Anderson and Doug Steenland, when they were both at Northwest, I knew them well and worked with them in the late 1990s. I mean, they were a whole interesting group, them and Mike Levine and some of the others.
Probably the smartest bunch of boys ever put together at an airline and these guys would plan for just about everything you could imagine and they would think out these plans a year in advance down to about every detail you could imagine. Then they would execute them flawlessly, you know. I’ve noticed this with them a number of times. So you know, I started out working on a deal where I had enormous amounts of confidence in the players and, you know, that always helps. And I mean these are interesting guys. It’s not like they’re any of them are warm and fuzzy even remotely. They’re not.
There are no foreplays. You sit down with them and you get right to business and both interesting to work with both very, very tough. These are really interesting negotiations now what you get on the other end is you’re getting – the world’s probably first truly global airline which is Delta, Northwest, Air France, KLM. Now right now KLM-Air France or Air France-KLM I guess I should call it, the world’s largest airlines and has the most global destinations and probably has the best global destinations. And so you combine that with their code share with Delta Northwest and their code share, their alliance probably the best one.
The Northwest and KLM did this in the early 1990s. It’s very successful and other code shares and alliances were falling apart because they never really competed against each other. They – Northwest shut down all their sales office. In Europe, KLM shut all theirs down in the United States and they actually worked as with one airline, a virtual airline and they have years of experience and then Delta Northwest, they’ve worked together on an alliance for some years prior to this. So these boys have a lot of experience working together and they’ve you know, were all these other guys have still some bugs remaining. These guys don’t – they do not compete against each other.
It’s enormously successful and the price, you know, everybody – I know they talked about cost cutting and synergies and stuff like that which I have less faith in. I don’t know if you really get a cost benefit from these things but the revenue push will be enormous. You’ll have – you know, somebody like Exxon Mobil. You know, they have what, $500 million $600 million a year budget which would go the 15, 20 airlines before. Now, they can go to one alliance, you know.
Mike McAllen: Yes.
Darryl Jenkins: So that’s quite a price so you have global corporations but we really never had the truly global airline and that’s where I think the focus should be going forward where we always – our scale, our perception and scale is always to a minuscule we think the United States win the markets – global market and so the price for this merger is being able to bid on contracts that Delta Northwest never ever in their wildest dreams had access to before. And you know, Delta is not a bad managed company right now. Three years ago on CNN, I called them a dog with [inaudible].
And so I got on of their planes and they were smelly and their flight attendants were you know, not nice and you know, it’s back in and you know, 10 years ago Delta was my favorite airline. The travel and wear you know.
Mike McAllen: Yes.
Darryl Jenkins: I mean we all thought of that. Most of us were in the industry.
Mike McAllen: Yes.
Darryl Jenkins: Domestically, I preferred to travel on Delta and it just broke my little heart to see them become such a dog but they’ve you know, repented of their very quintessence and are acting like they showed us an airline again and I’m happy to see that. I couldn’t be more pleased.
Mike McAllen: Yes, yes. Well, thank you so much for being on the show, Darryl.
Darryl Jenkins: No, my pleasure, kid. Good luck to you, buddy.
Mike McAllen: Yes and I’d like to get you back on later on and chat about a little bit more.
Darryl Jenkins: You’ll hear more ramblings from an old man. I know I’m not supposed to use that word. Oh, crap. My 20-year old and I went on a Tropic Thunder last night. I apologize. Please cut that off.
Mike McAllen: Okay.
Darryl Jenkins: I knew I let him talk to me to go and see the show.
Mike McAllen: No, it’s good.
Darryl Jenkins: You know, it wasn’t really that awful. I laughed all the way through it and I’m thinking why am I laughing? This is sick humor. You know, but it really went …
Mike McAllen: Yes, that’s – they went for though.
Darryl Jenkins: Yes. Yes, we did. Good grief. What a joke. Let me think of another word. All right, kid. I enjoyed it. Good luck to you, buddy.
Mike McAllen: All right. Thanks so much, Darryl.
Darryl Jenkins: Bye-bye.
Mike McAllen: Bye-bye.
Female: We appreciate and thank you for listening to the Meetings Podcast. You can find Mike McAllen at d72.c4e.myftpupload.com, Jon Trask at absu.com and Tom Hillmer at creativegroupinc.com. The Meetings Podcast theme music comes from the Delgado Brothers which can be found at www.delgadobrothers.com and a special thanks goes out to riptidegraphics.com for the audio editing of this podcast.
Mike McAllen: Well I hope you enjoyed the interview with Darryl. Mitch (Birsner) from AARP had a few extra questions for Darryl and so what I did was I e-mailed them off to Darryl and Darryl was nice enough to shoot back some answers and there’s only four of them so let me just read them off.
Mitch asked, “Why is there a deficiency in customer service? Why hasn’t the industry crafted itself to provide customer service in addition to transportation service? Why doesn’t it care about its customers and for that matter, its pilots, flight attendants, maintenance crews, et cetera?”
They all came back and said, “When you said they don’t care, you make a large value judgment. My 19-year old wants a new car and I could not afford to buy it. It doesn’t mean I do not care. It just means I’m poor.” which makes a lot of sense.
The second question was, why would paying more for less? How does the industry think they can encourage customers to use their services when there are nickel and diamond is along the way? Darryl says, “We’re paying more because it cost more to transport people. It’s really that simple. I’m sure that the industry does not want more customers that they can lose money on. The idea is to fly those that can pay enough to cover costs.”
The next question is, you think the government will begin regulating the industry and Darryl said, “It’s already the most regulated industry in the world.” and actually I made a mistake, there’s only three questions. So, I hope you enjoyed the interview. Please again e-mail me or us or call and give us any ideas if you’d like to have somebody special interviewed or if you’d like to come on the show yourself. So, thank you for listening and bye-bye.
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