Industry Research

Top 50 Motorcoach Operators Make a Comeback

Posted on February 3, 2011 by LCT Staff - Also by this author

FEB/MAR 2011 LCT: The annual survey snaps a shot of the current motorcoach operator market. Almost half of operators said that business was up for them in 2010 at an average increase of 9%.

2010 proved to be a more prosperous year for the private ground transportation industry, with more business and financing opportunities available to operators. Compared to 2009, this past year was much better for Top 50 operators, according to the list compiled by LCT’s companion magazine, Metro. Nearly half — 42% — said that business was up for them this year at an average of 9%, whereas last year only 8% of motorcoach carriers surveyed had a bump in business. About 20% of operators reported that business was down, at an average of about 7%, an improvement from 2009’s two-thirds figure. Another 20% said that business had remained the same.

Many more actions to cut costs were taken this year, the survey said. These included the typical, with rate increases at 52% and fuel surcharges at 36%. Staff downsizing decreased only slightly from last year’s 30%, coming in at 26%. Operators also reported several other attempts at budget-cutting, including refurbishing older vehicles instead of buying replacements, reducing vehicle road speed, fuel hedging, enforcing idling restraints, switching to more fuel efficient motors, and downsizing fleets.

The most common ways to boost business included obtaining school and government contracts, at 46% each. One-fifth of respondents said they diversified into limousine and paratransit while 10% formed co-ops with other providers. Additional efforts cited included stepped-up sports marketing, at 10%; meeting competitors’ prices; and expanding onboard amenities.

As with last year, Dallas-based FirstGroup America held on to the number one spot among surveyed operators, and Paramus, N.J.’s Coach USA weighed in second, again, with a total of 1,717 vehicles. (At press time, Coach America, a major player that has taken the top ranking in years past, was not available for comment.)

A total of 16,532 vehicles, excluding vans (1,657), made up this year’s list. Motorcoaches totaled 41%, or 7,446, and non-motorcoach buses comprised 49%, or 9,086. The average fleet size is 150, excluding FirstGroup America, which dwarfs all other fleets in size, at 9,175 coach and non-motorcoach vehicles. The median fleet size is 72.

Forty-five carriers are looking to purchase new vehicles in 2011, reflecting a slightly better financial outlook. Nearly three-quarters of operators are planning to buy coaches with seat belts. Anticipated purchases include 257 new vehicles and 79 used vehicles, up significantly from last year.

This year’s list saw fewer ties than 2009’s, with only four versus seven, but there was one tie among five operators for 36th position. New additions to the list included Napa, Calif.-based California Wine Tours; Owosso, Mich.’s Indian Trails Inc.; and Fabulous Coach Lines of Branford, Fla.

By far, the most popular innovation shared was installing Wi-Fi on coaches, with 34% of operators saying they added the technology to some or all of their fleet vehicles. Fewer operators than last year added satellite TV, at only 10%, versus 2009’s 29%. Nearly one-fifth of operators surveyed added GPS, a slight increase from last year. Use of social media, including Facebook, Twitter and YouTube, held steady at 8%. More operators said that they are making vehicle tracking, real-time arrival-info texting programs, and online booking and seat selection available to customers than in previous years.

Pricing was the recurring top challenge: Slightly more than one-third of carriers surveyed cited issues ranging from dealing with competitors who “low-ball their rates” to increased customer sensitivity to price. Driver recruitment and training, as well as customer service, came in at a distant second, at 8%. Other concerns weighing on respondents were juggling several different services and meeting government regulations.

On the bright side, vehicle financing became much easier to obtain during 2010 for many operators who said earlier in the year that banks had tightened lending. Nearly one-half of the carriers surveyed got financing with favorable interest rates, without encountering any hurdles. Still, slightly more than one-fifth of operators reported more difficulty in getting financed than in the past.

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