Operations

How To Upgrade Your Fleet For Better Results

Posted on December 13, 2015 by - Also by this author

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Black Tie owner-operators Bill Wheeler Sr. and Bill Jr. have found a winning fleet formula of BMW 740Li sedans, Cadillac Escalades, Mercedes-Benz Sprinters, Grech Motors cutaway buses, and Temsa mid-coach buses.
Black Tie owner-operators Bill Wheeler Sr. and Bill Jr. have found a winning fleet formula of BMW 740Li sedans, Cadillac Escalades, Mercedes-Benz Sprinters, Grech Motors cutaway buses, and Temsa mid-coach buses.
PLEASANTON, Calif. — On the surface, Black Tie Transportation seems to run its operations in ways that flout the pressures and trends of the industry marketplace.

The 96-vehicle company has moved to a more expensive high-luxury mix of vehicles, raised its rates 15%, and gets a bit choosy about its bus niche. That approach may seem atypical as transportation network companies (TNCs) like Uber gain market share, but Black Tie now reports some of its highest profits on record.

Owner-operators Bill Wheeler Sr., and his son, Bill Jr., are doubling down on core business and customer service principles to position Black Tie in the affluent, tech-driven San Francisco Bay Area that spawned TNCs. Their fleet philosophy serves as a template for operating in tougher, TNC times. “The best defense for Uber is a good offense,” Wheeler says. “You have to separate yourself out by being a premium provider.”

Bill Wheeler Jr. measures the company logo on a Temsa bus, a high-end luxury model suited to the company's corporate charter clients.
Bill Wheeler Jr. measures the company logo on a Temsa bus, a high-end luxury model suited to the company's corporate charter clients.

Finding The Right Fleet
The phase out of the Lincoln Town Car Executive L during the last four years forced Black Tie to rethink its fleet mix. Wheeler tried out all viable chauffeured sedans on the market and surveyed his clients. He said nearly every client and chauffeur was interested in talking about the options. The BMW 740 Li, which entered the limo fleet market two years ago, came out the winner when coupled with its fleet incentive and warranty programs.

“BMW made it fiscally responsible,” says Wheeler, who as of November was running 31 of the BMW sedans. Its long-wheelbase replicates the rear-seat legroom of the retired Town Car sedan. “We know now it was the right decision for our customers and company. I second guessed myself numerous times, but now just a few months in, it’s one of the best decisions I made about acquisition of equipment.”

In addition to the BMWs, Wheeler is reorienting his fleet to one premium vehicle brand for each niche: Cadillac Escalade SUVs, Mercedes-Benz Sprinter Vans, Grech Motors buses, and Temsa TS-35 40-passenger coaches. Using one make and model in each fleet category helps streamline maintenance, mechanical training, parts and supply purchasing, and chauffeur training.

“We wanted to separate ourselves from everyone else with the highest-end vehicles,” Wheeler says. “We also wanted to simplify and standardize for consistent transportation.”

But Wheeler still keeps a couple of stretch limousines for the clients who prefer the closer seating arrangements of a stretch compared to those of a limo bus.

To open up a gap with competitors and TNCs, Wheeler also looked at branding, training and compensation. “We’re now bringing the chauffeur up to the same expectations as those of the vehicle,” he says.

Black Tie Fleet Vehicle Types
BMW 740 Li sedan: 31
Lincoln Town Car sedan: 2
Lincoln MKT Town Car: 2
Krystal Town Car stretch limousine: 2
Lincoln Navigator stretch limousine: 2
Mercedes-Benz Executive Sprinter Van: 12
Mercedes-Benz Executive Limousine Van: 5
Cadillac Escalade SUV: 12
Temsa 40-passenger mid-coach: 5
Grech Motors F550 GM-33: 12
Grech Motors F550 GM-22: 8
Krystal 27-passenger limousine bus: 2
Community Bus: 1
Total: 96
As of Nov. 16, 2015

Fleet Options

The BMW sedans help promote the company since each of the 31 vehicles travel 5,000 to 8,000 miles per month on Bay Area roads. Each Black Tie fleet vehicle has a Black Tie-branded license plate holder. “No one else is running a fleet of BMWs,” Wheeler says. “Neighbors get excited because they see our clients going to the airport in a BMW 740Li.”

Wheeler has found in his 30 years as a limousine operator that clients do care what type of vehicle picks them up. “I can’t tell you why some [operators] say clients don’t care. Mine do for sure. The fact that the reception of these cars has been overwhelmingly positive means our clients do care. So we care as a company in that we want to present the best of the best.”

In fact, clients should never be left wondering what type of vehicle they will get picked up in, Wheeler says. They want to be comfortable with plenty of rear seat room in a clean car that offers a smooth ride. “Our clients are connected to each other,” Wheeler says. “They all know each other. We’ve grown business by referral, from one executive to the next.”

Bill Wheeler Jr. monitors the company's commuter bus runs in the San Francisco Bay Area on a weekday afternoon.
Bill Wheeler Jr. monitors the company's commuter bus runs in the San Francisco Bay Area on a weekday afternoon.

Pricing & Profits
To phase in his BMWs, Wheeler adopted a two-pronged strategy: 1) Biweekly and monthly e-mail blasts to his 10,000 clients promoting the BMWs; 2) Raised rates 15% across the board before deploying the BMWs.

Wheeler forgoes discounts and mark-downs on his pricing structure since he aims for service backed by the best vehicles and chauffeurs. He is still figuring out the exact profit margins of his BMWs versus previous vehicles, since this is the first calendar year with the full phase-in of the sedans. Wheeler saved on the purchase price of each BMW by buying them in bulk to qualify for maximum rebates and incentives.

Profits, however, don’t just depend on rates, payments, mileage, and overhead, but are connected to depreciation amounts and the timing of vehicle resale to capitalize on the best auction and sales opportunities. “You never want to be upside down on equipment — always even or right side up,” he says.
Wheeler adds that his previous Town Car sedans were durable, lasting 300,000 to 400,000 miles over four years.

“BMWs are not going to get the same type of mileage,” he says. “We’re on a two to three year maximum turnover. We’ll just keep a close look on it and figure out at what point it’s best financially and get out of it and replace it.”

One mitigating factor on vehicle usage may be a small decline in the number of overall vehicle trips, although the company is making more money. “Our trip count is slightly down but the profits are up,” Wheeler says. “We’ve reorganized the business and focused on meeting every need of every client and customer. We’re doing more charter rides [on buses] and doing everything we can to save clients time.”

The Wheelers’ strategy is to be a diversified chauffeured service, with specific niches they can excel in, but not have one client or revenue segment make up more than 10% of the overall stream.

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