Operations

Getting Beyond Industry Drama And Doomsday

Posted on February 5, 2016 by - Also by this author

The way it's supposed to be, the way it will be.
The way it's supposed to be, the way it will be.
By now the initial market shock of transportation network companies (TNCs) should be wearing off and more moderate outlooks taking hold. The longer the limousine industry deals with TNCs, and adjusts to their effects, the more likely livelihoods won’t vanish nor Armageddon beckon.

I’ve read and heard the range of reactions and views on what to do about Uber, and what could happen to all of us. When media headlines elicit panic, it’s always best to check with the everyday people on the ground, or in the mix, as I like to say.

I enjoyed a recent off-the-record lunch with two very experienced small operators in Southern California. These are some of my favorite industry experiences; I get good, accurate information and am told like it is.

Tap An App?
These veteran operators defy the conventional wisdom: They don’t have an app; don’t belong to the National Limousine Association (did before, may again); don’t worry too much about Uber; and weren’t fully aware of all the ins and outs of various app contenders on the market. Yet their limousine service thrives and draws a tongue-wagging, name-drippy list of VIP celebrity clients. Revenues and demand are at or near peaks.

The operators underscored a constant of true luxury chauffeured service: Most of their clients want to deal with them directly, one-on-one, and prefer the customized, attentive, personalized approach of a traditional limousine company.

Well, imagine that. A small operation succeeds in California on what has always defined this industry. Know-your-name familiarity and friendly service apply well beyond the Cheers barstools. Such anecdotes should reassure us of how company roles evolve in a shifting market. I say roles because the competitive ground transportation sector will never be one size fits all, one winner takes all, or one way or the highway. We’ve had enough of those attitudes already.

The small company’s approach is underscored in my article this issue (p. 32) about how a large operation works with a five-star hotel. Uber cars still pull up to the front drive, which is legal. On the day I visited the hotel, an Uber Honda Accord scraped its undercarriage because the driver wasn’t familiar with the quirks of the entrance driveway. But the five-star hotel and its partnered limousine company excel based on attentive, knowledgeable, and cultured service, and house vehicles such as a Rolls-Royce. As a result, the hotel clients mostly opt for the traditional chauffeured service around town and to and from LAX.

TNC Twists
From the other side of the continuum, some operators are exasperated with the TNC “obsession” — all the plotting and worrying and badmouthing of Uber, Lyft, etc. In this month’s edition (p. 4), you can read the emailed view of a Michigan operator whose company partially does business with Uber. “Believe me, as Uber’s largest fleet partner in Michigan, we do not think they’re perfect, but what we have learned is priceless to use once we have a valid white label app of our own,” the younger operator wrote us. As I translate that comment: “Uber’s got some good and bad, but they’re here, so we’ll see what we can learn, and do it better.”

What the TNC market shake-up proves is not everyone needs the same type of app or technology. Nor does everyone serve the same combination of clients. The consumers in the always-on, wired market are not fixed in their preferences, all at once. As market choices emerge, and as TNCs show their downsides, customer mindsets will constantly adjust and evolve. The burned TNC client of today could be in your vehicle backseat tomorrow. The longtime client of forever may need some more attention, or a new incentive, or the option to use an app.

Operators in splintered, varied, unique chauffeured markets will increasingly need to find their own custom-created approaches to doing business: All app, no app, or white label app; one type of elite service or multiple tiers; work with TNCs all the time, some of the time or not at all; keep the company independent or partner, sell or acquire; use a few vehicle makes/models or go for variety; stay in sedan/SUV chauffeured service or branch into buses; find new niches or double down on the old ones. Those are many choices to work with. No one has the right answer to all options for every company in every market, worldwide.

Level Heads
My clarion call to the industry in a year full of extreme actions and comments — in the news media, on social media, and in politics: Let’s ditch the radicalism. In our industry, that would be the tendency to call an Uber Black- or a Blacklane- cooperator a traitor, the reflex that deems smaller companies inferior or irrelevant, the prediction that all companies will be bought up or consolidated, and the warning to join one app or die.

Cooler heads who know how to think through a challenge and find a local solution should prevail during volatility. Now if we could just find a moderation app for those Presidential candidates. . .

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