Operations

LCT Show: Big Operators' Issues

Posted on March 2, 2003 by LCT Staff - Also by this author - About the author

By Eric Lassiter

LAS VEGAS – Let’s say you’re fed up with not being paid in a timely fashion – or at all – by a large network that has sent some business your way. What’s the solution? It’s simple: don’t accept any referrals the next time that network comes knocking on your door.

That’s the blunt advice that came out of a workshop session at the LCT Show featuring top executives from five of the nation’s largest limousine companies.

Responding to a question from an audience member about the pay policies of the national networks, David Seelinger, president/CEO of Empire International, told small operators in the audience that,“you have the power to say no,” to reject any referrals from a national network that may be slow in paying.

The discussion on pay policies, coming in the final minutes of a one-hour panel discussion, was brief. Vince Wolfington, chairman/CEO of Carey International, added that the issue of slow payments could, at times, be a complicated one for large networks and local operators.

“The reality is that big [limousine networks] sometime get into situations [where they can’t pay as promptly as they might like], sometime customers get into similar situations,” Wolfington said.

Other issues discussed during the session included:
* Insurance: Coverage remains “very difficult to secure and it continues to get worse” for the large operators, Seelinger said.

Wolfington noted that the insurance industry tends to put limousines, which largely have an enviably safety record, and taxis, which do not, into the same risk assessment category. This drives up limousine operators’ costs.

He added that monitoring drivers’ qualifications and keeping good car maintenance and driver safety- training records might help lower insurance costs.

Asked if they believed if an industry-wide self-insurance program developed by the National Limousine Association might help, several panelists said any such program probably was not realistic in light of the wide differences among operators’ fleets and safety records.

Instead, noted Carey’s Wolfington, “The onus is on us to better educate the insurance companies” that limousine operators deserve lower rates. He suggested that the National Limousine Association might help by providing positive discussion points that operators could use when they individually meet with insurance underwriters.

* Corporate RFPs: Corporate clients dramatically changed the shape of the travel agency industry in the 1980s and 1990s by bringing in purchasing officials to negotiate tightfisted national contracts. These purchasing officials are now turning their eyes to the limousine industry and are asking large operators to bid on complex and demanding Requests for Proposals.

These RFPs typically seek significant pricing discounts from operators and rarely take such intangibles as quality service into account, operators said.

“We are now on [purchasing officials’] radar screens,” said Wolfington. “Many of these corporations are very price oriented and they position us against each other.”

“We are our own worst enemy; we battle each other over price every day,” agreed moderator Scott Solombrino, president/CEO of Dav El Chauffeured Transportation. He gained a round of applause from the audience when he urged the panelists to take a unified approach and to “stand strong” against corporate clients’ price-cutting tactics.

“We need to stop this back-stabbing and control our own fate,” he said.

* The future of SUVs: Panelists agreed that SUVs were becoming an increasingly sizeable part of their fleets, based on clients’ growing preferences for these vehicles.

A heightened focus on safety and security among corporate clients is making them a more-popular option,” Wolfington noted. Added Charlie Horky, owner of CLS Transportation: “SUVs are here to stay. They are a lot like the Town Car, which crept in during the 1980s.”

* Drug testing: Panelists agreed that large operators are taking an increasingly aggressive stance on testing chauffeurs for drug use.

Cheryl Berkman, executive vice president/CEO of Music Express, said her company conducts drug tests before chauffeurs are hired, randomly during their employment and immediately following any accidents.

“It’s important that the entire industry be very pro-active on this issue,” Horky added.

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