Chicago Operators Feeling the Pinch, Shuttle Buses Reaping Rewards

Posted on May 28, 2008 by LCT Staff - Also by this author - About the author

CHICAGO – As fuel prices push airline fees higher and higher, travelers are being forced to cut back on spending wherever possible. So when it comes to getting to the airport, the more affordable shuttle buses are winning out over more costly limousine services. Limousine companies, which earn approximately 80% of their revenues from rides to and from the airport, have been hit especially hard.

“Some operators are saying they are 10% to 30% off from where they were last year,” according to Martin Romjue, editor of Limousine & Chauffeured Transportation magazine. For many Chicago-area limousine companies, corporate contracts have taken the biggest hit. At Chicago-based Delaware Cars and Limousine Services Inc., for instance, corporate pickups and deliveries are down approximately 25% compared to year earlier levels, according to Paul Valentino, operations manager. “Its been kind of spotty,” he said.

Valentino, who also serves as treasurer of the Illinois Limousine Association, said one reason for the drop is that businesses are not sending as many employees out on the road anymore. Instead, he said, videoconferencing is becoming increasingly more common than face-to-face meetings. “When people don’t fly, they don’t use limousines to get to the airport. It’s just a ripple effect,” said Jon Simon, legislative liaison at the ILA, and president and owner of Oak Brook-based A&O Oakbrook Limousine Ltd.

Unfortunately, Simon said, limousine companies do not have ample options to deal with the current economic environment. “They either have to increase their fares or increase their fuel surcharges,” Simon said.

Some companies have gone a step further, offering passengers the option to share a ride with another traveler in exchange for a lower fare. Industry experts call it “eco-commuting.” At O’Hare-Midway Limousine Service Inc., for example, passengers who share a ride can save “a little over half of what a private car rate would be,” according to Greg Eggan, the company’s vice president.

Eggan said O’Hare-Midway Limousine Service is also managing rising costs by phasing out older, less fuel-efficient vehicles.

While limousine services have seen their ridership fall, airport shuttle companies have been able to take advantage of travelers’ increased budget-consciousness.

“More people are sharing rides today,” said Rob Hann, director of operations at GO Airport Express, a unit of Continental Air Transport Co., Inc., which operates shuttles to both Midway and O’Hare International Airports.

At Airport Express, it costs approximately $27 for one person to travel from O’Hare to downtown Chicago. That is a fraction of the $60 to $80 that most limousine companies in the Chicago area charge for the same trip.

Last month, according to Hann, Airport Express posted its third best April on record. May, he added, is already “ahead of where you thought it would be.”

The ability to transport as many travelers as possible at a time has paid off especially well for Windy City Limousine LLC, Inc. Thanks in large part to a new emphasis on purchasing buses, business at Windy City is “screaming,” according to George Jacobs, the company’s owner and president.

“We’ve been buying buses like crazy,” said Jacobs. After buses, he added, Windy City is focusing on purchasing sport utility vehicles, then sedans, and then limousines. Earlier this month, Jacobs said Windy City booked a $300,000 contract for 50 buses and four days’ worth of work. The ability to offer customers multiple options is key at the moment, according to Jacobs.

“I think if you’re one-dimensional,” he said, “then you’re at a disadvantage because people know they can go someplace else.”

Source: Medill Reports

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