Long-term contracts for shuttle work offer operators some much-needed consistency and growth potential, but there are also pitfalls, notes to Kristina Bouweiri, vice president of Reston Limousine in Sterling, Va.
Reston’s 93-vehicle fleet was rated the 35th largest in the nation by LCT in 2003, and Bouweiri attributes much of her company’s success to shuttle work. More than half of Reston’s fleet is comprised of minibuses, which generally perform shuttle service between five and seven days a week for apartment complexes, government agencies, hospitals, airports and universities.
As attractive as that sounds, other operators looking to pick up similar contracts should heed Bouweiri’s warning against locking in rates that don’t offer a sufficient cushion against market fluctuations for gasoline or insurance. After 9/11, Bouweiri’s insurance skyrocketed from $9,000 to $30,000 a month, forcing her to return to the bargaining table to ask for relief.
“I told them I couldn’t pay my bills, and may not be able stay in business if they didn’t help me,” says Bouweiri, whose company serves Washington D.C., Maryland and Virginia. “Everyone understood except for the government contracts. They basically said, ‘tough luck.’”
Reston is still losing money each month on a handful of government contracts, although the company remains profitable. Bouweiri continues to purse shuttle contracts, including ones from government agencies. She is now more likely to walk away from a contract that doesn’t offer a sufficient profit margin.
Most shuttle contracts are won by the lowest bidder, typically locking in rates for a period of one and five years. Many experts say that insurance rates may begin dropping within the next year, but insurance and gasoline prices can be unpredictable.
Aggressive operators looking to get a piece of the shuttle contract pie must take all costs into consideration before placing a bid. These costs include vehicle repairs and monthly payments, gasoline, insurance and driver salaries, among other things.
Operators can cut their monthly vehicle payments nearly in half by starting with a used minibus. However, shuttle buses rack up a lot of miles, so it’s essential to find vehicles that can handle the task. Operators are urged to have any used vehicles checked thoroughly by a mechanic before buying. They should also ask the seller for detailed maintenance records.
Getting your foot in the door for shuttle contracts is no easy task, according to Bouweiri. She recommends that operators knock on doors, do internet research and place their names on special lists, so that government agencies, universities and corporations contact them when shuttle services are going out to bid.
“If you see a shuttle service in your area, don’t be afraid to call and ask them if they are happy with their current service provider,” says Bouweiri. Just make sure you don’t bite off more than you can chew, she adds.
Operators need to have backup staff and minibuses in case a driver gets sick or a vehicle requires repairs. Bouweiri recommends that small operators start with small, one-bus contracts.
Shuttle work allows operators to promote their services and prove they are reliable to a large audience, but an operator can just as quickly develop a bad reputation. To help avoid those problems, Bouweiri buys a new vehicle for every new contract.
“That way, there’s a much less of a chance that a vehicle will break down in the first year,” she says. “If one breaks down in the second year, they are already happy with you and are more likely to forgive you.”
Reston Limousine was established by Kristina’s husband, William Bouweiri in 1990, with one limousine. The company now operates a fleet of 50 buses, 30 vans, nine limousines and four sedans, and is staffed by 150 employees. The company provides corporate sedan service, sightseeing tours, out-of-town trips, and limousine service for proms, weddings, theatre events and concerts, although it’s biggest niche is shuttle work.
Reston got its first shuttle contract when a competitor’s driver walked into Mrs. Bouweiri’s office one day complaining that the bus he drove was always breaking down. He told Bouweiri that if her fleet was more reliable, she had a good chance of winning a big contract with a local apartment building. With one call to the property manager, Bouweiri got the job, forever changing the focus of her company.