Vehicles

Big Bus Econ 101: How To Make It Work

Posted on August 5, 2010 by - Also by this author

CHARLOTTE, N.C. - As the chauffeured transportation industry tipped into a full-blown recession in May 2008, North Carolina operator H.A. Thompson got ahead of the down curve.

Thompson, a limousine operator who started Rose Chauffeured Transportation in his backyard in 1985, bought his first used motorcoach well before LCT relaunched as Limousine Charter & Tour Magazine in February 2009.

Thompson, 76, foresaw how economies of scale and efficiency would become the driving factors in recession-era transportation and beyond. Two years later, Thompson has built up a growing division: a fleet of nine used Van Hool 57- and 49-passenger motorcoaches. Thompson predicts the buses will become Rose's most profitable vehicles after the start-up years.

Thompson recently shared some detailed figures with LCT Magazine, a rarity among private companies and operators. The numbers result from Thompson's successful formula: Buy used, upgrade to the max, and deliver quality chauffeur-style luxury service.

As a strong proponent of operating each vehicle as its own revenue and profit unit, Thompson makes sure a vehicle can at least pay for itself. If it's not making money, better to cut it from the fleet, he says. That's why he now has only one stretch limousine out of a fleet of 33 vehicles.

"Motorcoaches for us in Charlotte are a much better return than stretch limos," Thompson says. "The coach market in Charlotte softened and we moved in at the right time."

Motorcoach economics

Rose considers $16,000 a month a satisfactory revenue stream per bus, but shoots for a goal of $20,000 per month per bus. That translates into about 20 days on the road per month, with the average trip running about $800 to $1,000.

Thompson concedes 2009 was a bad year, as it was the trough of the industry downturn. Nevertheless, Rose averaged $12,000 per month in 2009 on its motorcoaches, although it was below its goal of $15,000 per month. In 2010, business has definitely picked up.

"You have to have good cash flow," Thompson says. "You can't jump into the bus business unless you have healthy revenue behind you. You can't run on a low checking account and have buses." 

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