ALL ABOARD: Operators Get on the Bus

LCT Staff
Posted on February 3, 2009

Buses aren’t completely recession proof, but they’re looking good. As economic challenges increase, the charter and tour business shines a bright light at the end of the transportation tunnel.

When gasoline prices skyrocketed, consumers were driven to find affordable, effective, safe, and enjoyable transportation alternatives. Annoyance with airline flights and traffic gridlock also motivated travelers to explore other options.

Bus rides appealed to them because of the lower cost per trip, and many experienced highly satisfying bus trips during weekend tours, social outings, concerts, sporting events, and business meetings. The experience was memorable enough to continue using buses even as gas prices plummeted.

This market trend has influenced the fleet buying decisions of chauffeured transportation operators. One- or two-passenger airport runs will never go away, but group trips increase each year, convincing operators to buy more motorcoaches, shuttle buses, and limousine buses.

As the recession deepens, consumers appreciate the seat value and operators are relieved to have a steady revenue stream. “Buses have the advantage of the lowest cost per seat,” says Dan Goff, general manager of A Goff, an operator based in Charlottesville, Va., with 53 buses in his 74-vehicle fleet. “It could be about $40 per person. Families and couples will choose this instead of more expensive trips. Operators don’t get rich in great times, but we don’t go broke in bad times.”

Consumers Prefer Bus Trips

MOTORCOACH TRAVEL REACHED a historically high growth level last year and is expected to continue building momentum in 2009, says Peter Pantuso, president and CEO the American Bus Association. Pantuso gave a market presentation on the subject during the Travel Industry Association’s Marketing and Outlook Forum in October. He cited the TIA study reporting that 41 million Americans chose to avoid airline flights over a recent 12-month period because of the anticipated hassles. Concern over traffic congestion, especially in the Northeast and West Coast, also inspired consumers to find transportation alternatives.

A large group of Americans took bus rides again for the first time in several years, says Eron Shosteck, ABA senior vice president of communications, marketing and media relations. “They became smitten with the amenities and conveniences of the modern coach,” Shosteck says. “Even with fuel prices dropping, they prefer it.”

Offering commuter service in response to demand for daily transportation to and from work, along with leisure charter bus trips, have become growing markets to service, according to the ABA report. Buses provide an affordable, convenient alternative to airline trips, especially to destinations 200 to 400 miles from home. International travelers are another market that favors charter and tour operators, as they visit the U.S. to take advantage of the weak dollar.

The ABA report further explains that bus trips have been embraced by a new generation of riders in their 20s who enjoy the experience and aren’t locked into driving personal vehicles. They enjoy access to WiFis, iPod hookups, fl at-screen DVDs, reclining upholstered seats, personal climate control, and other amenities. Even more enticing: Bus trips provide an environmentally friendly transportation mode by reducing collective carbon footprints — a key selling point to reach young professionals.

Intercity bus departures, or day trips, also have experienced recent growth, according to a study produced by DePaul University professor Joseph Schweiterman. Intercity trips grew nearly 10% between the fourth quarters of 2007 and 2008, the second year of growth after more than 40 years of decline. Demand for bus trips was sparked by the increasing cost of air and auto travel through much of 2008, along with revival of downtown districts in major cities, higher parking costs, and increased appreciation of bus travel by younger and pleasure-oriented travelers. Marketing day trips offers operators a different way to reposition their services, Shosteck says. “They can go on ‘daycations’ instead of ‘staycations’,” he says. “They might want to go to a Broadway matinee or a winery tour.”

Moving Over to Buses

DURING THE PAST five years, chauffeured transportation operators have substantially increased the presence of buses in their fleets. Operators have been buying motorcoaches mostly built by Motor Coach Industries (MCI), Prevost, and Van Hool, and shuttle/limousine buses produced by major limousine manufacturers. When visiting LCT event tradeshows, you’ll notice that buses now take up more floor space, and operators carefully check them out and make purchases.

California Wine Tours, based in Napa, Calif., started bringing buses into its fleet in 1995, and was one of the very first chauffeured transportation operators to do so; buses now make up 80 units in its 160 vehicle fleet. Mike Marino, president and CEO, decided to bring limousine industry practices into bus operations. One of his first management decisions was to give gratuities to drivers, which was not being done at all by traditional bus operators. He also wanted his bus drivers to look and act like chauffeurs providing a high level of service.

“The bus industry laughed me into the ground,” Marino says. “No one would pay gratuities, and thought drivers looked ridiculous in suits and ties. Ours looked like chauffeurs and were trained to be bus drivers. Resorts got wind of it, and wanted higher-end bus drivers.”

Purchasing motorcoaches

and other buses hasn’t been an easy decision for operators to make, Marino says, but once they do, the opportunities increase. “For our industry, it’s the hardest thing to swallow — buying a motorcoach for $410,000 to $420,000,” he says. “Once you throw a motorcoach into the mix, it’s like taking the next step.”

Mid-size minibuses (shuttle/limo buses) have been infiltrating the industry since they’re more affordable, Marino says. Minibuses can carry about 25 to 35 passengers, and motorcoaches about 57 to 61 passengers. The vehicles also present marketing opportunities for group transportation that were previously outside the realm of possibilities.

Marino has observed for a long time his colleagues putting off bus purchases — until very recently when they became a hotter commodity. Gary Bauer, president and CEO of Bauer’s Intelligent Transportation in San Francisco, has been friends with Marino for years, and didn’t plan on buying buses until recent years.

Now motorcoaches are prominently displayed in Bauer’s marketing materials and serve prominent corporate commute programs. “Gary Bauer thought it was crazy before,” Marino says. “Now he has several in his fleet.”

Marketing Your Buses

MARKETING BUSES IS not a complicated matter, operators say. “To build bus business, all you have to do is buy one,” says Kristina Bouweiri, CEO of Reston Limousine Service in Sterling, Va. “Once you have one, the bus is a walking billboard for your company and will drive business to you. Then you need to contact all your current customers and let them know you have a bus.”

And what about potential customers? Who do you go after for bus business? Bouweiri suggests contacting hotels, universities, hospitals, meeting planners, and travel agents to let them know you have a bus. Another smart bus marketing strategy is going after government contracts, commuter shuttle programs, day trips, and wedding packages, she says.

Reston Limousine Service has 74 buses in its 138 vehicle fleet and heavily promotes bus trips in its market. Tour bus rides has been the primary marketing focus lately. Tour buses are the least expensive way to travel and the number of trips should increase due to the high cost of air travel, Bouweiri says. “Our ‘Day Trip’ tour business is booming,” she says. We are doing day trips to New York, Charlottesville wineries, ski resorts, Charlestown races, Atlantic City, N.J., Williamsburg, Va., outlet malls, and more.”

As Bouweiri says, just having buses in your fleet provides you with opportunities you never had before. Having buses enabled A Goff to participate in the Safe Ride program, which has been implemented by Virginia universities after a fatal accident years ago brought much attention to the drunk driving problem, Goff says.

“We provide transportation three nights a week,” Goff says, ”and it gives a safe alternative to university students. The Alcohol Beverage Commission gave us an award” for providing these services, he says.

For Marino, talking to bus operators about market opportunities opened doors he hadn’t walked through before. School bus trips have been a strong source of revenue for his company. Bus operators guided him on becoming Student Pupil Activity Bus (SPAB) certified, going through California Highway Patrol inspections, and having drivers receive additional training for certification.

“We’re the largest school bus activity transportation provider in Northern California,” he says. “We’ve showed schools more cost-effective transportation than their own buses for off-site games.”

Senior retirement homes also have been an important source of customers for his company, especially for trips to offsite events at casinos and museums. Charter bus trips offer seniors an affordable transportation option.

During a recession, affordable transportation is important, but there’s still a valuable marketing opportunity in catering luxury bus service to high-end clientele. For California Wine Tours, winery trips continue to be an important service to market. “Wine country is an expensive place to visit, including the hotels,” Marino says. “Some people still enjoy themselves during tough times.”

Learning from the Bus Industry

AS LIMOUSINE OPERATORS have increased their presence in the bus market, they’ve done a lot more networking with bus industry operators and associations. They’ve needed to learn more about state and federal regulations, hiring and background checking drivers, and purchasing and financing buses.

Fleet management of buses requires learning a new set of skills beyond sedans, stretch limousines, and SUVs. Buses last a long time and maintenance is critical; it might require setting up an in-house service bay. As California Wine Tours’ Mike Marino discovered, brand new motorcoaches are not cheap to buy, but you’ll hold them in your fleet much longer. “Motorcoaches will last 10 years or more,” he says.

For limousine operators, if you started up in the 1980s, you’re essentially an industry pioneer. This is not the case for bus operators, many of whom operate multi-generational family businesses, or who started up at least 30 years ago. Limousine operators expanding their knowledge find it useful to network with bus veterans and learn the ropes.

Joining industry associations and attending meetings has been a step forward into the bus industry. The United Motorcoach Association and American Bus Association are the prominent industry organizations, along with state and regional motorcoach associations. Attending their conventions and tradeshows is an effective method for increasing skills and making purchase decisions.

UMA Motorcoach Expo, American Bus Marketplace, and BusCon are well attended annual events with a full plate of resources for bus operators. Operators must stay current on regulations, and industry associations are the best source for guidance. Commercial driver’s licenses (CDLs), DOT audits, insurance coverage, and the federal Charter Bus Rules are important topics for staying informed

LCT Staff LCT Staff
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