David and Stacey Glazier's Fleet Transportation service sees opportunity in a popular ski market.
Bill Fugazy is a celebrity in the New York area much like his friends Bob Hope, George Steinbrenner, Lee Iacocca, and Mayor Ed Koch. Golf tournaments, charitable events, political functions, and other civic events continually bring Fugazy together with well-known media figures and have made this limousine and transportation executive one of New York’s best-known men about town. Fugazy is also known to the public as the operator of many of the limousines and other forms of transportation in the Tri-state area.
The sixty-one year old Fugazy built a family business, which he inherited in 1947, from a travel agency into a multi-faceted transportation company known as Fugazy International Corporation. Fugazy International employs approximately 1,000 people and has seven operating divisions. One division is Fugazy International Travel which books in excess of $100 million annually and has thirty-five agencies throughout the United States. Another division is Fugazy Travel Franchises and Joint Ventures — a network of travel agencies operating under the Fugazy name and direction.
Another of the divisions of Fugazy International is Fugazy Continental which operates a fleet of chauffeured Lincoln Continental limousines. Fugazy Continental was started in 1967 because of Fugazy’s social contact with Lee Iacocca; then a Ford Motor Company vice president, Iacocca wanted more exposure for Lincoln Continental limousines in New York and offered three free limousines if Fugazy would enter the livery business.
Without the benefit of any experience as a limousine operator, Fugazy’s service lost $3 million in the first several years but later became profitable and served as a model for Fugazy’s sedan, motor coach, rent-a-car, and air transportation services. In all, the Fugazy fleet now includes 54 limousines, 400 sedans, 85 buses, 68 commuter vans, and 8 helicopters.
The newest venture is Fugazy Express, a franchised fleet of chauffeured Chrysler sedans and mini- limousines serving the Tri-State area of New York, New Jersey, and Connecticut. Started three years ago, Fugazy Express hopes to eventually operate as many as 6,000 vehicles. The sedans are licensed to respond to radio dispatches, but are not permitted to be hailed by passengers like cabs.
Fugazy Express is conceived by Fugazy as both a business venture and a minority aid program. The company hopes to recruit a high percentage of minority drivers by offering a program to finance the $30,000 franchises at some six to seven percent lower than conventional loans. Although the company has had to become more selective in screening prospective Express drivers in order to reduce the dropout rate to its current level of about ten percent, Fugazy claims that those willing to work steadily and able to adapt to the unique driving conditions in the suburbs average $35,000 a year, plus tips.
Fugazy claims that Express is his fastest growing division and is already generating a healthy proportion of the profits of Fugazy International. A partial interest in Fugazy Express was recently purchased by New Jersey-based Metromedia Inc., a broadcasting company whose chairman, John Kluge, is among Fugazy’s close friends. Funds invested by Metromedia have allowed the company to strengthen its position in all market areas, and facilitated the recent expansion into Long Island.
Fugazy credits his civic activities with much of the success of his transportation companies. “My charitable work has been very instrumental in my meeting a lot of great people,” says Fugazy. “Most successful people want to do something for good causes.” Among the organizations and activities he supports are the New York Statue of Liberty Centennial Commission, the Westway Park Advisory Committee, the Coalition of Italo-American Associations (his family name was originally Fugazzi), the John V. Mara Memorial Fund for Cancer Research, the New York Yankee Foundation, and several charity golf tournaments.
Fugazy recently spoke with Limousine & Chauffeur about his experience as a successful livery operator in New York.
Limousine & Chauffeur: Wasn’t the limousine business an experiment for you at first?
Fugazy: We originally got into the limousine business in 1965 or 1966. Lee Iaccocca asked us to drive a Lincoln limousine which was not very widely used at that time. Cadillac and Chrysler limousines were the most common in those days. Lincoln had a deal where they would give you the car for nothing, and all you had to do was pay for the conversion. I think that our first limousine cost something like $7,000. Today that car would sell for about $35,000.
Limousine & Chauffeur: Was that a Lehmann-Petersen conversion?
Fugazy: Yes. Lehmann-Petersen was the original version of the Lincoln limousine back in the early days. It made a very fine car. I think we started with three of them, then went up to seven, and eventually had twenty to twenty-five during the first year.
Limousine & Chauffeur: Did those cars have a television or any of the things that stretch-limousines have now?
Fugazy: They had the same features as today’s limousines. We had televisions, stereos, and bars, but now there is a lot more sophistication. You know, those are still very good looking cars and they have a very comfortable ride.
Limousine & Chauffeur: Did chauffeurs dress and operate basically the same way when your company started?
Fugazy: Originally, all of our chauffeurs were employed by the company and they all dressed in suits and wore bow ties. Three or four years later, we changed to our independent franchise concept where chauffeurs work for themselves, but the bow tie is still part of our image. We think it’s a nice touch because it makes our drivers recognizable, and customers seem to like it.
Limousine & Chauffeur: How did you train your drivers when you first went into the limousine business?
Fugazy: We hired professional drivers who were familiar with the area, and then we just developed our own procedures. Now, with Fugazy Express, we run a thirty day training program for all of our drivers. In that period we test them, and we reserve the right to give them their money back if we don’t feel they will be able to operate successfully. It’s a mixture of classroom and behind-the-wheel training. They ride with experienced drivers. New York is rather complicated because there are five airports in the area, in addition to a number of heliports. You really have to know how to get around the city, and how to park, and how to pick up people, and how to work with the various port authorities. We happen to have our own counters and phones at the airports, and our procedures are a little different than some companies. All of this requires a rather extensive training time.
Limousine & Chauffeur: What expansion plans do you have for Fugazy Express and Fugazy Continental?
Fugazy: We just opened up in Long Island. We have started to franchise out there and our business plan calls for us to have 100 cars there by the end of the year. That is a vast market. We will utilize Chrysler mini- limousines, our big Lincoln stretch-limousines, and luxury vans. Fugazy Continental will operate the stretch- limousines and Fugazy Express has the other end.
Limousine & Chauffeur: Why do you continue to use the name Fugazy Continental along with Fugazy Express?
Fugazy: Because the name Fugazy Continental has so much name recognition. Fugazy Continental connotes luxury to people who have used our service and seen our television commercials with Bob Hope.
Limousine & Chauffeur: How do people become Fugazy Express franchise operators?
Fugazy: Well, they call us up, and then go to a franchise meeting where we explain the whole matter. Then they fill out an application and we check on their driving record and try to assess their character. We think it’s very important that our independent operators have the best credentials because we really have the best clientele in the area. We have to be very careful about the quality of our drivers, which is why we have a thirty-day training program where they function as a trainee. This allows us to evaluate them and gives us an opportunity to say to some people that we don’t think this program is for them. They also have an opportunity to say “I don’t think this is for me.”
We try to be very blunt and tell them they’ve got to work ten, twelve, or fourteen hours a day, so many days a week, in order to make a good livelihood. I think we give them a very truthful and forthright story about the franchises. We have limousine drivers who have made fifty, sixty, and seventy-thousand dollars for themselves, but you have got to work hard. You have got to be able to hire additional drivers to operate your cars when you’re not around, it’s a business, and we train them to operate that way.
Limousine & Chauffeur: Franchises cost $30,000?
Fugazy: Yes, that is the current price.
Limousine & Chauffeur: Does that include the vehicle?
Fugazy: No. That includes the franchising and the training, and then they lease the vehicles from us, or buy them, or buy them from anyone they want provided that they comply with the color and appointments that we require in our vehicles. Most of our drivers lease from us be cause our financing, service, and warranty programs are very attractive.
Limousine & Chauffeur: Do you have an insurance program for your drivers?
Fugazy: Our drivers are covered with one hundred million dollars of insurance which is much more than most companies.
Limousine & Chauffeur: Is that built into their franchise cost?
Fugazy: Yes. That has come about as a result of our merger with Metromedia. We previously had a ten million dollar insurance program.
Limousine & Chauffeur: How do your different transportation and travel companies complement each other?
Fugazy: We have both company- owned travel agencies and franchised travel agencies, in addition to our transportation companies, and they all work together. Our travel agents can book almost any form of air or ground transportation through one of our companies. We’ve made it very convenient for customers by starting a gold card program, through a major bank, which allows them to charge all of our services.
We have come up with a program in which customers get a rebate on ground travel when they book an airplane trip. That is going over quite well. When someone buys a $1,000 airline ticket from us, we give them $50 in ground transportation.
Limousine & Chauffeur: How will the involvement of Metromedia, Inc., affect the growth of Fugazy Express?
Fugazy: We still think that we can put as many as 6,000 cars in the tristate area. The market is there for that. That will require a lot of money when you project a cost of about $25,000 per car. This is a very capital-intensive plan. We needed Metromedia’s money to advance, but the real benefit of working with Metromedia is that they are one of the country’s leaders in cellular communication and computer technology. We are putting cellular phones into our cars, and their computer expertise has improved our reservation systems dramatically.
Metromedia’s capital and technology will help us expand to different parts of the country. We will soon be in Atlantic City, and we have plans to serve New Orleans, Philadelphia, and Los Angeles. We plan to market master franchises which will give the buyer the rights to operate Fugazy Express in a particular locale such as Los Angeles, San Francisco, or whatever. We are going to do it in an orderly fashion. You can’t capture the world in one swoop. Our name, and our credit card, and our association with Metromedia will all play major roles in developing our company.
Limousine & Chauffeur: Where will your first master franchise be?
Fugazy: We have had master franchises in Connecticut and New Jersey for years. We just did one in Brooklyn, and we are about to start them in New Haven and Atlantic City. We’re looking at New Orleans now, but I don’t know how soon we will open there.
Limousine & Chauffeur: Are your radio call vehicles in direct competition with taxicab stations in the limousine industry?
Fugazy: I don’t like organizational regulations. I think it stifles competition. But I do think that associations can do a lot of good. We have had a very helpful association in the travel business in the past. The new National Limousine Association may be able to do something about the insurance situation which is a big problem here in New York. It’s difficult for operators to get the pro per insurance and that hurts the en tire industry.
Another thing is that there are a lot of gypsy operators running around in unlicensed vehicles without proper insurance. We need to pay some attention to that situation. There are some other benefits of associations, such as providing us with a number of companies to sell our used vehicles to. We like to sell the Chrysler mini-limousines after ten to twelve months. We might also be interested in acquiring limousine companies around the United States. That might fit into our growth plans. I like to see things like the National Limousine Association come about. That’s progress.
Limousine & Chauffeur: Do you think smaller limousines like your Chryslers will become more popular in the future?
Fugazy: I think that the Chrysler mini-limo is the limo of the future. It’s Iaccocca’s baby and we’ve helped develop it. The turbocharged engine provides great power and the cars are less expensive to operate than our sedans. They also allow people to stretch out. I don’t want to criticize the opulence of a big stretch-limousine, but there are executives of corporations who would prefer a vehicle with a more conservative appearance. There are still times when people want to use a stretch-limousine, but I think the market is really headed toward smaller cars. Our Chryslers have worked very well here in New York, Connecticut, and New Jersey, and I think they will have a great impact in New Orleans or wherever else we take them.
Limousine and cab operators around the country are calling us now to buy our used equipment, and they are finding that the durability of Chrysler mini-limousines is fantastic. Our cars take a tremendous beating in New York. We have put 90,000 miles a year on some of our cars, and some of them have been used for two years. They have stood up so well for us that I think they will stand up anywhere.
Limousine & Chauffeur: In general, do you see a positive future for limousine operators?
Fugazy: I think there is a good future for companies using independent owner-operators, but you continually have to promote your service and discourage people from using their own cars. In New York, you just can’t drive your own car around — and taxis don’t offer everything that limousines do. I expect continued growth in the limousine business, and things like cellular phones will benefit the industry.
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