The quarter-over-quarter rebound extends to all sizes of coaches, an ABA report says.
In the late 1990s, coachbuilders began making limousine buses almost as fast as stretch limousines. By the mid-2000s, all major coachbuilders were producing limo buses. Eventually, operators added shuttles, mini-buses, and charter tour buses to their fleets.
I was no exception. After more than a decade of running limo buses, I decided to take the next step in my fleet line-up and buy a charter bus. More and more operators have diversified into motorcoach service in recent years. [As a contributing editor of LCT Magazine, it also helps to have firsthand experience in Limousine, Charter & Tour, our formal name since February 2009]. In April, we acquired a 55-passenger 2000 Setra S-217 motorcoach as part of a bus lease agreement with an unnamed company client.
Entering the bus business
The business path to a motorcoach in many ways resembles that of a limousine bus. My experience running a limo bus prepared me for the decision to take on a motorcoach.
In 1999, we jumped in head first into the bus market. It wasn’t very well thought out and at first caused great financial pain. The bus business can be lucrative on some days and dismal on others. A local competitor had bought the first limo bus in our area. Everyone who saw it loved it. Our clients began calling and asking if it was our vehicle or if we offered such a vehicle. I contacted the competitor to build a farm-out relationship. Because they were in a financial mess over this bus, they were eager for business regardless of where it came from and willing to work with me. This worked to my benefit. They billed me on terms of 30 days. This allowed me to farm it out to corporate accounts that had terms of 10 days to pay us.
We eventually bought the limo bus from our competitor, which went out of business.
Whether you plan to buy a limo bus, shuttle, or motorcoach, I suggest you first farm-out work to other companies in your area already operating them to make sure you will get enough business. Once we got to the point where we were farming out five to eight jobs a month during a period of six months, it became apparent we should buy our own bus.
But the operation of any bus varies a lot from that of a limousine or sedan. You must be aware of laws that apply to buses and drivers, or you will pay huge fines. Ignorance is no excuse.
One of the first things you must consider is who will drive your bus. Bus drivers must hold a commercial driver’s license with a passenger and air-brake endorsement (if equipped). In some states, the cost of a commercial driver’s license far exceeds that of a standard driver’s license. In other states, no special license is required to drive a limousine for hire, but the federal Department of Transportation regulates buses in all states. Many states also regulate buses through a state DOT agency with respect to passenger safety.
Bus drivers are required to maintain logbooks for trips that travel beyond a certain radius from your base of operations. I hired a bus driver from a charter bus company to provide knowledge and guidance in training new drivers to operate our bus. There are federal DOT laws pertaining to drug and alcohol testing and how it must be administered. Having an experienced person provide guidance can spare you huge fines levied by state and federal authorities for violations. Logbooks are examined by both state and federal DOT inspectors. By hiring experienced bus drivers, it is presumed that they know right from wrong and what needs to be done to remain legal. Don’t become a training ground for new drivers.
New or used
When you begin shopping for a bus, you may want to consider buying a used bus first. It will save you money. Buses are built for high-mileage highway driving and can roll for long intervals without much maintenance. Because the price of a bus is so high, whether you buy new or used, financing terms can be spread over a longer period of time. A 55-passenger used coach can cost up to $250,000, but the payments can be spread over a 10-year period. However, you must calculate if you may wear out the bus before the final pay off based on the distance radius within which you plan to provide service.
Going through a federal DOT inspection can be a nerve-racking and grueling experience. Steve Levin of Sterling Rose Transportation in Carlsbad, Calif., went through a difficult two-day inspection where he learned firsthand about laws that were being unintentionally broken, but fineable offenses just the same.
I learned a painful lesson when one of our limo buses was seen by a federal DOT agent crossing the California-Nevada border. Who knew they take photos as you pass a border? You do now. I was unaware that you must have federal DOT authority to be able to drive across that imaginary line. A fine of $1,600 was assessed for my ignorance. But the inspector was quite helpful in getting us properly licensed.
Levin and I learned that driver qualification files must be kept under lock and key at all times. Failure to keep them in a locked cabinet with restricted access will result in a fine. Driver qualification files must include documentation of a road test, drug and alcohol test results, previous employer verification, a copy of a medical examiner’s card, a copy of the driver’s license, and a recent copy of the driver’s motor vehicle record. Buses in California are routinely stopped by “commercial enforcement officers” who will check the mechanical condition of the bus and the logbook of your driver. Logbooks are critical in documenting “hours of service” of your driver. There are rules about how many hours your driver can be on the road in a day and how many hours he can legally be on the clock while not driving. Buses must go through an annual safety inspection each year. Meanwhile, your recordkeeping will be put through a test in what is known as a “terminal inspection.” Any violation found may result in a fine.
Unlike your $29.95 Jiffy Lube special, a routine oil change can run $150-$250. There are all types of filters to change on a bus. Diesel engines can go 6,000 to 10,000 miles between oil changes depending on idling time and driving time. If you buy a used bus, one of the first major components that may fail you is the turbocharger. Expect to pay $1,700-$2,000 for a replacement. A tire for your bus can easily cost $400-$600. This does not include the price of installation. If your bus should break down, you will need a heavy-duty wrecker, and even a short tow across town can cost $300. A tune-up can run as much as $600.
Pumping and dumping
A full-size bus generally won’t fit the pump area of your local gas station. You will need to go to a commercial truck stop for fuel. You might want to consider a commercial fueling program because you will buy a lot of fuel at one time. A full size coach can hold 250 gallons of fuel. If you’re on empty, it will cost about $1,000 to fill up. If your waste tank is full, you will probably need to find another location to dump your waste tank such as an RV facility. Some locations charge for allowing you to empty your holding tank at their facility.
Determining how to charge
Charter bus companies generally charge by the mile and limousine companies by the hour. Calculate your payment and insurance costs first. Divide that by anticipated monthly charter hours. This is the hourly rate you must charge only to cover fixed expenses. Five hours each Friday and Saturday is about 40 hours a month. If your payment and insurance are $4,300, you need to earn at least $107.50 for each hour your bus works. The rest of the expenses vary with each trip depending on driver wages and fuel expense. You also must include enough money to cover tune-ups, tire replacement, and oil changes during the year.
What Is The Break-Even Point On My Motorcoach?
Sample data in calculation
13 trips performed
78 total hours of service
1,450 miles of travel
Associated hard costs
Cost to “make ready”
13 washes/prep by detailer — $10/hour x 13 hours = $130
Driver wages (including pre/post trip) — $15/hour x 104 hours = $1,560
Fuel — 263 Gallons @ $3.80 = $999.40
Insurance (monthly premium) = $342
Monthly vehicle payment = $3,942
Associated soft costs
Oil change ($150 per 6,000 miles) — .025 per mile x 1,450 = $36.25
Tire replacement — ($450 per 100,000 miles).0045 per mile x 1,450 = $39.18**
Major tune-up — ($600 per 75,000 miles) .008 per mile x 1450 = $11.60
TOTAL BREAK-EVEN POINT = $7,060.43
Excludes employer payroll tax or workers’ comp premium
**Based on six tires
Hourly break-even point:
$7,060.43 / by 78 hours of service = rate of $90.51 per hour OR
$7,060.43 / 1,450 miles = $4.87 per mile
With 10% profit margin: $100 per hour OR $5.36 per mile
What Are the Costs of Running My Motorcoach?
Bus fuel capacity: 50 to 250 gallons
Average MPG: 4 to 9 mpg
Average fill-up cost: $185 — $925
Commercial truck stop required for large buses
Tire replacement: $400 — $600 each
Lube, oil and filter service: $150 — $250
Turbo replacement (diesel): $1,500 — $2,000
Minimum: $5 million liability required
Monthly cost: $280 — $500
National average hourly pay
School bus drivers: $10.19 — $18.32
Transit bus drivers: $9.57 — $23.09
Greyhound Bus Lines: $15 — $20.67
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