While the numbers are hard to pin down, the reality is drivers don't make much when factoring out overhead costs.
[Note to Readers: This article is based on an educational seminar held at the 2012 International LCT Show. Lancer Insurance is an advertiser and exhibitor with LCT].
Many successful limousine companies have provided limo buses, mid-sized coaches and, in some cases, full-sized motorcoaches to their clients for many years. Since the 2007-2008 economic downturn and the economic damage to corporate and luxury transportation, many other chauffeured transportation operators are adding diverse buses to their fleets. Although that is a clear strategy for some operators, most should do some careful research and planning before making the transition.
It’s a different business
The process for expanding your business should begin with a business plan that first identifies the type of service(s) you intend to deliver: shuttle, charter, tour, line run, school, transit and/or private. The service type should be based on a careful market study and assessment of the need in your area. Once that research is done and you have chosen the services you intend to provide, then you can select vehicle type, style and model. A vehicle designed to transport 16 passengers or more, including the driver, is technically a bus. As such, there are many requirements with which you must comply, regardless of whether you are operating intrastate or interstate. Be aware, even if you will be working in-state only, there are still federal mandates with which you must comply, including the need for drivers to have appropriate class CDL licenses with the passenger endorsement and for your company to establish a substance abuse testing program that meets Federal Motor Carrier Safety Administration (FMCSA) requirements.
The second step in the process is to clearly evaluate how the vehicles will be used: either intrastate (operated in one state only) or interstate (crossing state lines or transporting customers who have moved across state lines during their travel). In most instances, opting for interstate authority will provide you with the most business flexibility, but it will require significant knowledge and compliance with state and federal regulations. This decision is perhaps the most critical because non-compliance will result in business interruption and possibly significant fines. The agency of the U.S. Department of Transportation (DOT) that oversees commercial vehicles transporting passengers (and cargo) is the Federal Motor Carrier Safety Administration. Knowledge of FMCSA and your state regulations is critical to your success. The FMCSA website www.fmcsa.dot.gov provides a lot of information, directions and suggestions about compliance with federal regulations. Also, be aware that depending on the size and type of vehicle(s), you may need to obtain and comply with Unified Carrier Registration (UCR) and fuel tax reporting (IFTA) requirements.
Although this article focuses on the federal requirements, remember to register and comply with all applicable state and local requirements for your operating area as well.
An alphabet soup
First, begin with the proper registration of your company by obtaining a federal DOT number (if you do not already have one) and then register for the proper operating authority. Both of these tasks can be completed online, but must be done in a timely manner to obtain the required authority. You also must get the proper limits of insurance for your vehicles and identify a process agent in order to comply.
Once the vehicles are properly registered and marked and you have obtained proper operating authority, you can begin running them as long as you comply with the other FMCSA regulations, including: proper licensing of your drivers; establishing complete and accurate driver qualification files; instituting a proper drug and alcohol testing program; maintaining compliance with driver hours of services (HOS) requirements and accompanying log documentation; establishing a vehicle maintenance program; and developing a driver training program.
These are the general areas of compliance, but you will have to review each area carefully and understand the list of items each requires. This can be time-consuming and expensive. Next, you can expect a new entrant’s audit/review by the DOT. All information about your company, your vehicles and safety record will be available for the public to view in the Safety Measurement System (SMS) component of the Compliance, Safety, Accountability program (CSA) website. You will have access to additional information in this system when you register and request a Personal Identification Number (PIN).
Safety Regulations Checklist for Interstate Operators
Avoiding compliance violations
There are four common compliance issues that, if violated, could result in out-of-service orders, fines or both. They include:
The most common venues in which these violations are found are during destination vehicle/driver inspections or during roadside inspections resulting from an observed driving violation such as speeding. The results of these inspections and/or violations appear in your Safety Measurement System (SMS) scores via the CSA program. As an interstate operator of larger vehicles, these violations can easily mount up and create an appearance that your entire limousine company is unsafe. Being new to this sector of the passenger transportation industry is no longer an acceptable excuse for these common compliance problems. Due to adverse publicity triggered by fatal bus crashes during the last few years, there is little likelihood of “flying under the compliance radar.”
Understanding ADA compliance
An important element now included in FMCSA audits and reviews is compliance with the American with Disabilities Act (ADA), which applies directly to the operation of buses. You must be aware of the many elements of this law and how it affects your business model.
For example, if you are operating a charter business, you will need to record every request for accessible service, from the first request to the successful completion of the service. You must provide accessible service to anyone if it is requested within 48 hours of the scheduled trip and if there are seats available on the coach. Not providing the service can result in federal audits and hefty fines.
Therefore, it is important to consider your business model and the type of vehicles you operate, especially before a vehicle purchase. It may make sense for you to buy a vehicle that is lift-equipped or, if that is not the case, carefully identify operators to farm out the business to or lease a vehicle from if you will have to transport a passenger who requires a lift. The ADA law also requires that lifts be maintained and that drivers and staff receive training in their operation and complete the mandatory recordkeeping. Consider working with a consultant who specializes in this area of the business and also take advantage of bus and motorcoach association membership programs that include training and education in this area.
ADA Bus Issues
Managing new risks
Risk management and safety programs are two elements of any operation that can add much value to your business and create strong customer loyalty. After all, regardless of the size of the vehicle, your business is all about providing customer service — delivering a safe, comfortable on-time and positive travel experience. As such, your business will grow or suffer depending on your ability to provide these expected services. Expanding too quickly without the proper preparation can result in a lower quality experience for your passengers.
It is important to be able to evaluate the risks associated with even the “easiest” bus trips. Depending on a number of factors, including time of day, day of week, weather, road construction, driver preparation, knowledge of the destination, type of vehicle, and type of passenger, just to name a few, any trip can become difficult to manage. The potential for a crash or other bad incident increases as the risks are not identified and managed. There are few ways to make up for a trip gone wrong after a crash or incident. While technology can help, it also can create a risk. The use of a cell phone, hands-free or not, can distract your drivers. A GPS that is not properly programmed for a commercial vehicle can direct a driver to a road or location that is either unsafe or a road that does not allow commercial vehicles. Before expanding your business, consider the implications of technology and how it will be used in your operation.
Finally, your drivers are your most vital resource. It is important to establish a driver training and support program for new drivers and your experienced drivers who are being asked to operate larger vehicles. Understanding that rear-end and sideswipe accidents are the most common accidents for all commercial passenger vehicles may help you as you select, train and retrain your drivers.
Expanding your limousine business to include bus operations can be an excellent market for your company’s long-term success. Research your options, evaluate the marketplace, track your budget and expenses, hire and train the best drivers, and remember that regardless of the size of your vehicles, you are in the customer service business responsible for transporting every one of your passengers safely.
Bob Crescenzo is the vice president for safety and loss control at Lancer Insurance Company in Long Beach, N.Y.
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