EmpireCLS & BostonCoach Cut Fuel Surcharges on Hybrids

LCT Staff
Posted on April 30, 2008

NEW YORK CITY — Two major chauffeured transportation companies are reducing or eliminating fuel surcharges on hybrid vehicles as an incentive to travelers. EmpireCLS Worldwide reduced the fuel surcharge amount, while BostonCoach eliminated it altogether. Executives at both companies pointed to decreased gasoline use by hybrids as a main reason for the initiative. "Even a hybrid does take fuel, it's just a smaller percentage," said Marissa Criaris, vice president of business development for EmpireCLS.

BostonCoach COO Mark Munoz added, "The operation cost of the vehicle is less to us because it's using less fuel."

However, hybrid fuel consumption is the reason Dav El Chauffeured Transportation is not reducing its fuel surcharge. "They're still running on gas at some level," said president and CEO Scott Solombrino.

Carey International still applies a fuel surcharge on its hybrid vehicles, but the company will look into reducing the amount in the future, said president and CEO Gary Kessler. "As we continue to diversify the fleet, we will look to see if there are opportunities to have a more variable approach to our fuel surcharge," he said.

EmpireCLS and BostonCoach also said they do not charge higher rates for hybrid vehicles, even though they are more costly for chauffeured companies to purchase than non-hybrids.

Dav El's Solombrino said buyer demand for hybrids has been moderate, due in part to the slumping economy. "There's definitely been a hiatus in certain segments of the economy," he said. "When they all settle down on Wall Street and get back to focusing on what they want to do socially, we can say, here's the program, here's what we do."

BostonCoach's Munoz added, "The demand coming from the clients is not what I would term as exploding. There's interest out there, but it's not a huge amount of demand."

However, David Balfour, director of ground transportation for advisory services for American Express Business Travel, said he is seeing more interest from buyers of all sizes.

Suppliers said that the smaller size of a typical hybrid vehicle, however, often doesn't match travelers' expectations of chauffeured transportation, and suppliers are looking for hybrid vehicles that better match client needs.

"Those higher-end vehicles are only now in the production plans of the manufacturers," said Neil Abrams, president of Purchase, N.Y.-based car rental consultancy Abrams Consulting Group. "It's a movement. Manufacturers have to catch up with demand and the question is, is the industry willing to pay a premium—more importantly, is the customer—for this type of service?"

BostonCoach's Munoz added, "The manufacturers are still working through what are the appropriate vehicles for our industry. There is not anything available now that meets the actual demands in terms of our clients."

BostonCoach's fleet contains approximately 2% hybrid vehicles, although the number fluctuates based on customer demand, Munoz said. "It grows, but it's growing slowly," he said.

Solombrino said a new collection of hybrid SUVs introduced by General Motors is a better fit for Dav El, which is poised to double its hybrid fleet to 10% in 12 months. "They are much more applicable to use in chauffeured car services. This is the first real step that's been taken that will have a real impact on the chauffeured car industry because of its size," he said.

About 10% of EmpireCLS' corporate-owned fleet is hybrid, but it changes weekly, Criaris said. The company is working to start programs at affiliate locations.

While Carey International has hybrids in its fleet, the company also recently launched a pilot program using technology to convert gasoline vehicles into flex-fuel vehicles, which run on a combination of ethanol and gasoline, Kessler said. The use of such E85 vehicles is limited due to the lack of fueling stations, though, and the program is being piloted in Illinois, where publicly accessible fueling stations are more prevalent.

Dav El's Solombrino added, "I don't anticipate that E85 vehicles will be what people will use five years from now. It's more of a stepping stone to eventually migrate to full-blown hybrids."

The continuing climb of oil prices also is impacting the focus on hybrids, Solombrino said. "We're very conscious of the fact that fuel is an issue now, and we have to find ways to cut fuel consumption costs and move ourselves to much more efficient ways of running the company."

Source: Business Travel News

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