Management & Operations

Talking Shop With Small and Mid-Size Bus Operators

Posted on January 1, 2006

Billed as the mid-size bus equipment and technology show, BusCon 2005 brought together a diverse collection of transportation professionals who spent three days in Las Vegas immersed in discussions about maintenance, management and watching the bottom line. On the heels of this information-packed conference and trade show, METRO contacted five BusCon attendees — a coach operator, public transit professional, shuttle bus owner and two university transit managers — and asked them to talk about an assortment of important transportation issues, as well as their experiences at the show. Their answers provide insight into today’s operating environment.


Ocean Coach Lines LLC
Richmond, British Columbia

Associate Director
UCLA Transportation
Los Angeles

Assistant Manager, Transportation
Middle Tennessee State University
Murfreesboro, Tenn.

Alpine Express Shuttle
Gunniston, Colo.

Executive Director/CEO
River Bend Transit
Davenport, Iowa

How have rising fuel prices affected your operation?
Thomas Choe:
They’ve done quite a bit. Mid-size buses are not getting the fuel economy that I’ve been hoping for, and larger buses these days are becoming so fuel efficient that margins or areas where there was a gap just aren’t there anymore. I’m getting better fuel economy on my 47-passenger with a Series 60 engine than in my 29-passenger cutaway with a 7.3-liter turbo diesel engine. It shouldn’t be that way, you would think. There was an advantage in the past to have smaller buses because they were more fuel competitive. But now it’s more of an advantage for me to buy a used, bigger bus, which is what I’m doing. Instead of forking out $150,000 to buy a new, small bus, I can buy a not-too-old 47-seater and get the same or better fuel economy and be more versatile. Sherry Lewis: The impact is simply financial. We all understand it is an expense that everyone must bear. As a commodity purchase, the costs are passed on to the users. The volume has not changed much, but I continue to view this as an opportunity to push alternative fuels, although natural gas prices have gone up as well and the availability of alternative-fueled vehicles is getting scarce. Woody Sherwood: In some ways it has had a positive effect, as our airport shuttle operations have become more competitive compared to drivers paying fuel and parking charges. Of course, the negative side is the rising expenses we incur. Randy Zobrist: We are able to absorb many of the smaller fluctuations without impacting service levels. However, extended escalation in prices has required us to pass on costs in our contracts. What measures have you taken to offset the rising costs of doing business (e.g., fuel, insurance, security concerns, etc.)?
In terms of offsetting fuel costs, you have to use common sense and not idle for too long. Unless you have a fleet of 1,000 buses, there are not a lot of ways that are going to save you a huge amount. With a smaller operation like ours, there is really no out. You just have to try and raise some of the prices a little and recoup the additional costs of doing business, and this is true not only for fuel but also insurance and rising employee wages, too. Lewis: For the first time in a few years, the overhead expense on labor, vehicle rental rates and parts has increased to raise the recharge rates to users. Our goal is to hold all other administrative and overhead expenses to a steady state whenever possible. Read: We have increased our fees for off-campus trips to offset some of the rising costs. Our fees for these trips are calculated on a per-mile price and an hourly cost for the driver. After Katrina, we increased both rates. The rate per mile we increased because of the cost of diesel, and the hourly rate because it was not covering overtime expenses. Additionally, we started selling advertising space on the inside of our buses this past summer, and we are just now seeing the revenue come in from this. Sherwood: We have changed the way that we purchase our fuel, tying it to the daily price at the refinery or pipeline plus a fixed fee for the margin. We have tried to place insurance in a competitive environment for pricing, with some success. We have tried to increase revenue through marketing, small price increases and modest ridership increases. Zobrist: Measures taken to offset rising costs include a fuel surcharge clause in our contracts for the past three years. This has reduced the impact of fuel cost spikes on our budget significantly. We have increased deductibles on auto coverage and dropped comprehensive coverage on older vehicles to reduce insurance premiums. We’ve also reduced idling time as much as possible, implemented new scheduling and dispatching software to optimize trip efficiencies and reduced overall miles. What do you think is the most significant social, political or economic trend that affects your operation today, and why?
People seem to be moving away a little from high-mileage jobs because there is a lot of ground to travel and a lot of fuel to burn. So what a lot of operators instead are doing these days is low-balling and screwing the market up just to get the local, short-run business. On top of that, these people are not maintaining their buses properly. They are also reducing expenses by using inexperienced drivers and not paying the higher insurance premiums involved with, for example, trips to the U.S. They are undercutting legitimate businesses, in which operators are trying to gut it out and make it work. Hence, legitimate operators are getting stuck with all the high expense jobs. Lewis: Air quality standards are driving the costs, compliance and long-term facility upgrades of fueling systems. Sherwood: I feel that there is a strong social stigma that has been attached to bus ridership. It is important that as an industry we figure out a way to break this stigma. Most other issues would be resolved with buses filled to capacity. What is your biggest day-to-day challenge in providing transportation?
Providing qualified staff to meet the daily service and support requirements of an aging, changing fleet. The staff is aging, technicians are hard to recruit and retain, and ongoing salary issues continue to plague us. Other areas are more interesting and are more highly recognized. Read: Working at a university, our biggest challenge is generating revenue. We have a small budget and are always looking for new ways to generate more money. Sherwood: It is always related to the people side of the business. Record keeping and driver files certainly pose major headaches for the operations team, and hiring is always a challenge. The presentation of a clean, quality product certainly is challenging and relates back to the stigma of bus travel. Zobrist: Maintaining the optimum balance of cost containment without affecting customer service. Making do with less helps us become more creative in scheduling and coordinating our services. From your perspective, are people increasingly looking for alternatives to driving themselves? Why or why not?
I do see that. I think the higher cost of fuel for consumers and the aging population are contributing to this. Younger guys are still cowboys and they want to drive themselves in North America. But when people get older, they want to be with a group and socialize, and they don’t want to drive or aren’t capable of driving themselves. Lewis: Although I personally have taken a drastic alternative to the high cost of fuel by leaving my car and taking the bus to work, most colleagues and local personnel have not. Commutes are too far or too time-consuming for lengthy multimodal trips. Bus service is not optimal in the L.A. area, and rail options are limited for cross-town travel. Zobrist: We have not seen any appreciable interest from the general public. With gas at $2.99 a gallon, there was a lot of talk about people using more affordable transportation but we did not experience an increase in ridership. In light of the recent catastrophe surrounding Hurricane Katrina, what changes, if any, have you made to your emergency operating plans?
We have updated our plan and completed a training review process. First responders have been identified, and training has been provided on initial steps. Additional training is forthcoming. Sherwood: We have set up better online computer backup systems. What do you think is the most significant technological advancement to affect your operation in the past five years and why?
In terms of the small and mid-sized bus segment, I haven’t seen a lot of significant advancements in technology. I think one of the bus manufacturers has come out with a wider minibus that I noticed at BusCon. The biggest advance I’ve seen is the development of more fuel-efficient engines for bigger coaches. Other little things like LCDs instead of monitors are a nice advancement, but in terms of usefulness, you don’t see that much benefit. Heaters and air conditioning systems have been a little stronger in the past few years, so that has been a nice improvement, too. Lewis: Advanced vehicle diagnostics require greater and more frequent training to maintain vehicles. The advancements have changed the skill requirements for technical staff. Read: Being a state-funded school, we are very limited on money and therefore always very behind in the use of technological advancements. Zobrist: We have implemented RouteMatch scheduling and dispatching software and Mentor Engineering AVL and GPS mobile data computers in our vehicles. We anticipate significant improvements in scheduling efficiencies and trip cost reductions with the new technology. Safety and emergency response capabilities will also be greatly enhanced with the AVL/GPS features. In regard to the ongoing threat of terrorism, what have you done to increase security at your operation?
With the charter work that I do, I don’t have many problems in terms of security. The security concerns here are basically with the drivers in terms of where they park and how they manage the bus. It hasn’t really been an issue in Canada like it is in the U.S. We’re fortunate in that regard. Lewis: The FBI has been brought in to update us on potential scenarios to consider and to increase awareness. We were informed of the level of notice that can be provided and of the appropriate instructions to follow in an act of terrorism or natural disasters. Sherwood: We have implemented better background checks for employees, and we are practicing tighter property security. What session or feature of BusCon stood out most to you and why?
Actually, I was hoping to see more about the issues that people encounter when they are running minibuses and shuttles — trying to find better drivers, decent engine retarding, engine brake systems for minibuses, booster heaters and snow tires and things that operators might need in a colder climate. Basically stuff to help a small or mid-size bus operator stay competitive with the bigger guys. Those are the types of issues I’d like to hear more about. Read: I felt that the university roundtable discussion was the most valuable. Having only been in this position eight months, I learned a great deal just listening to what other universities do. I found it comforting that other people are having the same problems that we are.

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