Management & Operations

Contractors Expound on New Opportunities, Services, Technology

Posted on September 23, 2008 by Alex Roman, Senior Editor

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With a mostly proven track record in providing efficient paratransit services under their belts, contractors are beginning to expect an increase in other areas of business including rail, due in part to the ever-growing costs for public agencies to maintain these systems. METRO Senior Editor, Alex Roman, recently spoke to three of the industry’s heavyweights about the growing market and the benefits that could arise for public transit agencies that choose to contract out their services, as well as the state of the industry today.

Dick Alexander, Sr. VP, Business Development

Is the contracting business still growing or has it flattened out in the last few years?
Dick Alexander: It did flatten out for a bit, but it’s starting to grow again. As more systems try to get new services on-line quickly, they are starting to turn to the private sector a little more to fulfill that need. We also have systems that are hurting because fuel prices have eaten into their budgets, so they are starting to explore alternatives. The trend is going to be up, and we’re starting to see a little of that now.

Is there a particular sector of business that is growing or perhaps shrinking right now?
None of it is declining. We’re seeing a lot more growth in rail and there are many streetcar projects starting up out there. Rail has grown pretty dramatically and is about to grow even more. On the transit side, we’re hearing a lot more about BRT; we haven’t seen a lot of systems come on-line yet, but there’s much more interest in it as an alternative.

There’s a lot of growth in paratransit, which is more incremental rather than new system growth. We’ve had two New Starts projects this year, which are in areas that never had transit before. We’re also starting to see a bit more of that, as well.

You already provide rail services, is that correct?
Yes. Veolia does commuter rail in Boston; the Metrolink service in L.A.; the Sprinter service in Oceanside, Calif.; commuter rail service in Austin, Texas; and Tri-Rail in Miami.

Do you think your experience with rail puts you in a great position for those new projects?
Definitely. We are one of the largest rail providers internationally and the largest private rail provider in the U.S.

Can you discuss the logistics of training operators, customer service reps, and other employees?
Well, Veolia has the operator development program, which is a trademark training program that we’ve developed. It’s a 22-module course that teaches everything from safety to customer service to understanding the physics and dynamics of a moving bus. It’s a combination of classroom and practical training, both off the road and on.

We also have other training programs that teach people how to assess their customers’ state of mind and work toward improving their experience. Often customer service is an issue of perception. How you manage that perception is the difference between whether the customer has a good or bad experience. This is something that was developed for Veolia in North America and is now in place worldwide. There’s never been a program like it developed, which is specific to the transit customer and improving their experience.

We also have a whole series of maintenance training programs. In this industry, you have a lot of component training that vendors offer for their particular product, but what the industry has lacked is a comprehensive training that pulls all that together. Our training programs are designed to address that area. We also have a whole series of training programs for our employees that provide transit information to customers, where they are trained to be able to communicate effectively and comprehend effectively what’s being asked.

What are the main reasons that so much paratransit is contracted out?
Paratransit is a complicated business and it takes experience and skill sets to manage that well. The private sector has developed those skill sets pretty effectively. Right now, it’s about 90 percent contracted. So, part of it is that it’s just something where there’s a capability for private operators to step in.

Can you talk a little bit about the contract with RTA in New Orleans?
We’re actually still in the process of negotiating the contract, but New Orleans has a special place in our heart. We operate the Jefferson Parish service there, which is the Parish next to New Orleans. When the hurricane hit, we were impacted like the thousands of other people down there and really put a major effort toward recovering that service and helping our employees through that whole crisis. The RTA went through a similar experience down there, and we saw an opportunity to help them recover and grow their transit system back.

The RTA has gone from operating more than 350 buses down to just around 80. It’s been a huge transformation of that service, partially because the demographics have changed and partially because there’s a lot of recovery to be done. What we hope to be doing down there is taking over the operation of the RTA and providing investment, technology, technical expertise and new leadership to really start growing that system again and reshaping it to the change in demographics.

What we hope to do is introduce a much broader spectrum of services to the community, and get it operating like it used to. New Orleans was one of the best-utilized urban transit systems in the country, but now they need help.

Is the population beginning to expand a bit more over there?
Population is coming back much faster then the transit system has been able to. Where that population is located has changed, but it’s at about 70 percent of its original size. There are whole new travel patterns now because many people have moved to Baton Rouge. As a result, the traffic between Baton Rouge and New Orleans is very thick. Now, for example, commuter rail makes sense where before it didn’t, and we want to be able to look at those types of options.

What are the latest trends in the industry?
What’s interesting is if you look at contracting models in Europe versus contracting models in the U.S., it’s approached very differently. In Europe, the contracting model is much more oriented toward results; they’ll tell you what the budget is, the kind of services they want and what their goals are for the system, and based on those dollars they want us to tell them what we can provide them in investment, technologies, service schedules, you name it. It’s a much more results-oriented process. I think this trend will probably begin to start spreading to the U.S.

It’s a change in contracting that will be good because it will allow private sector involvement to really unleash its ability to provide a whole range of features and services that are designed to achieve goals and results, as opposed to just filling a gap. In Europe, for example, if the goal of an authority is to grow ridership, we actually take a risk on passenger revenue. In other words, we will, through our own analysis, commit to growing ridership X percent. And, if we achieve those gains or surpass them, we’re rewarded with the extra fares that are generated for the investment we made to achieve those gains. If we don’t make those gains, we’re at risk and we lose money or simply do not make as much as we should.


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