Charter Rules Position Motorcoach Industry on Fast Track to New Business

Posted on April 2, 2009 by Alex Roman, Managing Editor

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[IMAGE]MET4charter.jpg[/IMAGE]When the Federal Transit Administration (FTA) implemented its clarified and revised Charter Bus Rules in April 2008, it was hoped that new interpretation would finally help erase years of fine lines between what could and could not be considered a charter.

“I’d like to believe that the serious situations were the exceptions rather than the rule. But  when you take all those exceptions and add them together, it’s millions and millions of dollars of business,” says Peter J. Pantuso, president/CEO of the American Bus Association (ABA), of the situation before the revised rule was put into place.

At this year’s United Motorcoach Association’s (UMA) Expo in Orlando, Fla., last January, the new Charter Bus Rules were a hot topic of conversation because they are being viewed in the industry as a new opportunity that operators could explore to increase their revenues.

Close to a year into the revised process, there are still many lines being drawn in the sand between transit agencies and motorcoach operators over what they believe constitutes a charter, and how the motorcoach industry will respond to their new opportunities to provide more services for their communities and, in some cases, work with people that in the past have been viewed as the competition.

Revised rules 

April 30, 2008, marked the end of a long process in revising the Charter Bus Rules that began with the Charter Bus Negotiated Rulemaking Advisory Committee — a group comprised of members and representatives of both public and private entities and associations — meeting every month from May 2006 through December 2006.

“The biggest issue was the definition of charter service,” says Paul Griffo, senior public affairs officer for the FTA, of the process. “Each side provided detailed recommendations on how to improve the definition. Toward the end of the negotiations, there were lengthy discussions in an attempt to reach a compromise, which ultimately failed.”

The Committee did, however, reach agreement on a staggering 80 percent of the issues it was brought together to address, including the adoption of procedures for creating advisory opinions to examine potential charter trips to assure adherence to the regulations, the nature of groups that could be included for exempt trips and the online procedure for private sector operators to register for notification of charter opportunities.

“It took about a year to come to a consensus on about 80 percent of the topics, and according to the administrator that oversaw the process, that was a huge accomplishment,” explains Mike Waters, vice president/GM for San Francisco-based Coach America, and member of the Committee. “There are often cases where there is very little consensus at all.”

The 20 percent that the two sides couldn’t agree on, in particular the definition of charter service, was decided by the FTA, drafted and put into effect, sometimes to the dismay of the transit agencies that have been providing some of these services for years.

How is it faring?  

“The feedback has been overwhelmingly positive,” says Pantuso. “Operator after operator has said that they are getting business coming their way that they never had access to before. In fact, we wonder where all this business was before.”

Victor S. Parra, president/CEO of the UMA, agrees with Pantuso about the positive feedback and increased job opportunities, but adds that at this point the bickering between transit agencies and operators, which caused the FTA to revise its stance, still continues in some instances.

“Some operators are frustrated because they are having to battle since some of the transit properties are not willing to let go of some of their business,” Parra says. “But, there is no question that the rule is very positive.”

On the whole, many operators are benefiting from new opportunities, including a few notable takeovers of services, including for the Kentucky Derby, Indianapolis 500, and the National Football League’s (NFL) Baltimore Ravens and Washington Redskins.

The interpretation of what is a charter is still being debated in some cases where there are exemptions written into the rules; however, the opportunities have seemed to vary from region to region. For example, Parra explains that a transit agency in Indianapolis did 62 charters in the month of April 2008 alone, adding that many of those new opportunities will now be open to the private operators.

Still, not everything has run smoothly. In Jacksonville, Fla., the local transit agency is currently being investigated by the FTA to see if they acted in bad faith when they provided charter service in 2008 to the NFL’s Jacksonville Jaguars games. Of particular focus is the agency’s claim that no operators were interested in 2008; a claim that has since been disputed even by the agency, who say they never actually made it available, according to a story in the Florida Times-Union.

These types of accusations are being thrown in the reverse as well. San Luis Obispo, Calif.-based Silverado Stages Inc., recently found its way on the end of a request by a transit agency to be removed from the federal list of private operators for acting in bad faith during negotiations for shuttle work for the Rose Bowl football game, in January, because they could not meet the conditions requested by the association and offered a rate that was not commercially reasonable. In its ruling, the FTA said that Silverado did not negotiate in bad faith under the Federal Charter Bus Rules and made it clear that transit agencies are not allowed to perform a charter job based strictly on the fact that a carrier could not provide all of the specialized equipment requested by the customer. Unfortunately, the ruling was made four days after the Rose Bowl, costing Silverado quite a bit of money.

“It was an experience, alright. Not a pleasant one at all. We like to deal openly and honestly with our charter clients and we tried to do this in this event and it did not go well,” says Jim Galusha, president of Silverado Stages. “We did learn a lot from the experience, though. If anything, it made me more determined to take as much of that work as I possibly could.”

In the wake of the ruling, Galusha adds that the agency has subsequently put up a notification for all the services it provides for the Rose Bowl as well as the 70-plus events it has historically done for the Hollywood Bowl.

It is these types of problems that have many in the motorcoach industry stressing the need for operators to stay on their toes.

“Going forward, the private motorcoach sector has to be very vigilant in watching what is going on because in certain areas of the country it is more of a problem then it is in others,” says Brian Scott, president of Escot Bus Lines in Largo, Fla. “If you’re not attentive to what’s going on, things will fly under your radar, even with the new rules being in place.”

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