[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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Can it be taken away?

A rallying cry, if you will, for the motorcoach industry since April has been to step up and do the work before the chance to take over some very lucrative contracts dissipates. “Keep in mind that when negotiating the client is used to getting these services at significantly lower prices than you can perform the service for,” says Galusha. “So, it could be in their best interest to be able to retain the services of the transit agency.” 

Many in the motorcoach industry feel that some transit agencies that have done a large amount of charter services in the past will continue to be reticent to give up the work. Some also believe that with the reauthorization of the transportation bill approaching later this year; it is the perfect time for the transit agencies to lobby to have the Rules terminated or at least for new concessions to be added.

“What this rule did to some agencies was actually give them a foundation to get out of providing charter services gracefully. But, in some cases a lot of the agencies that did a lot of work are just resentful of it,” says Waters. “At this stage of the game, if the rule stays as is through the next authorization, the industry would be happy with that.”

As the UMA’s Parra points out, though, the industry has to step up and provide excellent service to not only gain the trust of the public, but also ensure that the private operators’ opportunity to provide the service stays the same as it is now.

As for the FTA’s role in future Charter Bus Rules changes, Griffo says: “We expect that as public and private entities become more familiar with the revised rule requirements, there will be adjustments that we will have to make. We are committed to doing what we can to make this a smooth transition for all involved.”

Ready to go

Many stress that operators have to be ready to step up once a transit agency posts a potential charter.

“The key thing that operators have to understand is that this is not an opportunity to charter their buses to a transit district, it’s them basically saying that they are making public notice this service is available and if somebody wants to step in and run it in its entirety, then respond in a positive fashion,” says Waters, who adds that once an operator makes that decision to try to take the job, communication with the customer is the next most important factor to keep in mind.

Meanwhile, both the ABA’s Pantuso and UMA’s Parra urge operators to review their registration on the FTA Website to make sure it is accurate, paying special attention to how they are listed. For example, an operator shouldn’t list themselves to do work statewide or nationwide if they are truly unable to provide services that far from their usual operating area.

Escot’s Brian Scott says it is also important to get to know your local transit agency to help open the door for better cooperation. The best way to do this, he explains, is to attend transit board meetings, which will also let them know that you are interested in what’s happening in your local community.

The FTA’s Paul Griffo adds that for transit agencies to make the revised Charter Bus Rules work, they must get the email notification out as soon as the request comes in to allow the operator to have time for full and fair negotiations. He also cautions operators not to get discouraged with the negotiation process, since many of these potential customers have been working with the local transit agencies on some events for years. Echoing Scott’s sentiments, Griffo says that perhaps the most important thing to do is to get to know your local transit agency.

“Many transit agencies do not want to perform charter work, but feel pressured by other forces,” he says. “If the private operator has a good working relationship with the authority, cooperative arrangements in accordance with the rules can be reached. The worst case scenario is to view the transit agency as the enemy.”

To that end, Parra is pushing for operators to embrace “Co-opitition,” a term he’s coined to help those in the industry understand that with these new opportunities may come the necessity of working cooperatively with what was once seen as their competition, whether it is another operator or a transit agency.

“Let’s take the Baltimore Ravens, for example. There was no one company in the Maryland area that could handle the volume of work, same thing with the Redskins. So, what happened was the competitors in the area got together and said ‘we all win if we can put aside our competitive differences and pull this thing off,’” says Parra. “And, that’s exactly what’s happened.”

Parra adds that this new mindset will take some time for operators to embrace, but the sooner they do, the quicker they will be able to profit from the new broader well of opportunities opening up.   

 

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