Top Motorcoach Officials Talk State of the Industry

With COVID-19 effectively shutting down motorcoach operations for the last nine months, the industry has been fighting for Congress to provide emergency funding to help them survive this difficult time.

At the head of the fight has been the American Bus Association (ABA) and the United Motorcoach Association (UMA), who have not only continued to advocate and educate their members, but have also banded together to provide a unified voice for the entire industry. 

METRO spoke to the ABA’s President/CEO Peter Pantuso and the UMA’s President/CEO Larry Killingsworth about the state of the industry, the fight for emergency funding, and what the future may hold for the industry post-pandemic. 

Larry Killingsworth

President/CEO

United Motorcoach Association (UMA)

Can you talk a little bit about the mentality of your members right now and where the industry is as a whole?

Yes, first let me discuss a little about what happened in March when the pandemic first began. Initially, we felt we had to prepare to help our members, as well as the industry, through what we thought would last maybe eight to 12 weeks, yet here we are eight months later. When the pandemic began, we recognized that we needed to do many things, chief among them was to open the lines of communication because everything was moving so quickly. At that time, we decided to do a daily NewsFlash and a weekly Town Hall, thinking this would be an interim thing, yet again, here we are still doing both of those things today, and there is still great interest. We get about 300 people for each of our Town Halls, on average, so those have really been essential in helping our members stay connected.

And it is not just our members, we are not exclusive, in that regard. Our Chairman Jeff Polzien and the board were very prescient and decided early on  to make our operator member dues complimentary for the balance of 2020, which has been appreciated by our members and has helped expand our membership by about 15 to 20 percent.

Getting back to your question about our members, painfully the industry is still functioning at about 10 percent of its typical volume, and that is spiking up and down currently. Some people in our industry have had to mothball their company for now and plan to reactivate when the time comes. Others are handling onesie, twosie requests, while some are doing better than that depending on the segment, like moving sports teams, for instance. But overall across the board, we are still at about 10% of our normal level of business, which is just devastating. 

So, is the steadier business right now involve sports and military moves? What about those operators that provide commuter services?

Some commuter services are staying steady. Hurricane relief has been something we have done. But consistently, I would say military and sports, as well as a few church and family events, where they felt safe moving with less density on the motorcoach. We have been encouraging our operators to move beyond just charter and become more proactive in exploring tours if they have not looked at that possibility before. We have been telling them that because we believe when business is back that there will be more domestic travel than ever before, at least for the initial couple of years. 

Initially, there was a lot of fight and encouragement from operators to move forward after the pandemic. Are you sensing any discouragement from your members or the industry today?

Well first, it is very frustrating that Congress could not get together enough to create a second CARES Act, especially since 62 percent of the House and 60 percent of the Senate have signed on to support our CERTS legislation. We have the broadest support ever in our industry, and we feel that the $10 billion that the motorcoach, school bus, and U.S.-based vessel industries are asking for is a much smaller number than other industries have sought or received, but it needs to be attached to another piece of legislation. Because of the Congressional support, we are cautiously optimistic that something can get done during this lame duck session. There is also broad agreement on both sides that there needs to be another round of PPP, which helped about 85 percent of our members the first time around. 

You said cautiously optimistic about the CERTS act. Can you elaborate a bit on that?

Sure. I am cautiously optimistic that Congress can get something done during the lame duck, which is about seven weeks from today. It will ultimately be up to them to find the wherewithal to get something done. Yet, if I can shift gears a bit, while I am cautiously optimistic that the CERTS Act will be passed, I am very optimistic that there will be a second round of relief and that the motorcoach industry will be included in it. It is just a matter of timing, because for many of our operators it is a week-to-week battle right now. We have had a lot of support from the lenders, insurance companies, and vendors, who have all pulled together to help our industry get through this, but now we need Congress to step up as well.  

One of the silver linings of this whole thing, if there is one, is that the industry has grown closer together and become more like family than ever before.

I could not agree more. When I first got involved in the industry in May 2004, my consulting firm was brought in to help MCI sustain and grow its market share. During that process, I interviewed Pat Ziska who told me that the industry is like one big, happy family, and I thought ‘sure, most people think their industry is like one big, happy family.’ But you know what, it is true. I have told her many times that she was so right, because this is a very connected group of people that have gone to battle with each other and won some of those battles. But despite that, they are even more connected today than they have ever been.

How do you feel President-Elect Biden could impact the industry?

Well, I think a lot will depend on what happens in the Senate, which as of now is still up in the air. But the number one positive is just getting the elections behind us. With all that was going on, many politicians were more concerned with their own survival, rather than thinking about what is right for our country. Now that the elections are behind us, I think we will see movement toward a second CARES Act and more of a priority on getting the virus under control and moving our economy forward. So, not to get political, but I think just having the elections over will bring some better decision making to the forefront.

What do you think is the biggest lesson learned by the industry from the pandemic?

First, I think they have learned to prepare their companies for the unknown and have contingency plans in place, so they can survive a major crisis. Second, I think our operators have learned that they must diversify their businesses and broaden their customer base, so they are not just sitting around waiting for charter customers to call. 

What has it been like to lead the UMA during this difficult time?

Well, it has been very fulfilling to be able to give back to this industry. My career in both consulting and leading companies has prepared me for crisis management. In some cases, crises that I wish I did not have to be prepared for, but nevertheless I was prepared. I spent six-and-a-half years at MCI as a senior VP of sales and marketing but had been out of the industry for several years before this opportunity arose. And while it’s been a completely different assignment than what I thought I was taking on, it’s been fulfilling for me, personally, to be able to help our industry during such a challenging time, particularly many of the friends and associates I have accumulated over the years. 

Can you talk a bit about how your supplier partners are doing during the pandemic?

Yeah, I think first and foremost, their biggest challenge is there is currently zero demand for new coaches. And with the industry potentially set to continue downsizing for some period, there is going to be a glut of pre-owned coaches on the market. I think it is going to be a two- or three-year battle in the private sector motorcoach business to get back to selling motorcoaches at anything like the levels of the past. Fortunately, they are diversified and still selling some coaches to the public sector, and some of these companies like Volvo or even New Flyer have other segments of business that are helping them get through this. But even as they are going through their own struggles, they have kept their boots on the ground to support their customers.

I think the most encouraging thing I can say is that our annual EXPO, which is set for March, just launched registration a few weeks ago and we have been gratified with the early response both from attendees and vendors. In the first couple of weeks, we had 40 to 50 vendors reup their space, and it is setting up to be not only their first show since the pandemic, but also the first time we as an industry will be able to get back together on a national basis. Because of this positive news, we are excited for this year’s EXPO and feel it will be both meaningful and impactful for our industry. 

I know it is hard to say, but how do you think 2021 will play out for the industry?

What I am hearing from our members is that their spring bookings are beginning to really pick up, which is encouraging. And of course, there are also sports that have been deferred by colleges, universities, and high schools that are slowly beginning to ramp up. So, we are hopeful that that we will have gotten the virus somewhat under control and learned to live with it enough to where we can see a real pickup in business starting to happen around Q2 of next year. After that, I think it is just going to be a gradual build. Of course, the steeper the curve the better, but the real key will be that we begin to see business grow month to month, and then eventually, year over year. 

Peter Pantuso

President/CEO 

American Bus Association (ABA)

Can you talk a little bit about the possibility that Congress passes another stimulus bill during the lame duck session?

If you look at what happened right before the elections, the White House and Speaker Pelosi were working to hammer out some kind of deal. Speaker Pelosi wanted a program that was worth $2.2 trillion, with the White House initially looking at a bill worth around $1.8 trillion, before the President came out and said, ‘go bigger or go home.’ In the middle of all that, Majority Leader McConnell presented a $500 billion program, which he was not able to get through the Senate. Despite all that movement, though, it all just fell apart. Now that we are post-election, McConnell has come back and said that maybe we don’t need that much money after all, because the economy looks better, the unemployment numbers are less today than were predicted, and there is some potential good news as far as a cure for COVID. With all that as a back-drop, the gap between McConnell’s $500 billion and Pelosi’s $2.2 trillion is even wider than it was before, and it seems the Administration is less engaged to move forward with a new stimulus package then they were before. In addition to that, now we must factor in that we have two Senate races happening in Georgia that are going to determine control of the Senate.

So, with all that going on, I just do not see a path to get a significant stimulus bill done in the next four weeks or so before they adjourn. There is just not much time to do anything, and there does not seem to be a tremendous amount of will on either side. Democrats might want to wait until the races in Georgia are determined, because if they control the Senate, they won’t have to negotiate against themselves and that number could possibly be even more than the $2.2 trillion initially discussed. If the Republicans take majority control of the Senate, then both sides will have to go back to finding some common ground again, but with control of the House and the White House there should at least be some momentum. So, I am inclined to think we are not going to see any action until after the first of the year, and probably not until after January 20. 

What impact do you feel President-Elect Biden will have on the industry?

That is a great question that I do not have a definitive answer for. President-Elect Biden has been pro-labor and I would consider him to be somewhat of a moderate, so I am hoping that it bodes well for the industry. He has also worked in the Senate for a long time, so he understands the idea of working together to come to some common ground. Unfortunately, scheduled service is not a huge part of the Delaware economy. The travel and tourism industry is, however, and so we do bring a lot of business and industry into Delaware. At the same time, then-Senator Biden commuted back and forth to work almost daily on Amtrak, so we know that he is very much a pro-train, pro-Amtrak lawmaker. So it is all to be determined at this point, I guess. We are starting to see some of the folks who will be part of Biden’s transition teams and there are many who were part of the Obama Administration, which focused on labor and the environment. I don’t know if he’s going to be pro-bus or anti-bus, but if a cleaner environment is something that at the end of the day the Administration is focused on, that should be good news for the bus and motorcoach industry.

Can you please give me a snapshot of where the industry is today?

The industry has been through so much over the last 100 years that we have existed. We have been through so many ups and downs, but the people that I see and talk to every single day are looking forward to better days ahead and they all feel they are going to make it to that point. Optimism is high, but the operators are also realistic. They realize that things are going to change even for those who make it going forward. They also realize everybody is not going to make it through to the other side without government assistance. And even then, everybody is probably not going to make it because it is going to take time for all that to go into place. In a best case scenario, if we were able to get some funding signed by the President January 21 after he takes office, it will still take a couple of months before those monies are distributed, which takes us to around mid-March, marking a year that many of these operators have seen any business.
 
We also know that the industry is going to have a tough spring, overall. If you look at the various segments in the industry there are sort of three buckets. We have scheduled services like Greyhound and Megabus, which like the airline industry is operating at about 25% capacity. The next segment would be commuter services, which brings people into cities or directly to jobs in industries like mining or logging, for example. Right now in major cities, things are still pretty much shutdown and people are continuing to work from home. With most offices remaining closed, there will be a huge impact on the commuter market. I have talked to companies that run in the New York City area every single day and they are operating at 10 to 15 percent capacity at best. So, the commuter market is obviously a very challenging market right now. Lastly, we have charter and tour, which represents the largest amount of businesses, family-run businesses. If you remove military moves, hurricane relief, and the fires out west, those companies are operating at five to 10 percent at best. Looking at when these operations typically provide transportation go, scheduled services are busiest during the peak travel times and the summer when college-aged kids are coming and going. Right now, we do not know what the impact will be on holiday travel, but it seems like there is not going to be a lot of family travel during Thanksgiving, which could continue throughout the rest of the holidays. With commuters, it is hard for me to imagine those services getting close to normal until after a vaccine is found. Even then, work from home will continue to impact travel patterns in the way people commute in and out of cities, because I think that while most people will return to normal, many will also move away from going into the office five days a week. As for the charter and tour market, most operators have told me they make 60 to 70 percent of their money in the period between February and early June, when school groups and athletic teams are in full swing. In large part, most of that is shutdown this year because many school districts and universities are risk averse and much of that could continue through Q1 and Q2 2021. So overall, 2021 will be better than 2020, but it certainly is not going to be normal by any stretch of the imagination. 

What do you think is the biggest lesson learned by the industry from the pandemic?

Well, I think they have learned how to economize. They have learned how to make sure there is no additional expenses. I was on a call with a number of members a bit ago and they told me that when they were making money and everything was going well that they were able to hide a lot of mistakes in areas where they were not being efficient. Now, they are super-efficient, because they have had to figure out how to save every dollar by looking at ways to cut costs and improve their bottom line. It is not that they were not doing that before, but by implementing new practices and procedures now, and maintaining them once we get to some semblance of normalcy, I think their businesses will be in better shape moving forward.

The other thing I would say is they have learned that they must diversify and identify new elements of business moving forward. When I look at some of the companies that will most likely survive the pandemic, it’s definitely going to be those that diversified and perhaps pivoted a bit to add new types of contracts outside of the business they’ve typically performed.

What has it been like to lead the ABA during this time?

On the positive side, I believe we are doing everything we can to help our members, as well as the industry, educate Congress to help get some emergency funding. Our team here, which includes our outside lobbyists, consultants, and members, have been very engaged in reaching out to every single  member of Congress and multiple times, and really have been working nonstop seven days a week, and almost around the clock. So we believe that we are doing everything we can to help the industry. The frustration is getting all 535 members of Congress to listen to us now. The fact that we've got more than 330 Congressional members in the House and Senate signed onto the legislation is a testament to what we've been able to accomplish as a group, but the frustration is no matter how much we have done, we have not been included in any of the stimulus bills. I mean, there is only one real stimulus bill that was passed in March with a modification to that in April.  There have been others proposed by the House and the Senate that we have not been included in up to this point. And honestly, if we are not included in any of the upcoming stimulus packages, it’s going to spell the end for many of the companies that we have worked with for years, as well as many we don’t know. Because we know the time, sweat, and equity that many of these people have put into their businesses, as well as how much they have on the line in regards to their homes and families, it is incredibly frustrating to me that we haven’t been successful in getting Congress to recognize the importance of our industry and the critical role we play in the overall transportation network. And it is frustrating to our members too.   

I know it is hard to say, but how do you think 2021 will play out for the industry?

I am optimistic for Quarters three and four, because I believe that is when we are going to start to see the end of this pandemic through the introduction of a vaccine. If the projections I’ve heard are correct, we could be looking at the vaccine being distributed by summer and starting to see people once again feeling more comfortable about being in larger groups by the summer or fall, which are still busy seasons for the industry. As that begins to happen, we will start getting back to life as we once knew it, which will keep these companies alive and continuing to operate. And as we get into 2022, if the lessons learned from 9/11 are any indicator, I believe there will be tremendous demand for travel and the year will be gangbusters for the industry.