Just glance at some of this Summer’s motorcoach headlines:
- Security assessment launched
- UMA asks for border bill changes (more inspections)
- Higher fuel taxes
- Higher fuel taxes
- ASCAP, BMI music agreements complete
- NTSB drops recorders from list
- Newly-mandated engines to consume 3-5% more fuel
If you can’t find the common theme, here are a few more clues:
- Americans with Disabilities Act
- Hours of Service Regulations
- Insurance premiums
- Driver shortages
- Manufacturing changes
- Litigation
The common theme is clear. It is rising costs. To the degree traditional solutions even worked, they have pretty much been exhausted:
- Adding some larger coaches to the fleet may help – if one can generally fill them to capacity. But they also cost more to buy and to operate.
- Consolidation has provided some economies of scale, particularly when one can take advantage of multiple storage yards and other logistical opportunities, and a more-formalized referral network. But these benefits are slow in coming, and most of the consolidation likely to occur already has. Of course, the competitive consequences of all this on many small operators has been their lowering of fares.
- Roosting the bandits and low-ballers may help, competition-wise – but someone has to pay for the enforcement effort. Limited, token efforts have negligible impacts.
What approaches are left? Abandoning already-much-needed amenities – like napping and exercise facilities, day-rate hotel rooms, sleeper berths, nutrition programs and other fatigue-mitigation measures? Reducing drivers’ salaries and benefits? Lowered hiring standards? Expanding upon the already-wide variation in shift assignments? Deferring new coach purchases? Deferring maintenance? Reducing management?
Such remedies are not only naïve, they are irresponsible. They could also be dangerous. One might argue – as they soon may in court – that they are also negligent, or worse, reckless. While motorcoach service may only be a bronze egg, such measures could kill the goose – or wound it badly. If we pay drivers much less than we already do, we would lose seating capacity because they may have to use the coaches as their homes. Worst of all, cutting costs will necessarily lead to compromises in safety and its modern American cousin, increased liability exposure.
Safety and Liability
While most motorcoaches are relatively new, their drivers are practically antiques. Ironically, this particular combination of new and old is a key to the industry’s outstanding safety record. Anecdotal experience, and data and observations from recent studies, suggest that the median age of motorcoach drivers is close to 60. Many of these drivers entered the field at a time when America had a large middle class, and professional drivers among its members. As the years passed by, these individuals found themselves entrapped in an industry with less and less profit, in a profession with less and less earning potential, and too late in life to launch new careers. They will not live forever, and they certainly will not driver forever. But potential new, young drivers face different circumstances, and have different choices. If the industry continues to reduce costs, replacing quality drivers will become increasingly difficult, and the driver shortages already engulfing pupil transportation service will begin to haunt the motorcoach community, undermining its stability and inhibiting its growth.
And then there are the law suits. The costs of defending a law suit can be stifling even if one wins. Losing is obviously worse. But far worse is losing big – such as the jury awarding the plaintiff punitive damages. Doors to punitive damages, such as establishing a pattern of negligence, will swing wide open with increased cost-cutting. Even worse, the passenger transportation industry, as a whole, is only the right lawsuit away from one plaintiff’s successful argument that an insufficient number of drivers and/or not paying them well enough to attract those more qualified comprises a pattern of negligence. Imagine defending oneself in any lawsuit once such a precedent has been established!
In the long run, it is far cheaper to pay higher salaries and offer better benefits, and to provide more training, more monitoring, better facilities, more bio-sensitive work shifts, and better management, than to suffer the consequences of not providing them. The motorcoach industry is only one catastrophic accident, one network broadcast or one lawsuit away from being too late to fix. If one needs an example, witness corporate America scrambling to convince shareholders of its phantom integrity. For a horse to return to the barn, it must not burn down. This is likely to happen if it catches fire.
Elasticity, Reality and Common Sense
The fundamental principle in setting prices and fares is as old as commerce: The more something costs, the less desirable it will be compared to its alternatives. This principle – which urban planners refer to as “demand elasticity” – does not apply much to transit service, where the vast majority of passengers are “transit-dependent” and, thus, have no other travel choices. But offering luxurious motorcoach service at half the price of economy-class intercity rail service is pointless, and frankly, naive. Elasticity suggests that, at worst, motorcoach service should be priced only slightly lower than its competition. This might not be true with genuine high-speed rail. But AMTRAK is not such a beast.
And then there are September 11th, Afghanistan, Iraq and Palestine – and Saudi Arabia’s oil reserves lurking in the background. While these omens portend to raise fuel prices, this is not likely to be the motorcoach industry’s downfall. Far more likely, they could create a new breed of riders: “The motorcoach-dependent.” If the U.S. war effort expands, we might not merely see increased fuel prices and taxes, we might see less fuel. Frankly, decreased fuel and increased fuel taxes would be a godsend to the motorcoach industry: At least these cost increases would be split 47 or 55 ways.
It is this author’s feeling that motorcoach fare increases will also not hurt the tourism industry. What will hurt the tourism industry is the increased cost of automobile travel, coupled with lower incomes and higher unemployment. But jobless individuals are unlikely to travel by any mode. Those who continue to travel may just not be as able to do so by automobile, train, boat or airplane. Regardless, what will really hurt the tourism industry is a shrinkage of motorcoach providers.
Listening and Consciousness
With a serious downturn in the economy, another likely military invasion on the horizon, increased pressure to at least trim the AMTRAK network, and the energy crisis which tinkering with the Middle East almost always brings, the time to start increasing fares is not tomorrow. It is now.
Neither this author, the UMA nor the FMCSA are alone in this thinking or expressing this. The latest draft of the “Over-the-Road Bus Security and Safety Act of 2001,” H.R. 3429, is designed to give preferential consideration to those operators who have or intend to increase fares! Apart from isolated studies, and some institutional support, this may be the motorcoach industry’s first direct subsidy — not counting roads, of course. To paraphrase populist religious doctrine, government helps those who help themselves. Nothing can help those who do not.
Those who think the motorcoach industry must continue cutting costs in order to survive cannot be listening: Its about time we did. After all, the passengers are already paying for the tunes! Of course, one must be awake to hear them. So, to all my motorcoach friends: Vrrrriiinngggg! Buzzzzzz! Time to get up! If you do not, you may miss the bus.
