Chuck Bradway remembers when limousines were just for funerals.
That was when he was 16 and a driver. Today, he's 67 and the owner of a limousine company that bears his name. He's seen the industry go through a metamorphosis that has echoed changes in society and its modes of transportation. When he started his company 17 years ago there were 11 competitors. Now, there are about 40.
But those numbers tell only part of the story, he and others in the industry told BusinessWest. While business has never been better, in many respects, it has also never been more challenging.
Indeed, in addition to that list of competitors, limo company owners also face soaring gas prices, an ultratight labor market, increasing government regulation, and the high costs of leasing, maintaining, and insuring a fleet of vehicles. Add to this a maddening series of interstate border wars, and it becomes clear that the owners of limousine services in the Pioneer Valley certainly live in interesting times.
Drive Time
While limo owners aren't shy about listing their complaints, they say that business is generally good. That's because the limo has become the preferred means of travel for a growing number of occasions. Twenty years ago, no one took a limousine to Fenway Park or for a bachelor party. Today, it's standard fare. The reasons for this phenomenon vary, and include everything from a still-healthy economy to heightened awareness about the dangers of drinking and driving.
"When I was a young man," recalled Bradway, "Limousines were used mostly for funerals. there would be a few weddings, but not many. There was no such thing as 'on-the-towns,' and no corporate work. there was some airport work, but most of that was done by airport service companies that ran shuttles between Hartford and Bradley, and Springfield and Bradley."
The turning point for the industry, says Bradway, began when public transportation became less readily available. At the same time, factories and businesses started to spread outside the core of the region's cities. "People flew into Bradley or came in on the train and had to take a taxi or a bus, and this didn't meet their needs. So alternate transportation started to roll."
When Bradway established Bradway's Limousine in 1984, roughly a dozen companies in the Pioneer Valley served the two core markets: corporate work, which consists of getting executives to and from airports, seminars, conventions and luncheons; and leisure work weddings, funerals, on-the-towns, and proms.
The number of players grew to a peak of more than 70 in the period of 1995-97. Today, approximately 40 limousine services take on the challenges of a rollicking service industry where no two rides are identical, and a trip to the Big Apple becomes a bold adventure.
To the casual observer, this business may seem easy - a matter of buying or leasing a few vehicles, finding some chauffeurs, and waiting for the phone to ring. However, none of these aspects of the business are in any way simple.
The first challenge confronting business owners is obtaining the limos themselves, which run from around $55,000 to as much as $90,000 or $100,000, depending on size and amenities. "Banks won't finance limousines because the depreciation is so rapid," explains Don Chapdelaine, president of Limos Plus. "That means you'll be going through one of the leasing companies, which charge between 15% and 30% interest, and it's all frontloaded.
"It's like buying a house that you have to pay off in five years ... but after that five years, the body style's changed again, which reduces the overall value of your asset," lie continued. "So the only way you can ever get ahead is if you put an incredible amount of money down on the car. For example, if you're looking at a $60,000 vehicle, you need to put down $15,000 or more. Now your payments are between $1,000 and $1,500 a month per car. In addition, owners must maintain $1.5 million in liability in the Bay State, and thus are looking at a staggering $14,000 a year for insurance on a typical vehicle.
"Add to that the cost of drivers and gas, and you have to charge at least $40 an hour and more for a sixpassenger to make ends meet," he said.
Pricing, according to all those we spoke with, is a function of the vehicle's size, but mostly the client's intended use, destination, and duration of the excursion. "There's one rate for funeral work," says Bradway, "there's another rate for weddings: on-the-towns are different, and airport transfers come into several classifications."
Judith Birks, owner of Longmeadow Limousine, said that the bigger the car, the more money per hour, naturally. But she and others said that the key to pricing is finding a structure that is competitive, but not too lean.
Help Wanted
Perhaps the biggest challenge for the industry right now is the labor market," said Larry White, president of the New England Livery Association (NELA). "Big or small, it seems as though the biggest issue with everybody at this point is help."
Chapdelaine concurs. "I could use a 10-passenger driver for tomorrow," he quipped, adding that the holidays are a time of high demand for long-haul drivers.
Edward Dersarkis, owner of Deluxe Limousine Service in Agawam, describes his labor force as "a young team," with an average age of 33. However, many companies are relying on older workers.
"Most of my drivers are older, retired men who have been with me for a long time," said Birks.
However, there's a move afoot to impose an upper age limit on chauffeurs. "Down the line, there's going to be a whole new set of criteria coming out of the federal government," said Bradway. "And nobody knows how that's going to affect us."
He hopes the National Transportation Safety Board will allow the industry to continue hiring senior citizens. "I say, as long as a person is healthy and has an annual physical, he or she should be able to work. I'm over 65 myself!"
Insurance companies are getting more involved with who companies can hire, he said, adding that a driving record with more than 15 STEP points is a frequently cited line of demarcation. While a good driving record is a high priority, people skills count as well. "Your best chauffeurs are people who work with the public a lot," says Chapdelaine, who has successfully trained former cab drivers, bouncers, bartenders, and waitresses. "You have to know how to handle people."
The price of gasoline also challenges the bottom line. "In August of 1999," says Bradway, "my company was paying 88 cents for a gallon of fuel; in August of 2000, it was paying $1.65. It's made our pricing go up, and a lot of people haven't been too happy with that, but we can't afford to eat those increases, either."
As if gas, labor, and a host of competitors weren't enough, limo business owners must also cope with a maze of interstate transportation laws and procedures.
The state of Connecticut, for example, imposes restrictions on out-of-state limousine services. "Any runs that are in Connecticut, unless they cross the border in some way or other, are illegal," said Bradway, who has served on the Board of Directors of the National Limousine Association, and currently serves as the eyes and ears of Western Massachusetts on the board of the NEI-A. "It's a crime, all right, but there's nothing we can do about it."
And then there are the New York City border wars, which make the Connecticut skirmishes look tame. New York City has taken advantage of an obscure, 200-year-old stipulation in federal interstate commerce laws to set up its own transportation authority, the Taxi and Limousine Commission (TLC), with the power to fine and impound out-of-state cars that don't have what is called a Tier II license to operate in the City of New York, and put their passengers out on the curb.
"We have been hassled, no two ways about it, at different times," said Bradway. "When you go into the city, you take your life in your hands and pray you get out. New York City is a horrible mess."
Chapdelaine's company has had its own problems in Gotham. "As soon as they see you're an out-of-state car, they grab you, and it costs more than $100 to get your car back. At JFK, there are tow trucks waiting for you if you leave your car. One of my drivers was no more than 15 feet away and they were already pulling up to the front of the car to take it. It's a hard, hard business."
Interstate commerce is one of the most controversial issues in the industry, said White. Established in 1992 with less than a dozen members, NELA now represents more than 300 limo services. NELA is working to get a bill passed in Congress to make it easier for companies to do business across state lines. "If you have a legitimately run business and the proper federal authority to go into these areas," says White, "then you should be able to do business without running the risk of being fined and having your cars impounded."
Braking Even
Is all this hassle worth it?
Dersarkis reports that last year his company experienced an impressive 46% growth rate; his three-year plan includes a second location in northern Connecticut. Bradway, meanwhile, reported that his company posted more than $1 million in sales, a significant jump from the year before.
But for others, the bottom lines are less rosy, and many harbor fears that a softening economy will leave businesses and individuals less willing to indulge in limos.
Chapdelaine has already seen demand for limousine service decline somewhat, leading to a corresponding decrease in his annual revenues.
Birks summed things up for many in her position when she said that although business is good, her biggest challenge is "just trying to stay in business."
