Top Motorcoach Officials Talk State of the Industry
December 10, 2020
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.
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.