By Michael F. Carmichael
April 2, 2009
If you happened to see the North American International Auto Show’s opening night coverage on television this year you might have been aware that something was missing. The limousines that had clogged the entrance to Detroit’s Cobo Center in previous years were noticeable by their absence.
An economic indicator?
Was this strictly a local phenomenon or yet another sign of the economic downturn?
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Corp! talked to Ron Sorci, the president of the National Limousine Association, and discovered that executive transportation is down around the country anywhere from 20 to 50 percent. Particularly hard hit is the “stretch” limousine business. The NLA feels that “the political climate coupled with the media has caused a serious issue in this area,” as executives want to avoid being seen in what might be construed as an ostentatious display of wealth.
In Chicago, Robert Hann, vice president-marketing of Continental Air Transport reports a 50 percent drop in its eight-passenger limos and SUVs. Both Sorci and Hann attribute the decline in part to companies being reluctant to have their employees travel to business meetings because of the economy. “Ironically,” says Sorci, whose office is just outside New York City, “when companies are in an economic downturn, they should be traveling to stimulate sales and get their regional offices more productive. The backlash is contrary to good business sense.”
Innovation is the key to survival
What are limo companies doing to survive? In Detroit, Sue Jarvis, founder of Aristocat Limousines is doing a lot. She’s cut operating costs by reducing her phone bill $200 a month, negotiating lower gas prices with her local filling station, entering into barter arrangements with local mechanics and using Internet marketing techniques to reach customers less expensively than traditional advertising methods. Jarvis tries to maintain a positive outlook and says it “will reflect in not only how you go about everyday business but how you treat customers. Cultivating long-lasting relationships, as well as cutting bottom-line expenses, are key to surviving in this type of business.”
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Checker Sedans in Detroit is the official curbside luxury ground transportation service of Metro Airport. It’s a division of the Checker Cab company and operates a fleet of more than 100 sedans that range from Cadillacs, Lincoln Town Cars and Chrysler 300s with an inconspicuous six inches of extra space to handicapped-accessible vans. They’ve installed wireless credit card readers, bottled water and other amenities to help keep customers. Recently they’ve partnered with Northwest Airlines to offer frequent flyer miles and baggage-level pickup at the airport as additional inducements.
Being greener saves money
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Aristocat and others are investmenting in hybrid vehicles as a way to reduce fuel costs. Nationally there seems to be a similar move, spurred by customers who “have expressed interest in having ground transportation companies provide such vehicles,” says the NLA’s Sorci. Continental’s Hann says that they also are practicing operating procedures throughout their fleet that are saving them about 1,200 gallons a month. They’re “reducing idling time by turning off vans while waiting for passengers at the airports,” he says. They also are encouraging customers to share their rides. “With six people on board a vehicle, it’s environmentally friendly because it uses only 30 percent of the fuel that six cars would use and creates 54 percent fewer carbon emissions,” he explains.
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Continental is one of the oldest private transportation companies in the country, having been started in 1853 by Frank Parmelee as a horse-drawn carriage service shuttling passengers between Chicago’s numerous train stations. Its primary business is still carrying passengers to and from Chicago’s airports and downtown hotels. They, too, are being innovative in the economic downturn by pricing group rates based on travel times - rush hour trips cost more, for instance. They are also “empowering their employees to be more proactive in offering deals for customers,” explains Hann.
Don’t drink and drive
Several companies are exploring a new service offering that is popular both in Europe and Asia: a commercial “designated driver” offering. The usual approach is to provide - often with a special rate - an executive vehicle that will take you to a party or special event and then home without you having to worry about whether you’re over the blood alcohol limit.
For those whose needs for a designated driver are more spontaneous, there are services such as that offered by The Designate. Operations manager Arthur Kelly explains, “We have trained drivers who work with a ‘chase car.’ You call us when you want to leave and we’ll come pick up you and your party in your own vehicle and get you home safely. The chase car follows and picks up our driver.” Kelly continues, “While we do offer memberships, they’re primarily for the convenience of our customers, they’re not required. The benefits of membership are that we have all of the necessary information on each customer - their home address, phone numbers, insurance and credit card information - so that they don’t have to provide it to us in a public location. All they have to do,” he says, “is call us when they’re ready to leave, give us the membership code on their card and we show up. Currently we have between 6,000 and 7,000 members and we expect to double that or more in the next year.”
Yet another alternative
For those willing to do their own driving and who live in areas where it’s too expensive to own and garage a car - or are on a college campus where they’re faced with the choice of paying tuition or owning a car - there’s Zipcar. It’s a time-share arrangement on four wheels. Featuring a 5,000-vehicle fleet of Cooper Minis or similar small, easy-to-park and easy on gas vehicles, Zipcar even has pickups for those trips to IKEA or Home Depot that result in purchases too large for a Mini. Members reserve their vehicle via a web site, walk or otherwise get to the Zipcar of their choice, then swipe their coded membership card over a reader. The doors open electronically, and they have the freedom of the urban road for an hour or a weekend.
With more than a quarter-million members and growing at a rate of some 10,000 new members a month, Zipcar now has locations across the country in 50 cities and 120 college campuses - such as the University of Michigan in Ann Arbor. Corp! wonders when they’ll add Segway Personal Transporters to their fleet.