Peter Pan driver Joseph Anderson hits 3,000,000 miles

Earns a berth in 2011 BUSRide Safe Driver Hall of Fame

Joseph Anderson, a longtime driver for Peter Pan Bus Lines, Springfield, MA, who recently began his 37th year of employment with the company, achieved three million miles of accident-free driving. Three million miles translates to at least 36 consecutive years of driving without an accident; or the equivalent of 120 times around the world, and 12.6 trips to the moon without an accident.

The company honored Anderson at its annual S.T.A.R. Awards in April. He will also earn a salute in an upcoming luncheon by his family, friends and co-workers and receive a proclamation from the Commonwealth of Massachusetts, commending him for this distinction; Peter Pan will unveil a new coach with a special bus wrap to honor his driving record to attest to the public Anderson’s accomplishment — and Anderson earns his place in the 2011 BUSRide Safe Driver Hall of Fame, which will be announced in December.

Anderson is the fourth Peter Pan motorcoach operator to reach this milestone, sharing this distinction with Edward Hope, Robert Guistimbelli, and his brother, Everett Anderson, who completed his own three million miles of safe driving in 2008.  The Andersons are believed to be the only brothers to have achieved this mark. Both are still actively employed as motorcoach operators for Peter Pan in Springfield.

Peter Pan is the only company in New England able to boast of any three million mile drivers in its employ, never mind four.

The late Peter Pan Chairman, Peter L. Picknelly hired Anderson in 1974. The native of Alabama moved to Springfield in 1959.  Mr. Anderson after honorable service in the Army.  During his tenure with the company, he has received its highest honor, the Peter C. Picknelly Founder’s Award for excellence.

“Joe Anderson is one of the best of the best,” says Peter Pan President Peter A. Picknelly. “As one of our consistently most responsible, respected and dedicated drivers, he has received every award the company gives to our drivers.” BR

Guard against complacency

Operators should demonstrate good habits in a soft insurance market

By Peter R. Cohen

Several years ago when the robust economy was riding high and investors were raking in money too fast to count, many investors lost sight of reality. All too many held the common belief that those healthy returns would continue indefinitely. Consequently, the abrupt reversal of the trend caught many investors totally unaware.

Because the reasons for their significant return on investment seemed viable, and encouraged people to invest further under the assumption that those returns would continue unabated regardless of economic conditions, their losses came as a shock.  These individuals became complacent and completely lost sight of the familiar axiom: when something appears to good to be true, generally it is.

The same holds true for bus and motorcoach companies dealing with the current insurance climate. Coverage is more readily available in this softer market. Underwriters are more amenable to negotiation, premiums are either stable or falling, and new players seem to be entering the marketplace monthly.

Whereas in a hard market, coverage is more difficult to place, lower limits of liability are available, premiums are high and certain coverages might have sub limits — or be unavailable at any price.

A multitude of factors influence market conditions, among them economic downturns, catastrophic world events, industry capacity, industry claim reserves and supply and demand.

Risk management
Risk management encompasses myriad factors and components. With CSA 2010 now in place, regulatory compliance becomes even more relevant and requires much more attention to all federal regulations — an important component in risk evaluation, along with vehicle maintenance, hiring procedures, training protocols and claim prevention.

In evaluating a motorcoach account for insurance purposes regardless of market conditions, the common denominators are always claims activity, geographical location, driver quality as well as the nature and scope of the company operations.

As these soft and hard cycles occur the most important point to remember is they never last. It is essential to continue practicing good risk management habits regardless of the current cycle.

Michelle Silvestro, assistant vice president and national marketing manager, National Interstate Insurance Company, Cleveland, OH, suggests taking a buyer beware approach during a soft cycle.

“While there is plenty of capacity with several companies offering low premiums, operators must be certain the company they insure with is in stable financial condition and has made a long term commitment to the industry,” she says. “The ability to adjudicate and settle claims in an efficient and effective manner is paramount. Good claims handling ensures the account will be fairly judged.”

Silvestro says this, in fact, becomes the legacy of all motorcoach operators as an insurance carrier evaluates and considers their business.

There are numerous options to offset both soft and hard cycles in a roller coaster-like market. It becomes incumbent the broker think beyond traditional means to bring these options to the attention of the operator. Creativity and innovative thinking are the driving forces here.

“The liability deductible is the single best tool in managing cycle risk,” says Tim Delaney, executive vice president, Lancer Insurance Company, Long Beach, NY. “It allows an insured operator to assume risk based solely on what he knows about his own business — and the confidence he has in his ability to manage it.”

He says the operator can raise the deductible annually as premiums rise, or reduce it when prices stabilize or fall.

“He can soften the blow substantially by keeping the insurer out of day to day claims,” says Delaney. “With all of the variables that affect the long term viability of a motorcoach operation — driver shortages, training and operational issues, compliance related items— nothing can cause the failure of a good and well run company faster than the violent price swings that occur regularly with insurance expense, especially if complacency has become the rule rather than the exception.”

Informed broker

Choosing an informed insurance broker, one familiar with the nuances of the motor coach industry, is essential. Much like a corporate attorney and accountant, the insurance broker must meld into the management team and serve as a resource to both assist and advise. A competent broker is proactive and knows how to navigate the insurance landscape. He does not allow the client to compromise the commitment to run the safest operation possible regardless of the market cycle and economic climate.

The tendency to lower standards during a soft cycle because insurance costs become less significant is not a formula that assures long-term viability. An informed and involved insurance broker will never let the client lose sight of this all important maxim.

A new entrant into the insurance arena may have little idea about the risk that he assumes when he provides a $5 million limit on each and every piece of equipment he insures.

Not until policy limit claims occur do the eyes open and those new entrants realizes just what kind of exposure they have assumed. It can take a few years for these significant claims to mature, and when they do it is frequently too late.

The highway is littered with the carcasses of many insurance carriers who ventured into these shark infested waters only to realize too late what liability exposures they had become responsible for and the accompanying financial devastation.

The highway is equally littered with those operators who gave up the stability of a long term insurance relationship with their carrier just to save a few dollars in the short term. Many of those operators find themselves having to pick up the pieces as a result of that decision. Or even worse, having to deal with a state guarantee fund to step up and provide the protection that they had paid for because their carrier is no longer financially viable.

States create a guarantee fund to fulfill the financial obligations of insurers declared insolvent or who have incurred some sort of financial calamity.

The survivors are those who operate ahead of the curve and demonstrate the vision and foresight to practice good risk management regardless of insurance marketplace conditions.
Simply put, practicing good habits should occur every day, not just when insurance costs begin to escalate.

Peter R. Cohen serves as vice president and director of marketing for Capacity Coverage Company, Mahwah, NJ, one of the largest providers of insurance to the bus and motorcoach industry. Contact Cohen at pcohen@capcoverage.com.

Motorcoach Council welcomes new leaders for stage-two

By David Hubbard

Since ignition and liftoff two and a half years ago, word from Motorcoach Council mission control is the first stage is compete with the grassroots effort Todd Holland has diligently spearheaded. With the message firmly positioned, the second stage has fired and the next sequence of events is in motion.

Holland says the effort in this startup phase was simply to find the means to be as effective as possible with the resources at hand.

Before anything toward this end could happen, the Council had to take its own first steps to define and develop the concept, sell it to motorcoach industry and attract the necessary financial backing.

“We started this initiative with little funds but a lot of motorcoaches,” he says. “The idea to begin by wrapping our message on our own coaches was the most viable solution.”

Value and potential

Taking a moment to reflect on his ride in launching the Motorcoach Council, Holland says the value and potential of this mission is only as strong as what comes next.

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Not to worry. As he steps aside for Brian Annett, Annett Bus Lines, Sebring, FL, to take his seat as council chairman and Heather Horton to step up as executive director, he says it is important to know the current Get Motorcoachified bus wrap campaign was not the end goal, but rather the initial thrust to get as many operators as possible on board and participating.

“Our progress has been steady, but the Motorcoach Council is still in its infancy,” says Holland. “Our goal was to stay out there, talk to everyone and try to determine if our industry truly needed and wanted this initiative to create greater public awareness for what we do.”

Finelight Interactive developed the basic marketing concept with flexibility to allow variations on the theme, leaving room for the startup idea to grow legs as the industry has engaged in the mission, operator by operator, vendor by vendor.

Support of the core message

With 90 Founding Partners in support of the core message, the Council is poised to take its next steps to put it before the public. Coach operators are even chiming in with ideas of their own. One suggestion for a new slogan read, You text, we drive.

According to Holland, onlookers are beginning to get what it means to Get Motorcoachified. He says operators report calls and questions coming in from people reading the slogans as the wrapped coaches roll by.

“This early response is exciting,” says Holland. “It shows that people are behind us and finding ways for the program to evolve.”

In two and a half years questions about the Motorcoach Council have grown from what and why to how and what if; doing less explaining of what it is and more to help operators take the message to their customers. Congratulations go to founding partner Callen Hotard, Calco Travel, New Orleans, LA, for his effort to promote his business and motorcoaches in general through traditional media streams such as stand-alone billboards and cable television; and to Motor Coach Industries and ABC Companies for their development of donation programs based on parts purchases to support the cause.

“Everyone in the motorcoach industry agrees we need media exposure and public awareness more than ever,” says Holland. “We want people to know the benefits of modern coach service before they step onboard for the first time.”

Build stronger alliances

Pamela Wolf will be working closely with Horton in an official capacity to build stronger alliances with business entities that benefit from motorcoach tours and charters.

While the council purports the necessity of banding together to raise awareness by the traveling public through a singular message, and with the concept taking hold, still the Council will never realize its long-term vision without the creative participation in local markets.

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Holland says the Motorcoach Council exists to supplement and fortify, not substitute or replace individual efforts to market and promote. With the available tools from the Council, such as soon to come public service announcements, motorcoach companies can certainly move the process along by engaging in proactive public relations of their own to educate the traveling public about the advantages and conveniences of motorcoach transportation. Maybe this is the third-stage rocket that takes the mission well into the future.

Once everyone is convincingly Motorcoachified, my hope is for the slogan to revert back to the original hearty cheer, Go Coach!

The game has changed for motorcoach finances

By David Hubbard

Motorcoach financers remind operators to take time to reflect the hard times they have just been through and understand the game has changed. They say money is available, but the path ahead demands sound basic business with accountability like they have never seen. Credit processes are much more stringent than before.

Eric Coolbaugh, a principal of Advantage Funding, Lake Success, NY, says in the past 20 years, he has never seen such de-leveraging of commercial and consumer credit because of previous lax credit standards.

“The U.S. economy has seemingly prospered due to Americans’ ability to buy a home and tap into what they loosely considered endless equity. As a result of this feeling of prosperity, Americans spent more than they could afford on everything from automobiles to travel to coaches,” says Coolbaugh. “Unfortunately for most coach operators, the home equity is gone and there are hard choices to make.”

Considering the present economic climate, he says he has not seen such de-leveraging because of lax credit standards since early 2000.

Leases and loans

Advantage Funding, a subsidiary of Marubeni America Corp., the multinational Japanese trading conglomerate, specializes in direct and indirect niche transportation finance and leasing. Their target transactions are leases and loans for new and used commercial coaches, minibuses, school buses, paratransit vans, ambulances and limousines. They also establish captive finance programs for commercial transportation equipment manufacturers. With the exception of schools buses, these businesses have reported steady decreases in units sold for several years, according to Coolbaugh.

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“Operators without other areas of diversification have a tough time remaining profitable,” he says. “The retail limousine operator was practically annihilated as consumers cut any and all discretionary spending. All this has resulted in high delinquency lenders as well as increased repossessed inventory.”

With the public scaling back coach trips throughout the United States, Coolbaugh warns operators to be conservative in how they manage their operations.

Advantage Funding also reports OEM sales for new equipment are down, with many operators electing to maintain their current fleets rather than rather than replace or add equipment. According to Coolbaugh, they are running their vehicles longer they have historically because of the economic uncertainty.

Unable to pay on time

Coolbaugh says he sees customers with strong businesses who have never before paid late experiencing short-term cash flow disruptions and unable to pay on time. In certain circumstances a number of those operators without strong core operations have had to close their doors.

“In today’s finance market, banks are as skittish as they have ever been,” he says. “Some are only lending to the top 5 per cent of fleet operators and turning down most others. Advantage Funding continues to keep a practical lending standard, but we are seeing leverage and high debt loads on almost all applications that cross our desk. In the past many of these applications might have been structured for approval through increased down payment, but in today’s volatile market we almost always have to turn them down.”

Advantage Funding says customers applying for credit today need to pay keen attention to their submittal. Tax returns and financial statements (preferably audited) must be included as well as references from other banks they are paying in a timely manner. Most financial institutions will be asking more questions and scouring data for any signs of high debt load or inability to pay.

The highest standards

Lenders will review personal credit and hold it to the highest standards, so being up front about credit problems when submitting an application is essential. A brief summary detailing business history, future plans and personal experience is key, according to Coolbaugh.

Looking forward Advantage Funding is optimistic about coach financing but says it fully understands this is not the end of this de-leveraging process.

“We think there are still unforeseen bumps in the road and mountains to climb in 2010,” says Coolbaugh. “Eventually, the U.S. economy will be stronger and those coach operators who understand credit and cash flow will be well positioned for long term growth when the economy improves.”

The ABCs of credit financing

Shore Funding Ltd., Little Silver, NJ, provides equipment financing to motorcoach and school bus operators through conventional loans and TRAC leases for new and used equipment.

Company president Joe DiAngelis thinks much of today’s financial woes harken back to the recession of 2000 and the aftermath of 9/11. He says this was about the time the country began embarking on the path of easier credit in an effort jumpstart the economy. By 2009 the scene had shifted significantly due to liquidity problems in the banks.
“No question we have been through a tough couple of years,” says DiAngelis.

“Coach operators needing to replenish their fleets came up to a wall only a few could walk over. Many more had to really strain to climb over, while others did not make it over that wall whatsoever.”

DiAngelis says his company typically sees credit applicants in three tiers — A, B and C.

The As are top shelf operators who have been in business for at least five years and have maintained an excellent cash flow. They come to the table ready to supply strong financials and accurate balance sheets.

The Bs are similar to As but generally not quite as strong financially. Still they signal good business management and keep their finances under control.

DiAngelis says C-grade applicants can be good operators who have hit a rough patch along the way. He says while they will still pay a higher rate and take more time, they generally have what it takes to better their position in terms of financing. “They will have a story to how it happened,” he says. “Again, we just need an explanation. If they ran into trouble through the previous year or went through a single catastrophic event that set them back, we look for signs that show they are still headed in the right direction, such as positive cash flow and balance sheets that are intact.”

DiAngelis says as a general rule his company will likely not approve an operator who shows back-to-back yearly losses. In some situations where he sees red flags, DiAngelis says an approved C-grade applicant may still require additional collateral.

“We will look at the total fleet, how many vehicles are paid off, those still owing and the overall value,” he says. “That is how we determine hidden equity that may help with the deal.”

DiAngelis says the conditions of 2009 bring great scrutiny, and anyone financially derelict and unaccountable will have a tough row to hoe.

“Five years ago we never asked for a debt schedule, when a debt is coming off, the monthly payments, and how capable the client was in servicing new debt,” he says. “In today’s new world, these considerations are paramount.”

Insurers do what they can

According to Bill Love, president of Euclid Insurance Agencies, Melbourne, FL, the criteria and requirements for motorcoach insurance is pretty cut and dried.

“Operators know the limits to meet sand stay in business,” says Love. “There is no give and take with insurance compliance.”

But from where he sits, Love says he too has seen scathing ancillary effects of the economy over the past year. He reports approximately 9 percent of his client base closed the doors and went out of business, where in a normal economy that number is around 1 percent for a variety of reasons.

“As insurers, we have done our best to hold rates down,” he says. “The businesses that survived downsized significantly to insure fewer vehicles.”

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According to Love the insurance market is still offering operators reasonable rates. They are not seeing drops, but neither are rates increasing. He says insurance rates are settling as the economy improves little by little, giving everyone an opportunity to shake out and move forward.

Love advises operators to plan wisely for 2010 and beyond. He sees it as learning to do more with less and making realistic projections in line with present levels.

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