Creating a Win-Win Relationship

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Creating a Win-Win Relationship

• Presented by
• John McCarthy
• GO Airport Express

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The best service is achieved when both the
airport and the operator are successful in
Achieving their goals
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Common Goals

• Offer Quality Service to the customer.
• Achieve Satisfied Customers and Repeat Business.
• Provide Quality Employment for Local Residents

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Airport Goals

• Achieve efficient use of the airport resources
  i.e curb and terminal space.
• Maximize Airport Revenue

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Operator Goals

• Maximize Return on Investment

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What are we looking for in quality service?

• Professional Driver
• Attractive, Clean, Late Model Vehicles
• Frequent Service
• Easy Access to Service
• Economical Pricing

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Professional Driver

• Screening of Applicants
• Choose the best.
• Training and Retraining
• Invest in the driver and maximize driver
  retention.
• Offer an attractive compensation package.

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Attractive, Clean, Late Model Vehicles

• Invest in new vehicles to meet demand
• Invest in a preventative maintenance program
• Invest in in-vehicle technology
• Drivecam
• Mobile Data Terminals
• Credit Card Swipes
• GPS

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In-Vehicle Technology
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Frequent Service

• Minimize Waiting Time
• Manage Load Factor Economics.

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Easy access to Service

• Invest in state of the art reservation system.
• Offer online reservations through attractive
  website.
• Offer portals and links to travel sites.

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Brand Service for National Recognition
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Maintain Efficient and Responsive Call Center
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Have Professional Staff at Airport Ticket Counters
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Have Professional Staff at Airport Curbs
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Economical Fare

• Price Service to be 50 to 70 of Cab Fare
• Maintain Economical Load Factor

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Looking at the Economics of the Operation
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Transportation Industry

• Large Capital Investment
• Low Profit Margin
• Steady Cash Flow

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Airport Ground Transportation

• Business models vary based on specific market
  conditions.
• Profit margins of a healthy company range from 5
  to 8.
• When services were regulated, Utility Commissions
  looked for margins of 5 to 10.

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Micro Analysis of industry

• The economics of operating one van.

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Revenue

• 120,000 per year 2,400 per week 400 per
  scheduled day.
• Vehicle works 25 days per month (six days per
  week)
• Carries 3.5 passengers per trip 7 passengers on
  a round trip 21 passengers per day
• The average fare charged is 19.00 per person
  (Assume competitive cab fare is 30 to 38)

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Drivers Wages (35)

• 42,000 per year
• Including
• Taxes
• Benefits
• Excluding
• Gratuities
• Equates to a straight time hourly rate of 9.25.

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Vehicle and Equipment (6)

• Depreciated over 5 years.
• 34,500 Cost of Van
• 800 Radio
• 600 Mobile Data Terminal GPS Credit Card
  Swipe
• 600 Drive Cam

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Fuel (11.5)

• 10 Miles Per Gallon
• 4.00 cost per gallon

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Maintenance (6)

• 45,000 miles traveled per year
• 16 cents per mile including maintenance, body
  repair, cleaning and tires.

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Additional Expenses

• Insurance (4)
• Annual premium including 10,000,000 umbrella
• Transaction Expense (4)
• Cost of taking a reservation or selling a ticket
  is approximately 0.75.

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Administration (12.5)

• Includes
• Hiring
• Training
• Dispatching
• Accounting
• Technology
• Facilities
• Etc.

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Airport Fees (6)

• Equates to 10 on all business departing the
  airport.

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How Do We Share The Pie
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Annual Per Van Numbers Based upon 120,000 Revenue
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Annual Per Van Numbers Based upon 120,000 Revenue
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Sharing the Revenue

• If one area needs a larger slice of the revenue,
  then other aspects of the operation get a smaller
  slice.
• Mandates often require a larger cut of the
  revenue.
• Vehicles being required to use alternative fuel.
• Drivers having to be paid a prevailing union
  labor rate.
• Increasing Airport Fees.

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Growing the Revenue

• Increasing the size of the revenue pie allows for
  bigger slices.
• Ways to increase revenue
• Increase the Fare
• Increase the Passenger Volume
• Increase the Passengers per Trip

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Roles Airports Can Play in Increasing Revenue

• Promote the Shared Ride Service
• Press Releases about Holiday Travel
• Airport Website with link to operators website.
• Announcements in terminals promoting shared ride
  service
• Directional Signage to Shared Ride Service
• Provide Airport Ticket Counters for the Sale of
  Shared Ride Services
• Loading Zones and Counters in convenient locations

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Airport Directional Signage
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Counters and Loading Zones
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Making the Investment

• Short and Long Term Investments
• How much does one want to invest in a business
  that will last only three to five years?
• How much does one want to invest in a house if
  they are only going to live there three to five
  years?
• How many will take a job with a career horizon of
  only three to five years?

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Making the Investment

• The longer the agreement with the airport- the
  greater commitment of the operator.
• Long term agreements generate larger capital
  investments.
• Todays environment calls for greater investment
  in vehicles, technology and personnel.

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Making the investment

• Long term airport and operator partnerships have
  been successful!

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Return on Investment (5 Year Contract)

Capital Investment Vehicle 33,000.00
Related Equipment 3,500.00
Working Capital 6,000.00
Other Technology 1,500.00
Total 44,000.00


Annual After Tax Earnings Annual After Tax Earnings
38 Tax Bracket 3,700.00
Average Annual Return on Investment Average Annual Return on Investment Average Annual Return on Investment
Over 1 Year 8.5

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Return on Investment (3 Year Contract)

Annual After Tax Profit (38 Tax Bracket) 682
Average Return on Investment

Annual Return on Investment 1.69
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Conclusion

• Airports and operators need to be partners in
  making a shuttle service successful.
• The quality of a service is dependent on the
  economics of the operation.
• Long term commitments generate greater capital
  investment.

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Conclusion

• Revenue must be sufficient to cover
• The cost of providing quality service.
• Airport Fees
• Return on Investment