Money to be made in leasing buses?

by philg

Shuttle bus drivers in the San Francisco area are unionizing (SFGate), thus potentially rendering their employer unprofitable and inducing customers, such as Apple and Yahoo, to switch to non-union bus companies. This is kind of the same situation as with airlines and unions. At any time the drivers (pilots) can unionize and potentially render the airline insolvent. The resulting sustainable structure in the airline industry seems to be that a leasing company owns the airplanes. Then when the airline is bankrupted by a union contract entered into during a fit of management optimism, the physical airplanes can be moved, repainted, and put into service at a new carrier. ILFC is one example of such a lessor and it worked well enough to turn Steven Udvar-Hazy into a multi-billionaire.

Is there now an analogous opportunity in the Bay Area? Form a leasing company to own a fleet of luxurious buses ($300,000 each?). Use easily replaced vinyl wraps for branding. Lease them to an operator who will hire drivers and contract with Apple. When the operator’s employees unionize and the Apple contract becomes unprofitable, move the buses to a newly organized non-union operator who can be competitive. The regulations and start-up delays for a bus company shouldn’t be anywhere near as painful as for an airplane.

Where’s the flaw in this business plan? Is it already too easy to obtain low-rate bank financing for buses?

6 thoughts on “Money to be made in leasing buses?”

  1. There must be some sort of economy of scale with buses, even if only involves the ability to pay for expensive lobbyists. There were a number of inexpensive non-union Chinese owned buses in the Northeast (DC-Phila-NY_Boston) that would travel from Chinatown to Chinatown and then the Federal government shut them down because they were “unsafe”. And then Greyhound started a new subsidiary called “Yo Bus” (name written in Chinese and English) to fill the niche. And then NYC moved the bus stop for Greyhound competitor Megabus from a convenient location near Penn Station to 12th ave, in the middle of nowhere, four long crosstown blocks from any subway line (there is no 13th Avenue – any further west and they will be in the Hudson River).

  2. If the signage I see on the back or side of many (though not all) tour/shuttle buses is any indication, they’re all leased already. E.g., Owned by XYZ Leasing, operated by Zoom Carriers LLC.

  3. This reminds me of a theoretical business plan that has occurred to me many times over the years. Many companies incur huge ‘non-organic” costs because their products are actually dangerous in practice and they get sued successfully over the course of years. Think of aluminum ladders or gasoline canisters, though there are others. These items are inordinately expensive mostly because of the litigation and judgment costs that are baked in. What if you organize your company just as Philip says – it is a structure that is MEANT to go bankrupt every N years. Soonbankrupt Inc. contracts out the manufacture of the ladders and gasoline containers from a marketign company who itself buys it from another manufacturing company, both in China. Soonbankrupt Inc. leases the design, trademarks, business contacts, and all IP from another chain of foreign companies with mail box addresses. Everything they use in maintaining offices and doing marketing is leased. Minimal money is spent defending lawsuits. Judgments that pile up for for a few years are met with a stone wall of the corporation having no actual liquid funds plus legal stonewalling. In the end, Soonbankrupt Inc. truly goes bankrupt, legally, in court. Strange thing, extremely similar aluminum ladders and gasoline cans are then marked by Somedaybankrupt Corp., no legal relationship to the old company.

  4. They don’t even need the vinyl wraps, most of the shuttle buses are nondescript white, the only exception I can think of being Genentech and Bauer IT (Intelligent Transportation, Bauer is a big charter bus operator).

    I would guess the expensively appointed buses are custom jobs with long turnarounds, which would provide a small barrier to entry.

  5. ‘then the Federal government shut them down because they were “unsafe”.’

    Anonymous anecdotes on the internet, of course, count for nothing, but I would certainly describe almost all the “Chinabus” experiences my college friends and I took in the mid-2000s as ludicrously unprofessional and unsafe.

    They were as thrilling as the real, “3rd world” bus experience. Fun when I was a 20 year old but I sure as hell wouldn’t let my niece take one…

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