27 Apr 2020

GENERATING INCOME, REDUCING COSTS DURING COVID-19

The second Busworld Academy webinar about the Covid-19 virus and what it does to the coach sector was attended by 900 people from all over the world. “How to create income during a lockdown period and to reduce costs”, was the topic of this second Busworld Academy held in partnership with GPN (Global Passenger Network).

In this second Busworld Academy webinar 6 top-level managers of coach operating companies from around the world, brainstormed about possible internal measures companies can take to face the lockdown period and the Covid-19 crisis. The 6 top-level managers: Mr. Mohammed A. Afzal as Chairman and Managing Director of AB Business Enterprises (Parveen Group) in India and Secretary General of BOCI in India; Mr. Mark Anderson, CEO at Anderson Travel, UK; Mr. Trinh Gia Hien, Executive Assistant at Haivan Group in Vietnam; Mr. Luis A. Pedrero, CEO Car Tour and former president of GPN, Spain; Ms. Bronwyn Wilson, President of the International Motorcoach Group, USA; Mr. Thami Mourad, Vice President GM2 Tours in Morocco.

Jan de Man, Director of Busworld Academy: Coach companies have to survive with hardly any income for almost six months. There are three possible measures to be taken which can be crucial to the surviving of coach and bus companies: External help from the governments, finding creative ways to generate income and reducing costs with the focus on fixed costs.”

Spain is one of the countries which is hit hard by the Covid-19 virus. As former President of GPN Luis Pedrero gathered from his GPN colleagues some interesting examples about how to generate income in this time of crisis. The Italian company Linea Azzurra for instance was able to place its coaches in service for a cruise ship operator which had to repatriate passengers from their cruise ships. After this Linea Azzurra offered the cruise ship company a one-stop-shop facility for all over Europe with the help of the other European members of the Global Passenger Network. In France GPN member Say Bus converted sleeper coaches into medical sleeper coaches including ventilator-equipment. In Norway coach company Unibuss developed a campaign how to organize safe travel.

Transportation in India has almost stopped entirely according to Mohammed A. Afzal. Less than 1% of the normal work is carried out. “A special contract in partnership with tour operators was made to repatriate consulate-workers, expats, from all over the country to airports on their way to their home countries. Also we transport doctors and medical staff with tourist cabs to the hospitals and villages and places in rural areas.”

Trinh Gia Hien of the Haivan Group in Vietnam: “Government has stopped all transportation of people mid March. Since then we are transporting parcels and mail. We always did this already but it had never our focus, untill now. Our customers are mostly small businesses but also farmers who want to transport their goods to cities like Hanoi. We are helping people and at the same time keeping our business a live.”

Thami Mourad mentioned that a limited part of transport is still active in Morocco. “Like military transport and prisoners. But it only covers up to 15% of our normal revenues. This work is tendered by the government. All tourist transport is stopped. Our biggest problems lie in banks and insurance companies. We have cancelled the insurance on 30% of our fleet. In this way we saved 40% on insurance costs. But it is a complex matter.”

Mark Anderson started his business in 1988 with one coach and has now 40 vehicles, all under 3 years old. “Coach operators are very focussed on generating business. They are not so clear on the costs associated on generating that business. There is a feeling among many that an empty yard or depot means you're making lots of money. But are you maximizing that profit the same time? So now with the down time this pandemic is causing, this is the absolute time to start looking at your cost base to make your costs as low as possible. On the actual cost of an operation you can have a difference of 20%, 30% or even 40% with the competitors. We are experiencing difficult times but there is a grey lining out there and that is to delve down into the nuts and bolts of you organization and that you are able to see and understand the cost based you are operating with and the opportunity you have to reduce those costs.” According to his statement his company is by doing this saving up to 100.000 pounds.

In Vietnam the Haivan Group is working with the bank to reschedule its debt. “Basically we pay the same amount but over a longer period. Also for the next three months we do not need to pay any interest and after this period it will be decided per month what to do, pay the full amount or only interest. Also we can take out a zero per cent interest loan to cover 50% of the salaries for the next three months. This is a huge help for us, because we have problems in paying our employees.

In Spain the Government also helps out with the banks. Luis Pedrero: “The government has issued a guarantee on loans for 80% for one to five years. There is also the possibility for a one year moratorium on the capital. There is one problem because the maximum amount is set on 25% of revenues in 2019. For most companies it can be enough but for businesses with intensive capital investments it is not enough and can be difficult to survive. We are requesting the government a new line of investment for this.”

REGISTER NOW FOR THE NEXT BUSWORLD ACADEMY WEBINAR ON "HOW TO RESTART BUS OPERATIONS AFTER A LOCKDOWN?"

REGISTER HERE  >

Thursday 30 April 2020 at 3 PM CEST



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