When he founded Student Transportation of America in 1997, Denis Gallagher’s goal was fairly simple: “to just build a good company with good people who shared the same philosophy as I do,” as he puts it.
“I always thought that if you took care of the people you work with, they would take care of the customer, and the customer would take care of the company and so on,” Gallagher elaborated recently. “It’s called the ‘Service Profit Chain,’ and it is best delivered by people who really care about what they do. I thought if we did those things, we could possibly grow and make a difference.”
And grow they did. Student Transportation Inc. (STI), as the overall company is now known, has become the third-largest school bus contracting firm in North America. Each school day, STI shuttles 1 million students to and from school in the U.S. and Canada with a fleet of more than 11,000 yellow buses.
Gallagher, who serves as chairman and CEO of the company, has long been an outspoken champion of outsourcing school transportation in STI’s work with school districts and in high-profile interviews on news networks. He has led STI’s remarkable growth with a strategy dubbed “A-B-C”: acquisition, bid and conversion.
For his efforts in building a top-caliber company, providing safe and efficient transportation for students, and promoting privatized school bus service, SCHOOL BUS FLEET named Gallagher its 2014 Contractor of the Year.
SBF Publisher Frank Di Giacomo presented the honor at the National School Transportation Association’s awards banquet in Charleston, South Carolina, in July.
School bus roots
Gallagher was essentially born into the school bus business. In 1922, his grandfather launched a school transportation company when he began shuttling a few kids home from school in an old truck.
Gallagher’s father continued in the family business, called Coast Cities School Buses Inc., and later brought his son Denis on board.
“My father had the greatest influence in my career and taught me all about the school bus business,” Gallagher says. “He taught me how to drive, fix buses and dispatch as well as the importance of service to customers and the importance of never forgetting where you started.”
In 1987, Coast Cities — which had become the largest privately held school bus company in New Jersey — was sold to Laidlaw, where Gallagher became a senior executive and played an integral role in acquisitions and expansion into new markets. In 1996, Gallagher left to launch his own company.
With STI, Gallagher has maintained consistent growth through his A-B-C strategy, acquiring companies in targeted areas and then building regional density in those areas.
“The thought was to find good companies with good people that know their particular market,” Gallagher says. “From there, we would find bids for new work in the area to grow from an established base. Lastly, once we established ourselves in the area, we could work with local school districts that own and operate their transportation system to create public-private partnerships known as conversions.”
Earlier this year, STI acquired the California assets and contracts of Atlantic Express, which shut down at the end of 2013. Gallagher says the incorporation of that new business was seamless.
“It was fully integrated and running smoothly after the first two weeks,” he says. “We have an integration team that handles the operations and technology, our communications council meets and greets everyone and explains the culture, and we spend a lot of time with local management on our programs and systems. We also met with every customer and have renewed every contract we got there for another five years.”
As STI has grown, it has continued to focus on its people as the core of its success. In 2012, the company launched an annual Employee Appreciation Week, which terminals across the nation celebrate with events like catered lunches, barbecues and award ceremonies.
Gallagher and his team have also maintained strong relationships with customers, as evidenced by the company’s 95% contract renewal rate over 17 years.
Fuels, technologies for the future
Gallagher has been at the forefront in adopting alternative fuels and new technologies in school transportation. In 2012, STI made the largest single order of propane school buses to date: more than 400, for a new contract in Omaha, Nebraska.
Gallagher cites a variety of benefits that STI has tapped into by embracing alternative fuels.
“It’s cheaper in price per gallon, it is cleaner burning, quieter and starts in extreme cold conditions,” he says. “It is an easy shift to make, and customers — especially parents — are embracing the concept.”
Overall, Gallagher says that STI’s costs have been lower with alternative-fuel buses than with diesel or gasoline, but, he is quick to point out, “even if it cost the same, it is the right thing to do for the environment and for our communities.”
STI has also embraced technology, such as GPS and on-board cameras, to enhance safety and efficiency. Looking to the future, Gallagher says that he foresees more security systems in, on and around the bus, including such advances as facial recognition for children as they board and new driver communications like VoIP (voice over Internet protocol).
Gallagher adds that STI is increasingly collecting and sourcing data on its operations to make them more efficient and less costly, which will allow the company to do more with fewer vehicles and fewer drivers.
“Down the road, I think we will see a shift towards custom routes based on daily ridership with new ways to communicate more effectively and directly with parents and students,” Gallagher says.