Photo above: Headquartered in Staten Island, N.Y., Atlantic Express has a fleet of over 6,000 school buses and serves seven states in the U.S.

Managing costs to provide top service

Atlantic Express Transportation Group, Staten Island, N.Y.
Company head: Domenic Gatto, president and CEO
What is your company’s outlook for the 2007-08 school year?
This school year has been a challenging time due to the prevailing economic conditions of the country.

Fuel costs have been high, but we are not able to pass the added costs to customers with whom we have fixed multi-year contracts with no fuel escalators. There are contracts that are extended with increases using regional CPIs. However, these low CPIs are based on a basket of goods that is not reflective of the higher cost increases of fuel-dependent transportation companies like ours.

School districts are under pressure as well, and with tight budgets, they have been reducing daily routes and field trips. In our 35 years of school busing, this is the first time that we have experienced contraction instead of our typical same-area demographic growth. Additionally, the credit crunch resulted in tighter and more expensive cost of capital.

What has been the most positive aspect of this school year thus far?
The driver shortage has not been as critical except in some affluent areas. Another positive aspect is the consolidation of contractors at the larger scale.

How have you managed costs this year? Have you been able to reduce overhead?
We have always been vigilant and proactive about managing costs. We negotiate prices with our suppliers and find alternative ways or sources that are less costly without affecting quality. We always analyze our resources and optimize manpower, facilities and equipment utilization through local or regional synergies and economies of scale. In some areas, we have centralized sourcing and services. When feasible and more economical, we outsource some of our needs as long as they do not hamper our safe and effective delivery of transportation services.

Have you seen any changes, positive or negative, in the employee labor pool? How are you dealing with driver shortage, if you have any?
With an uncertain economy and possible higher unemployment, the driver pool situation is not as critical an issue as it used to be, except for some affluent areas, as I pointed out earlier.

The Rochester-Genesee (N.Y.) Regional Transit Authority case, in which the Federal Transit Administration ruled that it was providing illegal bus service for the local school district, was a big story last year. Is transit encroachment a widespread issue for contractors?
We wholeheartedly agree with the FTA’s decision. It is unfair to use business tax dollars to subsidize public transit systems that are used to compete against that same private business. This is inverse condemnation and should not be allowed. Private companies and yellow bus transportation will always be the most cost effective, safest way to transport our students.

Are there many opportunities these days for privatizing school district transportation services?
Not in the markets we serve.

Fleet Facts
Number of school buses: 6,180
States operating in: 7
Students transported: 265,000
School district contracts: 170
Website: www.atlanticexpress.com
Phone: (718) 442-7000

Having recently expanded into Tennessee and South Carolina, Durham School Services now has operations in 27 states.

Strengthening the team to expand service

Durham School Services, Downers Grove, Ill.
Company head: John A. Elliott, president and CEO

What is your company’s outlook for the 2007-08 school year?
As expectations from our customers continue to increase, there is constant pressure from their stakeholders to get more service for less. We are continuing to look at ways we can improve the safety of the students we transport and to educate school districts about the benefits of privatizing.

Some challenges we face this year include additional safety and emission requirements pushing vehicle prices higher; fuel pricing increases; additional facility costs; and increasing driver packages. We know that cost-cutting is not sustainable and believe that 2008 is the year we need to do our part to meet these challenges head on.

What has been the most positive aspect of this school year thus far?
We strengthened our administrative team and operating personnel and retained quality regional management, which has helped us to have our most successful school year yet. We expanded operations into two new states: Tennessee and South Carolina.

How have you managed costs this year? Have you been able to reduce overhead?
We have sought to take as many unnecessary costs out of our business as possible, and to provide a greater value to all of our stakeholders. There is more work to be done, and we have challenged our team to focus on creative solutions.

Have you seen any changes, positive or negative, in the employee labor pool?
We are competing more with other companies for the same type of employees since there has been a move to more of a service-sector economy. We are experiencing a strong applicant flow, but fewer of the applicants are qualified to meet our stringent hiring requirements for drivers.

How are you dealing with driver shortage, if you have any?
We are continuing to adhere to our hiring standards, which means we may experience moderate shortages in some locations. We are also reviewing and evaluating our recruiting processes, driver salary and benefits.

The Rochester-Genesee (N.Y.) Regional Transit Authority case, in which the Federal Transit Administration ruled that it was providing illegal bus service for the local school district, has gotten a lot of attention over the past year. Is transit encroachment a widespread issue for school bus contractors?
As a tax-paying entity, we do not want to see the taxes we pay being used against us in terms of competition. It is important for contractors to educate our school districts and transit authorities about the St. Germain Amendment.

Are there many opportunities these days for privatizing school districts’ transportation services?
As greater emphasis is placed on test scores, there are more opportunities for privatizing school districts’ transportation services. School districts realize privatizing their transportation services can enhance safety and the overall transportation operation, and allow them more time to focus on the classroom.

Fleet Facts
Number of school buses: 16,000
States operating in: 27
Canadian provinces operating in: 2
School district contracts: 350
Website: www.durhamschoolservices.com
Phone: (800) 950-0485
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First Student completed its merger with Laidlaw Education Services in October 2007.

Well-laid plans make for smooth integration

First Student Inc., Cincinnati
Company head: Carey Paster, president

What is your company’s outlook for the 2007-08 school year?
Operationally, the school year has proceeded really well. We, as well as other companies, face the uncertainties caused by rising fuel costs and acute driver shortages; however, overall we have been quite successful.

What has been the most positive aspect of this school year thus far?
This school year I’ve had the pleasure of integrating talent from two great companies. I have also had the pleasure of meeting many of our new customers. This is really an exciting time for First Student. As we continue to progress, I am thrilled with the bright future that lies ahead.

How have you managed costs this year? Have you been able to reduce overhead?
In order to manage costs and reduce overhead, we are consistently looking at world class excellence, continuous improvement in operating efficiencies, realizing economies of scale and utilizing business synergies.

Have you seen any changes, positive or negative, in the employee labor pool? How are you dealing with driver shortage, if you have any?
Currently, it appears that there are pockets of the country experiencing an economic recession. In those areas, we have experienced an increase in applicants for part-time work.

Then there are other areas of the country where we continue to face driver shortages.

In addition to employee recruiting, we also focus heavily on employee retention, consistently looking at the economic value we provide to our employees, by conducting surveys on employee welfare and wages.

It is our goal to be an employer of choice, and we look to our employees to provide feedback so we can constantly improve and better serve them.

The Rochester-Genesee (N.Y.) Regional Transit Authority case, in which the Federal Transit Administration ruled that it was providing illegal bus service for the local school district, has gotten a lot of attention over the past year. Is transit encroachment a widespread issue for school bus contractors?
I don’t believe it to be a widespread issue, but it is a severe issue in those areas that it is taking place.

Are there many opportunities these days for privatizing school districts’ transportation services?
Opportunities for privatization have increased as the tax base and funding to school districts continues to decrease. School officials and the public will be looking at more efficient ways to provide school transportation.

How has the integration of Laidlaw gone?
The integration has gone exceptionally well. We were very diligent in developing our action plans for the integration to ensure a smooth transition period.

We welcome and thank our new employees for their dedication and hard work during this process. They are truly a great addition to the First Student family.

Fleet Facts
Number of school buses: 62,000
States operating in: 39
Canadian provinces operating in: 8
Students transported: 4 million
Website: www.firststudentinc.com
Phone: (513) 241-2200

STA employees provide service at the company’s operation in Breslau, Ontario.

Focus on staff talents to meet challenges

Student Transportation of America, Wall, N.J.
Company head: Denis J. Gallagher, chairman & CEO

What is your company’s outlook for the 2007-08 school year?
We have been experiencing a good year in our operations across North America. Our drivers and staffs have performed exceptionally well this year and are focused on getting through this year’s challenging winter months.

What has been the most positive aspect of this school year thus far?
This year STA has won some great new contracts and has expanded our operations in all regions of our company. We are pleased to have recruited some new industry executives to our staff and added new positions in recruiting and operations. We continue to welcome those in the industry who want to be part of a growing family of companies like STA and STC (Student Transportation of Canada).

How have you managed costs this year? Have you been able to reduce overhead?
This year we have managed to improve our operations, not by laying people off, but rather by improving our business and asking our people, who are experienced, to find solutions to improve costs.

Have you seen any changes, positive or negative, in the employee labor pool? How are you dealing with driver shortage, if you have any?
The labor pool has been relatively constant, varying from market to market as usual. Our rural and suburban concentration has been good for finding stable, reliable staff, but we all realize that maintaining our staff is as important as finding new employees.

The Rochester-Genesee (N.Y.) Regional Transit Authority case, in which the Federal Transit Administration ruled that it was providing illegal bus service for the local school district, has gotten a lot of attention over the past year. Is transit encroachment a widespread issue for school bus contractors?
We are not seeing this in our area. We are seeing some ridiculous situations, like in Berks County, Pa., where the local government-sponsored operation, Intermediate Unit, cannot manage their own business so they are trying to manage others.

Are there many opportunities these days for privatizing school districts’ transportation services?
We have been successful in a few “conversions” this year, and we always are optimistic that the trend will continue.

School transportation contracting is, and has been, a viable solution to school systems throughout North America who prioritize delivering quality education over providing support services and spending millions of dollars on capital equipment when it is better spent on schools and teachers.

Fleet Facts
Number of school buses: 5,100
States operating in: 10
Canadian provinces operating in: 1
Students transported: 300,000
School district contracts: 200
Website: www.ridesta.com
Phone: (888) 942-2250