Motor Coach Contracting Tips

We sat down this week with Rick Schweitzer, Legal Counsel, for the American Bus Association. He is a transportation lawyer with a private practice based in Washington, DC. I reached out to him in November of last year regarding a motor coach contracting question posed to me by a Military Reunion Planner/Veteran.  He agreed to join us on MRN Radio.

Rick has been with the private practice, since the mid ’s 1990’s and has served as General Counsel for the American Bus Association, which is a trade organization representing some 800 companies that provide charter, tour, and scheduled bus service throughout the United States.  He regularly advises ABA, and its member companies on regulatory, commercial, and legal issues involving the bus industry.

The Military Reunion Network
Rick, let’s start with you.  We mentioned a little bit of your background in the intro but how did you become connected with the American Bar Association?

Rick Schweitzer
Well when I was a much younger lawyer in Washington, DC, I was at a law firm that did a lot of transportation work. Most of my background was in the trucking industry. Most of my clients were either in trucking or aviation or the railroads. We started representing a group of bus companies that had some issues, with Greyhounds, actually, access to the Greyhound Bus terminals. This was back in the early nineties. And we eventually resolve those issues, fairly amicably. We did some more work for individual bus companies, and got to know people at the American Bus Association. Ultimately, their outside general counsel retired sometime in the mid 90’s. They asked me to be their general counsel. I have served in that capacity ever since then.

The Military Reunion Network
We have had the opportunity to visit with ABA President Peter Pantuso, last summer, on the climate of the motor coach, and bus transportation industry as it related to COVID19 at that time. I wanted to get your take on the status of the motor coach industry, as we move to the new year.

Rick Schweitzer

The status is still precarious because the COVID19 emergency has not yet gone away, obviously. Fortunately, in this last round of COVID19 relief, Congress has set aside $2 billion that the private bus industry can share in order to, help them. It’s a bailout, just like the airlines and the cruise ship industry got and virtually everybody in transportation got except for the inter-city bus industry, so it’s welcome money that was long overdue and coming. Having said that, the bus companies generally, are doing very little work right now compared to, a year ago, or a little over a year ago.
But they are optimistic that with the vaccine, that the passengers will come back.
And they are planning for business returning to usual sometime in 2021.
And it all really depends on the vaccine rollout.

The Military Reunion Network
When Peter and I were talking about the state of your industry, he mentioned a statistic of about half of the 800 companies that you represent were not going to make it to and survive this crisis. Do the monies that are set aside reduce the percentage? How does it play into the survivability of the companies?

Rick Schweitzer
I think it will.  Companies have an awful lot of fixed cost right now. Obviously, the busses themselves and insurance on the busses and maintenance on the busses and interest on payments for the busses or lease payments.  All of those are costs that don’t go away, even though you have no revenue coming in. If they’d been able to hold on this long, and, without shutting the doors, and if they have some prospect of getting access to these funds in the very, very near future, then yes, it should reduce the number of companies that go out of business.  And, you know, even if companies do go out of business, if the demand comes back, there will be new entrants into the industry.

The Military Reunion Network
Let’s talk a little bit about the Veteran situation that initially connected you and me.  I wanted to get your take on what happened.

Rick Schweitzer
Sure. The association was trying to schedule a couple of passenger busses, typical 55 passenger motor coach to do trip for their reunion, and they contracted with what I’m guessing they thought was the bus company. A company that had a very nice website that had all these lovely pictures of busses that referred to our fleet of busses and the service that we provide. But in fact, this wasn’t a bus company at all. It was what I would refer to as a bus broker or somebody who has a telephone, who will take your order and then he will call a bus company and he will arrange the transportation.

Well, the problem is that you do not need a bus broker, you can call the bus companies yourself and bus brokers generally aren’t regulated by anybody.  They are certainly not regulated by the US Department of Transportation. Therefore, when you deal with them, you might or might not deal with someone reputable.

In this case, I am not making any representations about the company or their attention. But the fact of the matter is the reunion planner sent in a deposit for half of the cost of the transportation, which was a little over $2,000 and this was at the end of 2019, actually.

Once COVID19 hit, they realized that they were not going to be able to have the event, so they canceled the service. Which was well within the time in their written contract, which said that if they canceled more than 30 days out they would get a full refund of their deposit. They’ve tried and tried and tried to get a full refund on their deposit, and the money has just not been forthcoming. I’ve actually intervened on their behalf, sent a letter called and talked to the owners of this bus brokerage company, and we really haven’t gotten anywhere.

What I would caution you about is dealing with somebody over the Internet, who looks like a bus company, but really isn’t. The difficulty is how can you tell the difference.

The Military Reunion Network
What questions can reunion planners ask and what can they do to be sure they are dealing with an owner and not a broker?

Rick Schweitzer
I would ask them, number one, “Are you a bus company?” and they will probably all say, yes, I am sure the company that I just dealt with would say, Yeah, sure, we’re a bus company. If they are registered with the US. Department of Transportation, you can ask them for their MC number, which is a Motor Carrier number, which indicates that they are registered to provide for higher motorcoach service.  And then they will also have what is known as a US, DOT number. It will be a separate number that has the prefix US DOT, which indicates that they are regulated in the safety program of the US. Department of Transportation, those are both very important numbers. If they are an actual legal motorcoach company that operates its own busses, they will have both at MC Number and a US DOT number. Once they provide you those numbers then you could do a lot more research.

You can go into the website of the Federal Motor Carrier Safety Administration; FMCSA is the initials. The website is www.fmcsa.dot.gov  You go to the homepage of their government website and scroll down to the bottom. It will have a link for Passenger Carrier and Bus Safety.  You click on that and will come to another screen with a drop down for Passenger Carriers, Travel Planners, and Bus Passengers. You all are the travel planners. And if you click on the travel planner dropdown, they will ask you if you want information about a particular bus company, and you can put in the US DOT number, or the name of the company, and either one will bring up their record. It will show that they have authority from the US Department of Transportation that they are a regulated bus carrier. It will also give their insurance and safety record.  It will show that they have the $5 million in liability insurance that is required by the federal government.  It will show whether they have a safety rating, which just means that the government has done some sort of a safety review of the company now.

Not having a safety rating does not mean that it is an unsaved company because the government is not very good at investigating every bus company in the country, but there are three ratings. There is a Satisfactory rating, which is the best.  You should look for a company that has a satisfactory safety rating.  There is a Conditional safety rating, which means they’ve got issues that need to be addressed, and then the third is an Unsatisfactory safety rating.  If they’re a bus company, they may not operate with an unsatisfactory safety rating so, if you find that, that’s a big red flag.  It will show the list of inspections that they’ve had, as well as the number of accidents they’ve had, both over the last two years, and how many of their drivers and vehicles have been put out of service because of safety violations. That’s all very, very good information.

The Military Reunion Network
I could not agree more. I wanted to point out that we are suggesting reunion planners visit the website to distinguish between a broker and owner.  That said, planners should use the FMCSA website on a regular basis as a part of their reunion planning check list. 

Rick Schweitzer
Keep in mind that’s public information. In fact, you’re supposed to have those numbers written on the side of your bus, so everybody can see them.

The Military Reunion Network
We talked a little bit about investigating a bus company before you contract for services. The other thing that I would include is working with the Convention Visitor Bureau of the destination that you’re considering for your reunion.

Brokers are not bad.  I do not want to shed a bad light on Brokers.  They do provide a great service, and so just be aware of who you’re dealing with and ask those questions of the destination Convention and Visitor Bureau.

Rick Schweitzer
I agree with both of those statements that I do not want to cast aspersions on the entire brokerage industry. I am sure there are some that are quite reputable and upstanding. But I think that generally, you’ll be better off going directly to a bus company without dealing with the. middle person. And I also think that, yes, using Convention and Visitors Bureau or tourism, destination organizations is a good way to get recommendations on reputable bus companies from them because they’re members of the American Bus Association they deal with member companies all the time and they know who come to their sites on a regular basis and so they can give you ideas.

The Military Reunion Network
Yeah, absolutely. What are the things that reunion planners should be thinking about in terms of contract language for brokers and actual motor coach organizations?

Rick Schweitzer
Well, obviously, with COVID19, we’ve all had to learn how to deal with cancelation clauses and impossibility clauses, or if you want to use Latin, they’re called forced mature clauses.  Basically, what are the terms under which both either party may cancel the service, without any repercussions?

And you need to be mindful of what are the circumstances that allow you as the contracting party to get out of your contract obligations. Typically, you refer to things like Acts of God, weather insurrection, labor unrest, those sorts of things. Pandemics were not something that was on our radar screens until a year ago. Now, we’re all very well versed.  But, you know, you can include language like including pandemics or epidemics, or language, that would include any sorts of governmental shutdowns of service.

In many cases, State and local governments have shut down the attractions that you’re going to visit. That should be a reason that would allow you to cancel the contract without any repercussions and then know language about how to get your deposit back.  Contracts will require you to put some money upfront, I would think, but you need to just be aware of what are the conditions for getting your funds back, and how long will the bus company have to return your deposit? If, in fact,  you’re entitled to a refund, and if there’s some question about a refund, how are you going to resolve that dispute?

The Military Reunion Network
I had a wonderful conversation with hospitality industry attorney when we were talking about hotel contracts, and he was talking about adding a COVID19 or Coronavirus Clause to contracts.  A year and a half ago, COVID19 would have fallen under force majeure because it was unforeseen.
Well, we know about COVID19 now, so now it becomes a specific clause on its owned in the contract.

And the other thing that he was suggesting that I’m not sure how this translates into motor coaches, but the other thing that he was suggesting is, in your contract, having a definition of your event. Having a definition of your reunion, and the specific things you do, the specific goals that you have.  So, if something happens with COVID19 and things get shut down, and the hotel is unable to meet those goals based on the current COVID19 climate, then there is an out for you as well and again, I’m not sure how that translates over to the motor coach contracts

Rick Schweitzer
Translating if you are trying to attend a specific event or a specific site, and that event or that site has been closed on the days that you are anticipating being there, that should provide you and out under the motor coach contract as well.

The Military Reunion Network
Are there other things that you can think of that motor coach companies should include with their contracts moving forward?

Rick Schweitzer
It wouldn’t necessarily be a contract term but something that would encourage you to use them which is what are their policies, their procedures for making sure that their vehicles have been cleaned and sanitized?  What sort of procedures are they using to minimize contact, and to make sure, to the best of their ability that persons are not going to be exposed to this coronavirus.

ABA has put together an extremely strict protocol for its members to use it, and how they sanitized their busses after each use and how they enforce social distancing on many of their routes and I think that those are reasonable questions to ask.  You might have a 55 passenger bus and only have 25  passengers on it so that you all have some space.

The Military Reunion Network
Yeah, So it’s interesting with military reunions as they are point A to point B type of user. If there are restrictions on capacity on busses, they are going to have to contract for more coaches than they otherwise normally would have or contract the same number of busses but have them go in a loop of picking up and dropping off passengers until everyone is at the attraction together.

Have you seen trending like that as well?

Rick Schweitzer
I think everything is negotiable at this point. Frankly, I have not seen that specifically, but my guess is that bus companies would be more than willing to talk to you about ways to maximize the service and maximize the protection to the passengers.  They are very, very anxious to get business back to normal, and they will bend over backwards to, to accommodate you.

The Military Reunion Network
We are seeing a philosophy for the most part of, we are all in this together, we all want to climb out of this together.

One of the things that I would ask of the motor coach companies out there, and those actual companies and the brokers, is maintain communication with reunion planners, even if the news to the reunion planner is not what they want to hear. I think that no communication is the most difficult and challenging of this entire situation. We all seem to be pretty understanding as if everybody else’s situation, but that communication is going to be so critical.

Rick Schweitzer
I think that is a very good point and I will pass that on to the ABA member.

If I can also make a a plug for ABA, one of the other ways that you can ensure you’re dealing with a reputable company is to see if they’re a member of the American Bus Association. ABA has requirements that you can’t join, unless you are a regulated Motor Carrier’s. So, you are subject to the Department of Transportation’s Requirements, and they have a very active Ethics Committee.  So, if you are engaged in business practices that are less than reputable, it will be brought up before the Ethics Committee.  We’ve actually kicked some companies out for not living up to the standards. I think that that’s another level of scrutiny that you can provide when you’re researching which companies to use.

The Military Reunion Network
Excellent point!  Thank you!   We will be sure the ABA website and the FMCSA website links are up on our website. Rick, I wanted to thank you for joining us on the MRN Radio podcast.  This has been a great conversation.   I know reunion planners will find it extremely helpful moving forward.  I hope we will have a chance to connect again.

Rick Schweitzer

You are welcome Sharon.  Happy to visit with you again.

related links:

Bus Safety Search | FMCSA (dot.gov)

American Bus Association (buses.org)