INDUSTRY CONNECTIONS TWEET, TWEET
STN WEB POLL Sponsored by Durham
School Services “Can’t wait to get off the cheese wagon
AKA school bus.” — An eager high school student in Angola, La., via Twitter in April
How many hours of training do your school bus drivers receive each school year?
As of May 6, 2011
More Than 50 Hours
6%
40-49 Hours 12%
Under 30 Hours 68%
30-39 Hours 14%
Gloves Off?
Like in most industries, especially during
economic hardships, student transporta- tion is an ultra-competitive marketplace. But an article published in the UK’s Pas- senger Transport in mid April demonstrated how contentious things can get. Te publi- cation featured a heavy-weight slugfest of sorts between at least two of the largest private school bus contractors in North America. As contractors vie for fleet conversion contracts amid
shrinking school district budgets, it’s no surprise that Scot- land-based FirstGroup has also felt the pinch of the economy here in the states. The company announced “disappointing” financial results earlier this year tied to its North America school bus business. As Passenger Transport points out, First Student accounts for about a quarter of its parent company’s £6.3 billion annual revenue, or about $10.5 million. It’s also no surprise that First Student, and FirstGroup, are
in Denis Gallagher’s crosshairs. In addition to being the largest school bus contractor in North America, First Student is also a main competitor to Gallagher’s Student Transportation, Inc. In 2006, FirstGroup acquired Laidlaw International (and the rest of the company’s school bus and transit business), where Gallagher for years was the regional vice president and then senior VP of operations. But by the time the acquisition was approved, Gallagher had been gone from Laidlaw for nearly a decade. In 1997 he left Laidlaw, then the largest contractor in the nation, to set up a new shop under the name of Student Transportation of America. Since then, STA added a Canadian subsidiary, aptly named Stu-
dent Transportation of Canada, and consolidated the two national operations under the umbrella of Student Transportation, Inc. Gallagher told Passenger Transport he is not surprised that
First Student has also been feeling the pain of the economy, and it’s not surprising he blamed the company’s business model. “They have viewed this as public transport,” Gallagher told
16 School Transportation News Magazine June 2011
Passenger Transport. “School buses are not public transport. It’s a different type of business.” First Student established itself as the largest contractor by acquiring smaller con- tractor companies all across the county, and some fairly big operations, too. UK competitor National Express similarly slid into the No. 2 spot in
North America after acquiring Durham School Services and Stock Transportation. Gallagher took a similar tact, one of acquiring smaller contractors mostly in urban and rural ar- eas in the northeast United States and Canada that fit the company’s core customer base. Since then, STA, or STI, has expanded nationwide. But Gallagher said the UK transit and rail model doesn’t work as well for school buses in the United States. And he added that First Student is taking on new con- tracts too fast, a model he referred to as “full speed ahead — steady as she sinks.” FirstGroup America responded that it remained “fully
committed to providing safe, reliable, locally focused trans- portation service for its clients. To claim anything else would be ridiculous and completely without merit.” A company spokesperson pointed out that FirstGroup
entered the school bus market in 1999 and has since gained “the knowledge and expertise of operators and professionals who had decades of local experience and insight. Our drivers and managers are local to the communities which they serve — they know the community, the students and the parents, which is a tremendous asset on all levels.” She added that the company continued to stand by its busi-
ness model and was confident that its reach could provide unparalleled advantages for school district customers. For example, she said FirstGroup brings to the table “substantial economies of scale and purchasing power, which allow our cus- tomers to put more financial resources back in the classroom.” Tere was no comment from National Express at this writing.
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