Why Be An Airport Transfer Specialist?
Why become an airport transfer specialist? There are other options available if you were to choose to provide cars for passenger transport. You could specialise in weddings, school transport, close protection services, wheelchair accessible vehicles or even regular taxis for that matter. Specialisation in ground transportation offers a wide choice. If you are considering airport transfers as a field of expertise, your geography and local economy will play a big part – so too will your competition.
With two major airports less than a one-hour drive away, becoming an airport transfer specialist was the overwhelming choice for DrivenByQ. There was a clear gap in the market where supply did not meet demand. There were enough wedding car suppliers established in the local area already. I wasn’t driving a Mercedes or a Rolls Royce either so VIP work was ruled out and Wrexham had an abundance of taxi offices. The best choice was the middle ground, offering executive travel, where people appreciated a car with some nice qualities.
Defining a Niche
When originally marketing my executive car in 2003, it became obvious that supplying ‘executive’ airport transfers would be the right choice. I originally set up a web site to attract people from overseas who were flying in to the UK’s Manchester International Airport. This initially provided more affluent customers. It started well but Google is fickle and trying to guarantee results on the Internet is futile. Eventually, we decided to establish a company supplying the local area. This way, we could direct more of our marketing to the right place.
Understanding the Competition
The next attempt at becoming an airport transfer specialist focused on holiday makers going to Manchester and Liverpool John Lennon Airport. These are two seasonal airports with lots of traffic through the summer months. Unfortunately there were established suppliers in Wrexham like Andy’s Travel, Route 66, GLT and many more who were competitive on price. At the time, some were offering the fantastic £85 deal. This meant there was little scope to grow past anything more than a one-man-band operation.
Specialism within the Niche
The price competitiveness of the holiday market leaves very little margin or profitability. It is difficult to grow a team at low prices and working around the clock with hardly any sleep is risky business. It has never appealed to me. With guidance, I came to see the corporate market as being the place we needed to be: It has regular travel demands (rather than a seasonal peak) and it will support higher pricing. The corporate customer requires a more structured approach (which suits me) and there is potential for growth. With better margins there are more self-employed drivers available to help in busy times.
Business passengers require a higher standard of service than a taxi can provide. They will prefer to travel in an executive car with a good driver. The cost of travel is not quite so critical for them either, especially where sixty-day account facilities are required. Likewise business customers may require multiple cars at the same time – their organizational requirements can be demanding. An Executive Assistant will need a supplier who can give them confidence too. Understanding these requirements are key for knowing how to attract business customers. To be a success, we had to define our niche though and own it!
Once corporate customers start to open accounts and travel with you, the volume of bookings will increase. Going from one car (and a diary) to two or even three cars will require a more organized system. Knowing how to manage chauffeur bookings is crucial. Introducing a booking system will be essential for invoicing and keeping track of accounts – not to mention the allocation of work to drivers. As volumes increase further, there is also the potential to develop greater profitability by linking journeys together. This is essential if you wish to attract more drivers in to your team.
There are basically two revenue streams as an airport transfer specialist. The first method is to do all the driving yourself. The second method is to sub-contract a job to a self-employed driver and make a commission. If volumes are high enough, a member of staff will be required to receive and manage bookings (so a commission is crucial). Other overheads such as licencing fees, accountants costs and insurance premiums will also be incurred. Journeys paid on account make it easier to deduct commission before paying a driver but it requires a greater working capital to begin.
Making profit as an airport transfer specialist does not happen overnight. There needs to be volume. Journeys then start linking together. A vehicle travelling to an airport with a passenger and returning empty, typically costs 20% commission, 20% fuel, 30% vehicle and 30% for the driver. If however the vehicle travels to the airport with a passenger and also comes back with a passenger, the fuel and vehicle costs are negated. This means 80% of the return journey is received by the driver. A £60 one-way trip makes £18 for the driver, whereas a linking return will make them £66 in total.
The VAT Conundrum
Receiving account payments from business customers will require a business bank account. As money flows in to this, the annual turnover will increase. If an airport transfer specialist completes journeys at an average of £65 per trip, it only takes an average of 26 trips a week to reach an £85,000 turnover. At this point, there is a legal requirement to register for VAT. In the UK this adds an extra 20% to invoices but it can be claimed back by VAT registered businesses. It was just one more reason why DrivenByQ focused on executive airport transfers as part of a corporate chauffeur service.