With COVID-19 seemingly behind us, and due to an increase in vaccination rates, air travel is on the upswing. According to the TSA, U.S. travel on August 8, 2021, surged by 160% compared to the previous year. Starting an airport shuttle business is a profitable venture as travelers return to airports. We also see an increase when comparing 2023 and 2024, meaning that the trend continues.
Shuttle services have broad applications beyond air travel. They provide affordable, efficient transportation to hospitals and jails. They also help alleviate traffic by transporting commuters into cities.
When launching a shuttle service, it’s crucial to cut recurring costs for maximum profitability. Proactively managing route planning, route optimization, and driver schedules reduces expenses, saves management time, and boosts the profitability and efficiency of your shuttle service.
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A shuttle service regularly transports groups of 10 or more travelers. It does so using buses or vans between different locations. One type of shuttle service focuses on providing transportation to and from airports. It appeals to travelers due to its cost-effectiveness compared to self-parking or taxis.
Another example includes medical transportation services or Non-Emergency Medical Transportation (NEMT) businesses. These shuttle drivers transport patients or elderly individuals between hospitals, homes, and care facilities.
Shuttles generally fall into two categories:
For instance, a scheduled shuttle might operate between a hotel and various airport gates. An on-demand shuttle functions like Uber Pool, accommodating many stops based on passengers' destinations.
With travel on the rise again, it's a great time to start a shuttle service. From 2016 to 2019, the U.S. charter bus industry experienced steady growth, earning $3.1 billion in revenue. Although the 2020 pandemic caused a 15.4% decline in revenue, the outlook is now positive. Airports and hotels are eager to offer guests a convenient and reliable way to get to and from their destinations. Shuttle services have a unique chance to partner with local businesses, such as hotels and shopping centers, to benefit from the increasing activity in the travel, hospitality, and retail sectors.
Scheduled bus services are becoming more popular in 2024. As people become more mindful of their spending, they are opting for scheduled bus services.
If managed efficiently, shuttle services can be a profitable venture. This is especially true when operating on busy routes or using technology to optimize their routes.
Starting a transportation business involves both one-time startup costs and ongoing recurring costs.
Business License Expenses: Just starting a shuttle business—before you have customers, employees, or vehicles—has costs. Whether you choose a corporation, sole proprietorship, or LLC, you'll need to pay state filing and reporting fees. These fees vary by state and business type but generally range from $50 to $150.
Purchasing vehicles is one of the largest and most crucial upfront expenses for shuttle services. The cost of shuttle buses varies based on factors like size, passenger capacity, whether they are new or used, and whether you buy or lease. According to Major Vehicle Exchange, new 15-passenger buses average around $50,000, while used ones cost about $25,000.
After acquiring vehicles, shuttle service owners must obtain permits allowing them to operate commercially. Requirements and costs for permits differ by state, but typically include an application fee and an annual renewal fee.
Entrepreneurs may choose to franchise a shuttle service for benefits like leveraging an established brand, receiving support from a larger organization, and reducing risks. However, starting a franchise involves various fees, such as franchise fees, training costs, vehicle down payments, marketing expenses, and other associated charges. For example, the costs to open a shuttle franchise may cover many expenses, including a franchise fee, a training fee, a vehicle down payment, marketing costs, and various other expenses. Knowing these costs upfront can help entrepreneurs better plan their budget and financial strategy.
Running a transportation service involves several recurring expenses. The profitability of the business will hinge on minimizing these costs while attracting a large customer base.
Fuel Costs
Fuel is a critical and fluctuating expense. According to AAA, diesel fuel, which many buses use, currently costs between $2.933 in Mississippi and $4.375 in California. Since fuel prices are influenced by macroeconomic factors beyond a company's control, it's crucial to use fuel efficiently.
Driver Wages, Maintenance, and Storage
Other ongoing expenses include driver wages, which average $17 per hour, along with cleaning, maintenance, and storage fees for vehicles. Research by the Kevin Smith Transportation Group shows that annual fuel costs for gas and diesel average between $2,110 and $2,500 per vehicle, while annual insurance costs range from $3,360 to $6,000.
Once you know how much money you'll need to start and run your business, you can plan out the details.
First, decide where your shuttle service will operate. Understand the scale of your operation based on your resources. If you have a good budget, you can cover a larger area. If you're starting with limited funds, it might be better to start small and plan to expand later.
No matter the size of your business, do some competitive research to find gaps in the current market. How many shuttles are already operating in your area? Are they on-demand or scheduled shuttles? Do they have exclusive deals with local businesses, like hotels and shopping centers? Check out local airports to see if an airport shuttle service would be a good fit. Contact businesses that don't offer a shuttle or taxi service to explore potential partnerships.
To maximize your profit, focus on busy areas and aim to transport as many passengers as efficiently as possible.
After deciding where to operate, choose your business model. The two main options are scheduled services (like a bus) or on-demand services. Your pricing will differ based on the service type. For instance, if you partner with a hotel for an airport shuttle, the hotel might pay you a flat fee for a scheduled loop. For on-demand service, you’ll likely charge customers directly.
If you have a smaller team and fewer vehicles, starting with a scheduled shuttle service might be best. Partner with a local business and set up a regular route between their location and a place like an airport or hospital.
If you have a larger team, more vehicles, and more flexibility, consider offering on-demand service at a higher price. On-demand service, which involves taking multiple passengers to various pick-up and drop-off points, is more complex. This makes route optimization crucial.
Before driving passengers, ensure your company has all the required documentation and insurance. You'll need:
Once you know the costs, service area, and have all your paperwork sorted, it's time to hire your team and buy your vehicles. These are crucial for your shuttle service’s success: the early success of your business depends on having good drivers and reliable vehicles.
Buy vehicles based on the service you plan to offer. For instance, a limo business needs limousines. If you’re offering an on-demand service, you might need a fleet of smaller vans. For higher-capacity trips, you may need buses for 40 or more passengers. Make sure your vehicles are accessible for disabled travelers and comply with ADA standards.
As you build your business, consider travelers’ comfort and safety. Do your vehicles have enough storage for luggage? Can they allow for appropriate social distancing? Do they offer good airflow? These features can make your shuttle service the preferred choice for frequent riders.
When building your team, hire experienced and reliable drivers. You need drivers who drive safely, follow directions, and are dependable. To minimize inefficiencies that could hurt your profit, ensure your drivers are punctual, stick to the schedule, and are willing to make route changes that save time and improve the customer experience.
Managing routes and drivers proactively cuts costs, saves time, and boosts profitability. By using software like eLogii to create efficient routes for drivers, shuttle services can reduce recurring expenses and become more profitable faster.
Inefficient, unoptimized routes add time for both drivers and travelers and can hurt the business’s bottom line. Longer routes take more time, resulting in higher wages for drivers and more fuel consumption. Plus, longer routes mean fewer trips and fewer revenue opportunities.
Long and inefficient routes are also more likely to face traffic issues and delays, which can harm the customer experience and damage the brand.
It's crucial to make your shuttle routes and schedules as fast and efficient as possible, but doing this manually is tough and time-consuming. That is especially true for a small team that could focus on higher-value tasks. That's where route optimization software like eLogii comes in handy.
eLogii creates more efficient routes, no matter how many stops your shuttle will make. The software automatically optimizes multi-stop routes by considering driver and vehicle schedules, capacity, and service areas. Automation means less manual work for your team, getting drivers on the road faster with less oversight.
Additionally, eLogii tracks your fleet in real-time, allowing you to predict delays and respond quickly. Its user-friendly analytics features support continuous improvement and driver accountability. That helps you identify top performers and those who need support.
As travel picks up, people will seek more affordable ways to get around. This growing interest makes starting a shuttle service a great business opportunity.
Additionally, people and communities are more focused than ever on reducing carbon emissions. Recent years have seen a surge in urban mobility options, including public transport, ride-sharing, and shuttle services, as alternatives to energy-wasting single-passenger cars. With sustainability becoming a bigger concern, shuttle services can attract travelers wanting to cut their carbon footprints.
Starting a shuttle service can be a profitable way to start a business, help your community, and support a greener future. Yet, to do it efficiently and profitably, you'll need careful planning and logistics optimization. Tools like eLogii, which help save fuel, manage drivers, and improve efficiency, can be a big help.