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By Matt Daus
Matt Daus of Windels Marx
In a long-awaited journey from passage of the bill at the end of 2020 to the opening of the application portal on June 19, motorcoach operators are finally able to apply for the Coronavirus Economic Relief for Transportation Services (CERTS) Act program. Applicants will have only four weeks to submit their grant applications—closing 11:59 p.m. ET on July 19. Applications will be reviewed and approved in the order submitted. In other words, the sooner companies submit, the better. The program does not allow applicants to request specific grant award amounts; instead, the grant award will be based on the total applicant pool. The great news is that CERTS grants are non-competitive, which means all eligible companies that submit by the deadline and are approved by Treasury will receive a grant award. This is a big deal for transportation service providers, as this is funding that companies will not have to pay back at any point in the future. The goal of the CERTS Act program is to make transportation service providers whole again, as much as that is possible, after the unexpected and difficult circumstances faced in 2020 due to the pandemic.
“Applicants will have only four weeks to submit their grant applications—closing 11:59 p.m. ET on July 19. Applications will be reviewed and approved in the order submitted.
Who is Eligible for CERTS Act Grants?
Based on the final language in the guidelines, the CERTS program is for motorcoach, school bus, passenger vessel, and pilotage vessel transportation service providers who were in business on March 1, 2020. The eligible transportation service provider must have experienced a revenue loss of 25 percent or more between calendar year 2019 and 2020 as a direct or indirect result of COVID.
The eligible transportation service provider will have either:
- 500 or less employees (full-time, part-time or temporary), and not be the affiliate, subsidiary or parent to any other entity with more than 500 employees; or
- 500 or more employees (full-time, part-time or temporary), and not received a loan under the Airlines Loan Program or the National Security Loan Program under the CARES Act.
Treasury will review and consider any COVID federal assistance the company has received and subtract that amount from the overall revenue loss in 2020. A company is ineligible if the COVID federal assistance already received exceeds or equals the total amount of revenue earned in calendar year 2019. This includes assistance provided under the CARES Act, PPP, or any other COVID relief program funds. Participation in these federal assistance programs does not disqualify the company unless the other COVID assistance amounts to more than the total revenue earned in 2019.
Example: If Bus Company A made $100,000 in 2019 and only $50,000 in 2020 due to COVID, the amount of revenue lost from 2019 to 2020 is $50,000, or 50 percent. During 2020, the business received a PPP loan for $20,000. When considering eligibility for CERTS, Treasury will consider Company A’s total loss in 2020 of $50,000 minus the PPP loan of $20,000, making the maximum grant consideration $30,000 (based on current guidelines). CERTS guidelines do not specify whether the Treasury will consider only the forgivable portion of any COVID federal assistance received.
Motorcoach & School Bus Company Eligibility
To qualify as a motorcoach transportation service provider, a company must be registered as an interstate carrier at the federal level or an intrastate carrier at the state level and provide passenger transportation services. A company must have at least one over-the-road bus that it uses in its principal business operations, and must operate its vehicles on a fixed route, commuter service, tour, or charter service model.
Under the recently released Treasury guidelines, the requirements to qualify as a school bus transportation service provider were significantly updated and changed. Under the May 6, 2021 guidelines, a school bus company was to provide its USDOT registration number, for the Treasury to validate the company with the Federal Motor Carrier Safety Administration (FMCSA). If the school bus company did not have a USDOT registration number, Treasury was to review the state registration number or other unique identifying number issued by the state or local agency. A school bus company was also required to provide a copy of its primary or largest contract(s) with a school, school districts, or state department of education for which it provides transportation services. A school bus company might be required to submit additional information to help determine eligibility, such as the vehicle license plate numbers for its school buses and the customer names, points of contact, and contract service periods for the school bus contracts upon request by the Treasury.
Under the June 17, 2021 guidelines, a school bus company must provide a current certificate of insurance with liability coverage as a school bus company, which describes operations as school bus transportation of students. The Treasury will rely on this information to validate the school bus company in addition to a sampling of the VIN, license plate numbers, and model years for a limited number of the company’s school buses and the name of a school, school district, or state department of education which the company provided school bus services for. School bus services includes transporting students to and from school and/or for education-related events in or after 2019. These updated guidelines no longer require a USDOT registration number, although a company may still provide one if the company is registered with FMCSA. The updated guidelines no longer limit eligibility to school bus providers with long-term contracts with a school or school district which in turn widens the applicant pool.
Each CERTS application must be linked to a federal tax return. All information reported on the application must match the information reported on the linked federal tax return. The primary factor in calculating the grant amount will be the difference in total annual revenues reported on the 2019 and 2020 tax returns. Companies that applied for and were granted an extension to file 2020 tax returns are also eligible to apply as long as they demonstrate that extension paperwork was filed.
Limousine and Black Car Companies May Also Be Eligible
Although the CERTS grants don’t apply to companies operating sedans, SUVs, and limousines, it could apply to those that generate the most revenue from either motorcoach services or school bus services. Treasury will review the company’s completed application and determine the principal business that the company is engaged in. If the application for CERTS is approved by Treasury, the CERTS grant can be used for allowable expenses in any part of the company’s business including black car and limousine related expenses.
Companies in Bankruptcy
With the slow rollout of federal aid, many companies were forced to shut down. Luckily, CERTS does not immediately disqualify transportation service providers that have filed for bankruptcy. If a company remains operational, or is no longer operational but not out of business, has met all other CERTS Act requirements, and is in bankruptcy under Chapter 11, the company is eligible for CERTS Act funds so long as the bankruptcy was filed after March 1, 2021. If a company is out of business, dissolved, or filed for bankruptcy prior to March 1, 2021, the company is not eligible for CERTS grants. Those in Chapter 7 bankruptcy are also not eligible.
Using CERTS Funds
Unlike PPP loans, CERTS funds have a wider range of allowed uses. These monies are intended to cover payroll costs; the acquisition of services, equipment, PPE, and protection measures from COVID for workers and customers; continued operations and maintenance of existing equipment and facilities; rent; leases; insurance; and interest on regular debt service.
Funds will be distributed equitably among the four eligible transportation industries based on an analysis of their industry size and cost structure. Fund allocation will be determined after the application period closes on July 19, 2021, and based on actual data from eligible applicants in the pool. The grant-sizing formula (determined by Treasury) will set minimums and maximums for the awards, although the primary factor in grant-sizing will be the company’s lost revenues from 2019 to 2020 and will not exceed the total revenue earned by the company in 2019.
Register and Apply
The portal will be open for a total of four weeks, closing on July 19, 2021 at 11:59 p.m. Eastern Time. To apply, interested companies should register to obtain an ID.me username and password. Companies can also register for updates directly from the Treasury.
Gather copies of your tax returns, income statements, and payroll information for the years 2019 and 2020, as well as any prior COVID federal aid received including EIDL, PPP, Main Street Lending Program loans, and any other COVID-related grant or loan. Given the more flexible allowed use of the grants, the time and effort to prepare a CERTS application is likely worthwhile.
For assistance in completing the CERTS applications beginning to end, for review of your draft application before submitting, or just to ask any questions whatsoever, contact me at mdaus@windelsmarx.com or at 212.237.1106.
[06.28.21]
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The U.S. Travel Association (USTA), which launched its Let’s Go There campaign earlier this year, is now turning its eye to the beleaguered meeting industry. As domestic travel heads toward full recovery of its pre-pandemic numbers, the work isn’t done until other segments of travel are also seeing similar gains.
As such, USTA has launched its Let’s Meet There, a campaign that targets the struggling business travel and professional meetings and events (PMEs) sectors. According to data from the association, the US saw a decline of more than $200 billion last year in direct spending generated from business travel (of which roughly $100 billion was directly due to declines in meetings and events), leading to the loss of nearly 1.5 million jobs and $28.8 billion in tax revenue.
The segment’s revival is crucial to chauffeured transportation's long-term health as well as the overall travel economy. Business trips account for a majority of air travel and lodging, with 500 million trips taken in 2019 alone, representing 2.5 million American jobs and a massive $348 billion in spending. Polls show, including those from the Global Business Travel Association, show that business travelers are itching to get back on the road, and that their employers are steadily moving toward it. This campaign aims to convince reluctant C-suite executives that travel is imperative to company success as face-to-face meetings tend to be more productive and business-building than phone calls or even video conferencing.
U.S. Travel Association President & CEO Roger Dow
According to the campaign’s website: “Let’s Meet There will seek to elevate the economic importance of PMEs—and the fact that it is possible to resume PMEs safely—to state and local policymakers, as well as the Centers for Disease Control and Prevention, to encourage a reassessment of guidance for PMEs. As stated in a review of current best evidence led by scientists at The Ohio State University, PMEs have the advantage of being structured and well-organized large gatherings where mitigation factors can be enforced to protect the health and safety of those in attendance.”
“We have a lot of work ahead of us, but I am confident that we can accelerate the recovery of this crucial sector of the travel economy,” says USTA President & CEO Roger Dow. “The same energy, focus, and collaboration that made Let’s Go There such a great success will carry the Let’s Meet There campaign through this next chapter. I am looking forward to continuing working with all of our partners and know this will be an important part of our industry’s comeback story.”
Visit ustravel.org or letsmeetthere.travel for more information.
[06.29.21]
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You asked for it and we listened. In this column, we ask operators of all sizes and from all walks of the industry a question about their business and report their answers so you can assess how your own company compares to your peers. If you would like to participate, please email Rob Smentek at rob@chauffeurdriven.com for next issue’s question.
TOPIC: In light of the upswing in costs, have you raised your rates? If so, by how much (%)? How have clients reacted? If not, are you planning an increase in the near future?
We have seen a dramatic uptick in fuel, staff, and insurance costs over the past 18 months. We had to address each one individually, not just for the current increase, but also for future impact. We felt addressing the current need and ignoring the trend would result in a second rate increase that customers might push back on. Once we did the analysis, we were able to come up with rates that made sense for both point-to-point and hourly services. Our biggest challenge was balancing the rate increase for non-contract work to offset our contracted rates, which we couldn’t easily adjust. In all, we have had rate increases of more than 20 percent in some cases, and to this point, our clients have not pushed back at all. It will be something we monitor closely as we continue to communicate our value proposition frequently.
Maya Adrine, Vice President/Business Development
Golden Limousine International in Ann Arbor, Mich.
Traditionally, I would raise my rates slightly every year with little to no pushback from clients as I think they are accustomed to it. Although this year, I have instituted dynamic pricing using the LQC system with Addons based on supply and demand—and couldn't be happier. My pricing now fluctuates and, although it is hard to quote on-the-go, I am definitely generating higher revenue trips. I think the customers also enjoy how easy it is to get a rate and book a vehicle online that they are willing to pay more for the convenience of not having to talk to anyone unless they want to.
Kirk Bagger, CEO
Captains Car Service in Parma, Ohio
We raised our rates by 10 percent in January 2021. We have also just increased our rates another 5 to 10 percent depending on the market. We have not received any pushback to our rate increases to this point. However, we did not raise our rates on yearly contracts, but plan on pushing those to higher gains during our next contract renewals. As far as raising rates in to the future, we will most likely base it on two main factors: 1) fuel costs and 2) increase in wage minimum requirements per our operating region. Inflation is here, and we have to be ready to adjust our costs to regional economic stimulus.
Michael Barreto, President
Metropolis Passenger Logistics in Philadelphia, Pa.
For reasons above the rising costs of fuel, we have made the decision to increase our rates 17 percent. Fuel was one factor; however, the additional costs to keep our employees and our clients safe come at a price that we just can’t and won‘t absorb. When explained, in a manner that emphasizes a safe ride, we haven’t found any pushback. More importantly, we are making a statement that safety is priority one at Mosaic Global Transportation.
Maurice Brewster, CEO
Mosaic Global Transportation in San Jose, Calif.
We have been very careful regarding raising our rates, even though the whole market is increasing a lot while all of our fixed costs are on the rise. Also, we are aware that so many people are still suffering traumatic financial problems originated from COVID. Soon, however, we will have no other option and will be forced to increase some rates to cover all the extra costs that were added to our overhead.
Fernando Carlison, Jr., Co-founder/CEO
Mundi Limousine in Deerfield Beach, Fla.
We have not raised our rates. We have always been a rate-plus-gratuity company without all the “plus, plus” business. We are considering adding surcharges for early/late services, and passing along tolls and airport fees like many in the industry..
Carlos Cortez, President/CEO
Cortez Transportation Company in Topeka, Kan.
We have not raised our rates as we are still down in (local) business. We fortunately haven’t had any serious increase in costs yet, and economic predictions are promising, so rising rates is not our concern now. But that may change once traveling to Europe is possible again.
Richard de Krijger, General Manager
DMC Limousines in Amsterdam, Netherlands
We are currently holding tight with our 2020 rates as our clients are still in the “I deserve a discount” frame of mind—the COVID Effect. I have instructed my staff that we don’t discount and to be strict with returning deposits (of course, the clients never see the “nonrefundable deposit” language). We also did not know what the horizon looked like as it relates to other companies in Dallas shutting their doors. Very few have closed up shop and so competition is fierce, therefore, we did not have a rate increase starting in 2021. Being in Texas, our fuel, while it has gone up, is not as bad as it is on either coast. I expect that we will be making a 5 to 8 percent increase starting in 2022, if not sooner in the fall.
Eric Devlin, President/Owner
Premier Transportation Services in Dallas, Texas
As of right now we haven´t raised our rates, and are not planning on doing so in the near future.
Katharina Monsberger, Managing Director
RSL Premium Chauffeured Services in Vienna, Austria
We raised our rates 10 percent in 2021.
Michael Oldenburg, CEO/President
United Limousines in Offenbach, Germany
Between the shortage of drivers and high expectations of our passengers, we needed to make a change in rates. Our rates effectively went up 10 percent across the board effective in June to cover all of the new unseen costs that have crept up on this business. From gas, wages, equipment, security, communication, supplies, utilities, and parts, it seems like everything is increasing majorly.
Gus Ortis, CEO
Executive Transportation in Minneapolis, Minn.
We have increased our rates between 8 and 26 percent depending on the vehicle and utilization.
Sam Rubin, Owner
Four Seasons Concierge Transportation in Park City, Utah
We’ve held our rates on point-to-point sedan and SUV transfers; previously, we were the highest in our market and felt that we would see fierce competition from the TNCs. It looks like it’s just the opposite and people are leaving them for chauffeured car—so we’ll probably have to rethink our plan. We raised hourly charters in specialty vehicles about 25 percent, primarily to slow the business down… which didn’t work. Clients are booking events at a rocket‘s pace with no care about rates. I think this will continue for some time.
Doug Schwartz, Founder
Executive Ground Transportation in West Babylon, N.Y.
We have adjusted rates and will continue to do so; not a specific percentage, but through adjusting some minimums as well as transfer rates. We’re also considering adding late-night/early-morning fees and increasing FBO rates.
Quentin Shackelford, Owner
AllClassLimo.com in Wichita, Kan.
We did not raise our rates for 2021 because many clients had the same difficult time that we did. We will raise our rates slightly by 2022 when the world is hopefully normal again.
Bart van Leijden, CEO/Founder
ETS Luxury Driving in Barendrecht, Netherlands
We have not risen the rates, nor do we intend to. Occasionally, we even offer additional discounts, compensating the cost increase with overall jobs volume, which is still far from pre-pandemic times. Our biggest advantage is that we never ceased activity, even in the roughest of lockdown. This way, our drivers are comfortable with strictly following COVID safety protocols, while the competition is still shut or just starting to adapt.
Joseph Votano, CEO
Abaser Limousine Service in Barcelona, Spain
We’ve loved hearing your answers to our benchmarking questions—but we always welcome suggestions for future topics, too!
Send an email to rob@chauffeurdriven.com you just might see your query answered in our next E-News.
[06.29.21]