Business travel

Working with Chauffeur-Driven Suppliers

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Demand for chauffeured cars has returned to 2019 levels, according to the National Limousine Association, but travel managers whose programs depend on these suppliers or transportation service providers should prepare for a sticker shock.

The average cost of trips in the industry is higher than it was before the pandemic, according to the NLA, with rates rising due to rising labor costs, lack of inventory and rising fuel prices.

Many suppliers have added fuel surcharges. Enterprise ground transportation technology provider HQ reported that four times as many black car trips in March were charged on fuel as in February, and prices with some fluctuation have remained high ever since.

Travel buyers can try to negotiate these extras into their contracts. HQ said some companies added either a flat fee per ride averaging $2 to $6 or a percentage deal, averaging between 4% and 6% of the base cost of a ride.

Also in March, ride-hailing providers Uber and Lyft announced fuel surcharges of up to 55 cents per ride. The supplements are meant to be temporary, according to the companies.

Additionally, suppliers have raised wages and added other incentives to entice new and returning drivers. These costs have generally been passed on to users. Still, 86% of NLA members who responded to a February survey said they continue to have difficulty hiring new employees. However, Lyft CEO Logan Green on an earnings call in May noted that the total number of active drivers had increased by more than 40% year-over-year and that activations of new drivers had increased by 70% for the same period.

Even with drivers returning, it could be harder to catch a ride — and it could cost more — at least for Uber, if travelers are heading to destinations outside of airports or city centers. The company plans to implement its “upfront fare,” which will allow drivers to see a customer’s destination before accepting a trip. Trips to the ‘periphery of a neighborhood’ will be ‘paid’ so drivers know ‘exactly what they’re accepting or not’, Uber CEO Dara Khosrowshahi said in an earnings call in may.