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Gas Prices Have Limo Firms Burning Rubber

Industry ReportWith gas prices hitting the $3.00-a-gallon mark, the limousine industry is pressing the accelerator on passenger rates. Some companies have imposed a fuel surcharge of $2 to $5 per trip while others plan to use a sliding percentage scale of anywhere from 2% up.

“We hope our clients will be cooperative and sensitive to this issue,” says Barbara Chirico, CEO of Woodbridge-based Gem Limousine Worldwide.

Her firm has 100 drivers and 85 cars, chauffeuring everyone from CEOs to to prom dates. The price of a gallon of gas is critical to Chirico’s bottom line and gas prices are up 39% from a year ago, according to AAA Mid-Atlantic.

“High gas prices are causing many of us to struggle since we cannot pass on the increased costs to clients with whom we have long-term contracts,” says Chirico.

In New Jersey, 80% of vehicles used by limousine firms are sedans while the rest are stretch limos, coaches and buses, according to Kay Hoskins, owner of B&K Luxury Coach in Hillsdale. Based on a fuel tank that holds 20 gallons, it can cost almost $60 to top off one of these vehicles when the gauge hits “E,” she says. The fuel tab for a 100-mile trip to the airport and back in a vehicle that averages 16 miles per gallon can easily come to $18.

Hoskins says after figuring costs for insurance, labor and maintenance, her firm hardly makes anything.

And the cost of gas, serious as it is, is only one problem. “The limousine industry was devastated by September 11, which led to the loss of over 20% of the business,” says Hoskins.

Add high insurance premiums to the mix. Some limo firms are paying more than $11,000 per car, per year, says Chirico. “Post September 11, limousine companies have been forced to concentrate on hiring procedures, safety and security training, and technology at a burdensome cost,” she says.

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