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OLIVER TOWNSEND: The visionary behind Knutsford Express

BUSINESS LEADER NOMINEE # 2

BY MOSES JACKSON

Sunday, November 02, 2014    

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OLIVER Townsend likes to share a funny yet telling exchange he witnessed between a ticketing rep at the Knutsford Express terminus in Montego Bay and an anxious passenger.

The young man approaches the agent's window and makes an enquiry. "Excuse me, what time is the flight?" he asks.

The customer service representative raises her head and flashes a furtive glance in his direction, but even before she can utter a word, the passenger, realising the slip-of-tongue hastily corrects himself: "Sorry, I meant what time is departure?"

It did not escape the chief executive officer and visionary behind the bus company that both questions, even the corrected version, were couched in airline language.


As it turns out, Knutsford Express customers use expressions normally associated with airline travel all the time when making reference to various aspects of the bus service.

This reflexive association is understandable. Pre-booking, passenger and luggage check-in, scheduled departures and arrivals are important features of the Knutsford experience. When combined with the air-conditioned waiting lounge and organised boarding process, it should come as no surprise if an impression is created in the mind of the traveller that he/she is about to step into a commuter plane.

This company is not the first or the only business that has sprung into existence specifically to serve individuals travelling between Kingston and Montego.

Along the 115-mile stretch of road linking the two cities, service stations -- some of which double as rest stop and restaurant with generous lavatory facilities -- have for years been providing welcome relief to exhausted motorists and passengers.

Knutsford Express stands tall above them.

By 2006, Townsend had already persuaded a group of investors to throw their capital and expertise behind his dream of revolutionising the way Jamaicans moved by public transportation between the capital and the island's major tourist resort.

He was confident that a safe, reliable, comfortable and convenient alternative to the unorganised minibus service that existed was not only possible, but desirable and economically feasible.

The businessman, who resided in Montego Bay, came by this conviction through personal experience.

In the early 2000s, Townsend, an electrical engineer, had to drive to Kingston multiple times each week to get to class for an MBA programme he was pursuing and had grown frustrated at not having suitable public vehicles that could allow him to study while commuting.

"This business could only work if done the right way," he declares, reflecting on his early plans to enter the transportation industry. "I realised that everything would have to come together perfectly with the right quality service to go with it. Ritz-Carlton was the inspiration."

This reference is a good indicator as to just how high this entrepreneur was reaching. Ritz-Carlton is the four-star hotel chain renowned for its mantra 'Ladies and gentlemen serving ladies and gentlemen' and which became somewhat of a metaphor for top-notch service while it operated in Montego Bay. It recently pulled out of the island.

There was initial scepticism once the businessman began to share the broad outlines of the plan with friends, colleagues, potential investors and other interested parties; and, understandably so.

After all, no template existed for the venture that Townsend had on the drawing board. Commuters routinely complained about the existing minibus system, but for all its deficiencies, it was relatively inexpensive and got the job done.

Back then, few would have made the bet that the market placed such a high premium on comfort that the travelling public would willingly absorb the real economic cost of the quality service being contemplated by the dogged businessman.

Some folks raised doubts about the viability of the proposition.

Townsend dug in. "Many people said it could not work," he notes, "but I have learned that oftentimes it is a waste of time to solicit the opinion of people who are not familiar with a particular situation."

He visualised a bus service that would expose ordinary folks and middle-class Jamaicans to a travel experience that was commonplace in First World countries and which tourists had come to expect while vacationing on the island.

And he should know. His vision for the business was shaped in part by his more than 20 years' involvement in the tourism sector, including his stint as an executive of Caribic Vacations, a destination management company founded in 1982 by his father Gordon.

Among his first recruitment efforts was the informal pitch he made to a few tour bus drivers. They were targeted because the visionary wanted to attract to his firm individuals who were already steeped in the culture of service excellence.

He says he is still flabbergasted that some of them could not even wrap their mind around the idea that at his new venture they would be specifically required to provide the same generous customer service to Jamaican passengers that they routinely extended to foreign guests.

The effort did not bear fruit.

Yet, sometime in June 2006, two buses pulled out of the depots, one headed for Kingston while the other rolled in the opposite direction towards Montego Bay -- the first pair of 28 weekly departures that Knutsford Express introduced to Jamaica.

To get the enterprise quickly off the ground, Townsend had to lean heavily on his father's company.

"We started off by wet-leasing two buses from Caribic," he notes, the airline lingo seeping into his communication -- as often happens with many of Knutsford Express' repeat customers.

The wet-lease arrangement meant that the coaches came with their own drivers and maintenance guarantee. It remained in place for the first two years of the company's operation.

The business had an inauspicious beginning. But for his grit and unyielding sense of optimism Townsend may have had second thoughts about his economic mission and acted on these insidious doubts.

"There were times when we had two passengers in the bus," he remarks. "But we never cancelled the service. We had a scheduled service and took the decision to absorb the early losses and stick to our commitment. It took a lot of resources and will."

By all indications the low passenger load improved with time, so that within three years -- as early as 2009 -- Knutsford was already a profitable undertaking. From revenue of $78 million that year, it netted nearly $8 million.

Townsend retrospectively concedes that not even he, with his ardent conviction that he had made the right move, imagined eight years ago that the company would have grown to its current size, or that it could have what he now senses to be a profound impact on people who use the service.

Here is how he puts it: "We did not know it would turn out like this. It has made a tremendous difference in people's lives. It is just amazing to see the quality Jamaican people using our service, and how they respond to our service. It has given me hope in Jamaica."

The current success is, in part, a reward for management's early decision to consistently push the boundaries on quality in all aspects of the company's operation -- from the obsessive attention to human resource training, to the keen eye that the directors have kept on the quality and safety of the buses, the reliability of service and passenger comfort.

Townsend says that he and Executive Director Anthony Copeland are under constant pressure to lift the bar on service. He describes Copeland, the executive in charge of operation, maintenance and standards, as one of the critical persons to the success of the organisation.

"Each year the expectation gets higher because passengers are passionate about our company, so we have to keep the bar moving with lots of training," he lets on.

Public listing was one step towards "taking the company to the next level" as the CEO puts it. "It was the logical move, and was by choice," he stresses.

Clearly he has had no regrets: "We thought that public listing would bring the company to the next level, so the Junior Stock Exchange was the logical step. The three directors (who have been added since listing) have brought lots of wisdom and experience to the company. These are three people you can lean on and consult."

The firm began trading on the Junior Stock Exchange in mid-January this year, having in December raised roughly $100 million from the issue of 19 per cent of its shares to the public, including the brokerage firm that took it to the market.

Once listed, Gordon Townsend took over the chair from his son, who retained the position of CEO. Oliver, Gordon, and Copeland are the three major shareholders in the company.

Knutsford Express now operates a fleet of nearly 20 buses, four of which are spanking new.

In June last year, it bought South Coast Express, a relative upstart that had followed it into the industry, but which served the south coast corridor. The acquisition immediately expanded the Knutsford Express route to the towns of Negril, Savanna-la-Mar and Mandeville. Falmouth has also been added to the three initial stops -- Ocho Rios, Montego Bay, and Kingston.

Altogether there are 105 weekly scheduled departures, and 80 members of staff. The corporate headquarters is located at Ironshore in Montego Bay.

Though best known as a scheduled passenger service, this firm has succeeded in leveraging its transportation assets to do a thriving business in centre-to-centre courier delivery. Over the past few years this segment has mushroomed and is now contributing millions of dollars to revenue and profit.

There are two other services on offer: private hiring and special events shuttle.

The four discrete business lines have combined to create a fairly robust revenue stream for the relatively young firm. Gross income jumped from $203 million for the year to May 31, 2013 to $323 million during the 2014 financial year. Profit for the 12 months to May 31, 2014 amounted to $51 million.

Knutsford Express Ltd is in the first year of a five-year tax-break for which it is entitled, the owners having taken the company to the Junior Stock Exchange.

A 10-year programme was initially introduced by the Government to incentivise new listings, but the initiative was scaled back, beginning 2014, to five years. This firm missed out on the full 10-year tax benefit because it failed to list by December 31 last year.

If it had met that deadline, shareholders would enjoy a tax freeze on 100 per cent of profit during its first five years as a publicly traded firm, and a 50 per cent break during the succeeding five years.

Twenty-four companies have so far taken advantage of the incentive. Others that are still in private hands have until 2016 to be listed and benefit from not having to pay any tax on profit for five years.

According to Townsend, the capital that was raised from going public is already helping his company meet some important medium-term goals.

One example is the plan now under active consideration to open up service in Port Antonio, the island's most easterly town.

The thinking behind this latest initiative is that a reliable, cost-effective scheduled service has the potential to open up Kingston in a major way to visitors who would normally confine themselves to the north coast.

"It could be transformative for the tourism industry," Townsend reasons. "The island is not just sand and sea, and there are entire new areas to be explored. We can play a role."

The four-lane highway currently under construction as an alternative to the winding and treacherous road that now exists will drastically reduce the travel time between Kingston and Ocho Rios. It is scheduled to open in 2016.

Many people share Townsend's outlook that the prospect of a 45-minute hop between Ocho Rios and Kingston is a potential game-changer for tourism.

But there are some economic risks for Knutsford Express. The fear is that the highway, in transforming the driving experience from Kingston to Ocho Rios, could redirect passengers who now opt for the bus, back into their own vehicles.

Townsend focuses on the upside. He believes passengers will benefit from the quicker and more efficient travel time. In any event his bus service is as well positioned as any other transport outfit to benefit from whatever success Kingston may have in attracting more daytime tourists to its many interesting sites.

"I am cautiously optimistic," he says. "We will up the ante. We want to extend our value, to make the service so compelling that motorists won't want to drive."

The current stock of coaches has many of the creature comforts that are standard in luxury transport -- reclining seats, air-conditioning, restrooms, Wi-Fi service, and audio video entertainment.

The next wave of upgrades will add features like laptop charger ports, plugs for headset jacks, and seats with even smarter ergonomic designs than the ones that outfit the present fleet.

To help fund this unrelenting drive for quality, the directors are now trying to develop a secondary market in Jamaica for the buses that they operate.

"If we can develop this market a bus operator will be able to buy from us extremely well-maintained coaches that are four to five years old; this will allow us to upgrade," Townsend explains.

For many commuters the upgrade has long been achieved -- from the day in June 2006 that two buses set out on their inaugural journey.

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Moses Jackson is the founder of the Business Leader Award programme and chairman of the Award Selection Committee. He may be reached at moseshbsjackson@yahoo.com

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