Languishing in the decades after World War II as the nation's resources went toward building a highway system to support private automobiles and the airlines skyrocketed in popularity, the motorcoach industry was revitalized with the energy crisis of 1973. It was then that the nation was reminded about the essential service, the fuel efficiency, the flexibility, and the economy of the bus.
When gasoline supplies returned, attention all but vanished again until the federal government lifted the constraints that had been imposed since the Interstate Commerce Commission Act of 1935. The industry became free to address the problems of an archaic product and could develop new products to fit current needs.
While the bus business was regulated, existing companies operated under a kind of government protection, with their routes like franchises and their profits virtually assured. The companies generally could charge customers what they liked, and though they usually had authority to operate both point-to-point (scheduled) service as well as charters, long-haul scheduled service was the mainstay of the business. Many companies were family businesses, operated by third and fourth generations of the founders, and had little incentive to innovate or respond to changes in the marketplace.
Immediately following deregulation in 1983, however, thousands of new companies obtained operating licenses. There were 1,500 companies in 1983; today, 3,000 to 4,000 companies employ about 51,000 people and offer bus service in one form or another. However, only 452 provide scheduled service charters and tours have become a critical component of the business, accounting for almost 40 percent of all bus passengers and revenue.
In the 1940s and 1950s, the heyday for bus operators, relatively few families had a car air service was nonexistent or prohibitively expensive, and even the railroad served limited numbers of communities. Things have changed dramatically over the years: Cars have become ubiquitous (now even many 16 year olds have their own) air travel has become much more available and affordable and rental cars fill in any gaps. Consequently, the bus industry has been fighting an uphill battle to maintain its customer base.
Nonetheless, the intercity bus industry still serves more com-munities (one estimate is 13,000, compared with only about 200 airports for scheduled service) than any other common carrier. In 1989, the industry carried 119 million revenue passengers including 40 million charter and tour passengers. The intercity bus industry generated some $1.8 billion (compared with $2.3 billion in operating revenues in 1984), of which $593.3 million came from charters and tours.
Buses still perform a valuable service in providing low cost point-to-point transportation, particularly from the thousands of communities not readily accessible by air. It is difficult, however, for bus lines to compete with airlines for speed and competitive rates and particularly with personal automobiles. For the industry to survive, it must find ways to provide widespread, quality service at low fares ($21 is the average fare).
Greyhound Rising to the Challenge
Greyhound, still the largest single bus company and the only one providing a truly nationwide network of regular-route passenger service, epitomizes the challenge facing the motorcoach industry. Greyhound typically carries 30 to 35 million passengers in a year and offers service between 38,000 city pairs.
In 1987, Greyhound acquired Trailways Lines, the largest operator in the Trailways System, which gave Greyhound service to 400 cities that Greyhound had not previously served. For three years, the merged company recorded increases in passenger ser-vice. Then, in 1990, Greyhound was devastated by a brutal strike by its drivers and forced into bankruptcy. The company emerged from Oct. 31, 1991 and, at the same time, became a public company, with 95 percent of stock held by equity shareholders including creditors and 5 percent by employees under an ESOP (Employee-Sponsored Ownership Plan). The company decided to focus almost entirely on regular-route passenger service and pull back from the charter side (though it still maintained about nine sales offices around the country).
"We think there will always be a demand for high-quality, low-cost ground transportation," a spokeswoman explained. 'It will never again be like the 1950s-there have been too many changes in demographics, standard of living, high-technology air-planes, and faster, safer, cheaper air service. But we're still returning to basics. We have chosen not to compete with smaller bus companies doing charters-the operating cost for us is too high.
"Our challenge is to see ourselves as a customer service, rather than a transportation company," she said. That means that our primary concern is helping passengers get to their destination, rather than moving a bus. We are focusing more on quality service and customer needs." This focus has translated into more customer service and quality control positions. In addition, by seeing point-to-point travel in a new light, Greyhound can address marketing issues aimed at winning back passengers and gaining new converts.
The further challenge is to provide quality service at low cost (the average ticket is $35, and it is possible to travel across the country for $69) and to provide comprehensive service through a variation on the hub-and-spoke pattern of the airlines by funneling people in and fanning them out. These measures require improved yield and fleet management, necessitating computerized controls.
Thus, the bus industry, like the airline industry, will be focusing on innovations in marketing and sales, yield management, customer service, and computerized reservations and fleet management systems, all of which spell new professional opportunities. "It's more challenging and interesting than I had imagined it would be," commented one manager.
Out of 7,700 employees, about 1,000 are managers. "The Greyhound manager must be a very strong, non bureaucratic, broad-based manager who can deal with all kinds of customer service, bus control, and driver issues," said Ted Knappen, senior vice president. "Airlines are encumbered by more levels of specialization our managers are generalists-people with practical, hands-on general-management experience."
