By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
Virtually all of the other large bus companies in the country, although they serve regions instead of the entire nation, are making money. Several, in fact, are eating the top dog's lunch in areas where they compete directly with Greyhound.
Greyhound's tactics have backfired with a vengeance. Instead of growing stronger, Greyhound has isolated itself to the point of near self-destruction. Ironically, many of the smaller bus companies, forced to scramble for survival, have emerged even stronger and are challenging Greyhound's dominance of the industry.
"[Schmieder] had a philosophy that 'If I can put these other guys out of business and we're the only ones left, then our business can only get better.' It was not a very constructive way to go," says one lifelong bus company official. "There's really no justification for any of the stupid moves they made."
Despite repeated efforts, Schmieder, who was forced out of the company last fall by irate investors, could not be located for comment. The former company president has declined other interview requests, citing the lawsuits pending against himself and the company.
New president Lentzsch was also unavailable for comment. Company spokesman Kula explained that Lentzsch, enmeshed in efforts to salvage the company's finances, did not have time for an interview.
Lentzsch better be busy, say those with money invested in the company. If Greyhound is to survive, he has many fences to mend.
The bus industry is simple. Basic. Nickel and dime. Nuts and bolts. It ain't rocket science. Those are the characterizations repeated by long-time practitioners of the trade.
Success requires clean buses that arrive on time with polite, safe drivers. Bus riders--from college students to the least economically endowed--do not ask much from a bus company.
"People who ride the bus have more time than money. People who ride planes have more money than time. It's that simple," says Chriss Street, president of Chriss Street and Company, a California firm that owns Greyhound stock and led the effort to force Greyhound into bankruptcy last year.
Unquestionably, bus ridership has fallen with the advent of cheap air fares. In the 1960s, during Greyhound's salad days, almost one-third of those traveling from state to state boarded a bus.
The number of riders has dropped dramatically since then, especially as airlines made inroads into the travel industry. But even now, more than 100 million people ride buses at some point each year--not counting city-run commuter systems like DART--and about 35 million use bus carriers like Greyhound to travel from city to city or state to state.
Many of those passengers are headed for towns and burgs that do not, and probably never will, have commercial air service.
The bus business, experts say, has settled down to its bedrock core of riders, people who most likely will not have the money or inclination to switch to air travel. From that base, there is ample money to be made, and the nation's monopoly should be benefiting from it.
"People ride the bus because it goes to all those funky places where their grandmother lives, and takes grandmothers from those funky little places to where their kids live," Street says.
During the bus industry's heyday three decades ago, Greyhound was the largest of two national bus companies and made plenty of money, enough for the corporation to expand well beyond bus service and into other businesses like soap and computers.
The conglomerate moved to Phoenix in the early 1970s and eventually renamed itself the Dial Corporation. Bus service was just one of its numerous enterprises, albeit one of the most profitable.
In 1987, three private investors from Dallas--including newly hired president Craig Lentzsch--bought the bus operations from Dial and moved them to Dallas, setting up the freestanding Greyhound Lines, Inc. (Lentzsch, 46, is a former executive for bus leasing and manufacturing firms. He helped manage Greyhound for two years after the buyout, but left the company in 1989 following "philosophical differences" with his partners.)
Later in 1987, Greyhound was able to buy the remnants of Trailways, the only other national bus system, and command total control of nationwide bus service.
Many at the time feared the power of a single national carrier, and voiced their concerns to the Interstate Commerce Commission, which had to approve Greyhound's takeover of Trailways.
Unlike Greyhound, Trailways was a consortium of dozens of independently owned bus companies. Some served just a few towns, others large regions of the country. They shared the Trailways name and coordinated marketing.
Only one company in the Trailways family--Trailways Lines, Inc.-- provided national service, linking the rest of the family members. It was Trailways Lines that Greyhound purchased, leaving independent and regional carriers across the country totally dependent on the running dog for connections with the rest of the country.
In order to win ICC approval of its Trailways takeover, Greyhound had to promise it would not unfairly savage the remaining independent and regional carriers.
"For the ICC to approve it, there was a verbal agreement that Greyhound would treat the Trailways carriers with open arms," says J.D. Johnston, president of the remaining Washington D.C.-based consortium of Trailways companies. "We'd be a big happy family. Well, that lasted for about two years, until the strike sent Greyhound into Chapter 11. Under Frank Schmieder, that's when it changed. That's when they started breaking away from the bus industry."