One Scared Puppy

Why Dallas' Greyhound Lines is fighting for its life

Picknelly's company continues to do fine. In fact, it is one of the fastest-growing regional bus companies in the country. Peter Pan's operating revenue for the first nine months of 1994 was reported at $30 million, a $6 million jump from the same period a year before.

Meanwhile, Greyhound, Peter Pan's next-door neighbor, lost $140,000 a year in rent from the Worcester terminal and gained nothing from Peter Pan's departure.

"We're still doing a million dollars a year in sales in Worcester," Picknelly says. "Greyhound is left with their $600,000 a year in sales, but they're paying for the full cost of the terminal. Frankly, [former Greyhound president] Schmieder was the best thing that ever happened to Peter Pan. He made it easy to compete with him."

Similar scenes played out across the country, as Greyhound attempted to raise rents or force smaller carriers out of their terminals. Again, many complained to the ICC, and Greyhound was forced to back off from some of its demands.

Still, the terminal flap further shredded the once-seamless network of small and large bus lines that allowed passengers to traverse the country with minimal hassle.

As it was changing the rules for terminal leasing, Greyhound also turned another industry given into an unknown.

For decades, bus companies had always honored each other's tickets. If a passenger was holding a Greyhound ticket, but a Trailways bus was leaving sooner for the same location, the ticket was good.

Every so often, the companies would settle up any fares owed to each other, and typically would pay a small commission to companies that honored one of their tickets.

Under Schmieder, Greyhound stopped that practice. The company, in filings with the ICC, argued that it was unfair for the company to offer things like special low fares for college students or elderly people and have other bus companies steal away their riders.

More and more Greyhound tickets were good only for Greyhound buses, regardless of convenience for passengers.

"If we had a bus leaving in an hour, and Greyhound's next one wasn't until the next day, the passenger was supposed to wait until the next day," says Peter Pan's Picknelly. "Tell me what kind of customer service that is."

Time and again, the smaller carriers complained to the ICC, but the commission saw no need to step in.

"These business practices were dramatically different than what the industry had accepted over their past history," says Milan Yager, head of the ICC's office of economics. "Whether they were right or wrong, I don't know, but they were instituted very quickly and a lot of people had trouble adjusting to those business practices."

With numerous complaints flowing in, the ICC in 1993 ordered its staff to study whether Greyhound's behavior was anticompetitive--and whether the commission needed to adopt new rules for the bus industry.

"Many of Greyhound's policies are regarded as unreasonable and unfair by much of the rest of the industry," the study concluded. "It is alleged that Greyhound's actions, due to its dominance of the intercity bus passenger market, adversely affect other intercity carriers."

The commission decided that no government intervention was warranted. Rather, it left it to the bus industry to hash out its own problems.

"The bus industry should be encouraged to continue its negotiations and to resolve as many issues as possible from within," the ICC report recommended. "It is in the industry's best interest to work together to revitalize this industry."

Left alone to pursue its aggressive strategy, Greyhound almost destroyed itself.

The industry practices that Greyhound upended were not quaint traditions. They were in place because they worked.

Shared terminals, interchangeable tickets, and widely published schedules allowed all bus operators to work together, enticing passengers with cheap, convenient travel.

When Greyhound began tearing the system apart, it not only hurt profits, but put off potential customers who began to see bus travel as inordinately troublesome.

"When Greyhound used to make a lot of money, they used to have a seamless system between the regional carriers and themselves. They don't have that any longer," says Gerald Connor, the Toronto investor. "The fact that Greyhound went head to head with the regionals was to the disadvantage of the entire industry."

The warfare with regional carriers, Chriss Street says, reflected a broader, fundamental misunderstanding of the bus industry.

"Somehow, Schmieder thought Greyhound should be the airline of the road, just as every airline decided they wanted to be the bus of the sky," says Street. "He had lots of vision. He just had no common sense."

Even as management under Schmieder was burning bridges with the rest of the industry, Street and other investors say, the company's service was suffering. Buses were overloaded, passengers got bumped, terminals began to look ratty.

And as part of its vision, Greyhound decided to cut costs, reducing its fleet of buses, cutting down the numbers of runs between cities, and abandoning some cities all together.

The new, lean Greyhound would be efficient.
In the old days, for instance, buses were dispatched according to fairly simple principles. If 44 passengers showed up for the noon bus from New York to Philadelphia, one bus would do the trick. If 80 people showed up, a manager could survey the crowd and order up another bus to carry them.

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