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Bus Operators in Cross Fire of Air Fare War : Carriers Forced to Close Terminals, Cut Routes

July 07, 1986|MICHAEL SPECTER | The Washington Post

Hanna Schulte was all set to see America the Greyhound way.

The German college student had been told by friends that to travel cheaply across this country, she would have to go by bus. But when she arrived at Dulles International Airport last week, she asked about air fares anyway.

"I had no idea how cheap the flying is here," she said three days later, back at Dulles and ready to board a New York Air flight to New Orleans. "I don't think I'll need to take a bus anywhere."

Savage fare wars have put millions of new passengers in the sky since the airlines were deregulated in 1978, and domestic air travel has never been cheaper. But the competition, while hard enough for airlines, has dealt a deadly blow to bus companies that for years carried cost-conscious travelers across the roads of America.

"It's been a brutal time," said Herbert Doherty, a spokesman for Greyhound Bus Lines, the country's largest scheduled bus carrier. "Our ridership has dropped badly in the past five years. There has been a revolution, and we've almost had to become a new industry to survive."

Selling Terminals

In the past five years, Greyhound--which carries about 60% of scheduled bus passengers, according to industry estimates--has had to curtail its long-haul business, halt service to hundreds of stops and sell almost two-thirds of its 127 terminals to stay alive.

The company broke even last year for the first time since 1981. It is expected to have a better year in 1986, largely as a result of the sale of assets, a massive reorganization and a new strategy of running short hops and group tours.

Greyhound hit its peak in 1969 when it logged 9.3 billion passenger miles. By 1980, just after airline deregulation took off, that figure had dropped to 8.5 billion. By 1985 it had fallen to 5.2 billion.

In the mid-1960s, Greyhound buses were carrying more than 65 million passengers each year; last year they carried just over half that. And the company's fleet has fallen from 5,000 buses to fewer than 3,000 in less than a decade.

By comparison, 1986 probably will be the biggest year in the history of domestic air travel, with about 415 million passengers, according to the United States Travel Data Center.

But airlines aren't the only bad news for the big bus carriers. Cheaper gas has put more families on the road this summer and, according to the Automobile Assn. of America, most of them are doing the driving themselves.

More Summer Drivers

"There is no question that more people are in their cars this summer," said Mary Anne Reynolds, a spokeswoman for the Washington-area AAA office. "We have seen almost a 10% increase in Trip-tik requests," the map and route information AAA provides to members.

Reynolds added that AAA travel agents have experienced a 16% increase in sales of domestic airline tickets this year compared with the same period in 1985. This year's increase--attributed in part to the fear of possible terrorism overseas--is more than three times greater than it was in 1984.

In 1982, the bus industry itself underwent deregulation, and the result has been more competition for the two giants, Greyhound and Trailways, which together carry almost 90% of all passengers in the industry. As in the airline industry, increased competition has lowered prices for travel by bus; and for the bus companies, it has lowered profits. Industry earnings have fallen from $89.2 million in 1970 to $39.9 million in 1984, the last year for which there are statistics, according to the American Bus Assn. And the number of bus companies operating in the United States has jumped from 1,000 in 1970 to more than 3,000 today.

While most of the new bus companies are small metropolitan and suburban commuter lines that do not compete directly with the long-haulers, in many regions they have drawn passengers from carriers such as Greyhound and Trailways.

"We have had to fight like a tiger to keep what we have," said Kathleen Darden of Trailways. "Deregulation has hit everybody pretty hard across the board."

To stay in business, big carriers have offered extremely low prices. And when they can't beat the airlines, they have joined them by hooking up local communities to many major airports. When all else fails, the companies have made good use of the old baseball maxim, "Hit 'em where they ain't."

"We're going where we never went before," said Greyhound's Doherty. "Our No. 1 destination in the country is now Atlantic City. We didn't even serve Atlantic City in 1980."

With a small airport and millions of visitors, Atlantic City today has become a bus operator's dream town. Greyhound runs 28 daily round trips to Atlantic City from New York City alone.

Greyhound and Trailways both are offering bonus fares this summer. Greyhound has a $59 maximum fare to any destination in the United States and a charge of $2 for any person traveling with a passenger who has paid $25 or more for a ticket.

"Tour buses and charters are becoming major players in the industry," said Vincent Campanella of the American Bus Assn. "You just can't compete in scheduled service with the airlines."

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