May-June 2016: The Bus Rennaissance - Intercity Travel, Bus Rapid Transit, Technology Advances, Rural Services (2016)

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TR N EW S 303 M AY–JUN E 2016 11 The author is General Manager, BoltBus, Dallas, Texas. Most people readily associate intercity busservice with the name Greyhound and theiconic symbol of the greyhound running swiftly and efficiently. Greyhound Lines originated in Minnesota more than 100 years ago as a curbside operator, transporting miners from Hibbing to Alice for 15 cents a ride. The founding entrepreneur, Carl Wickman, laid off from the mines, had decided to become a Hupmobile car salesman. He had a single seven-seat car in inven- tory but lacked a buyer. Knowing that many of his for- mer colleagues at the mine needed transportation from home to the mines, he launched the intercity bus ser- vice that evolved into Greyhound Lines. The Greyhound network today serves thousands of communities. Operations span nearly the entire North American continent, from as far north as Yel- low Knife in Canada’s Northern Territories, across most of the continental United States, to as far south as Monterrey, Mexico. The transcontinental network serves 3,800 locations and more than 180,000 unique city pairs. The Intercity Bus Renaissance One Company’s Experience D A V I D H A L L The Bus Renaissance Greyhound has adapted to new markets for bus service with BoltBus and other subsidiary brands. After a seven-seat 1914 Hupmobile successfully began ferrying miners between Alice and Hibbing, Minnesota, the Mesaba Transportation Company expanded—and soon became Greyhound Lines. P H O TO : M O 1229, F LIC K R P H O TO : G R EY H O U N D TRN_303.e$S_TRN_303 7/1/16 11:46 AM Page 11

TR N EW S 30 3 M AY –J UN E 20 16 12 The Greyhound enterprise includes many brands and services, as the company has diversified to meet customer needs. Among the new brands and ser- vices are BoltBus, Greyhound Express, QuickLink, and Rural Connector Service. Greyhound’s experi- ence in introducing these new brands and services, particularly BoltBus, exemplifies a broad renaissance of the intercity bus industry that few transportation experts had foreseen. Historical Context In 1987 Greyhound acquired Continental Trailways, combined the two route networks, made some refinements, and left the resulting network largely unchanged for 15 years. The network emphasized rural and long-haul travel, the basic service strengths of the two companies. Trailways had operated an extensive network in the Southeast, and the substantial overlap made many routes redundant. The Greyhound network also had an imbalance of low-volume routes subsi- dized with revenues from the higher-volume routes. Some cross-subsidization is not unusual in large networks—the stronger routes internally subsidize the weaker ones, and all of the routes benefit as part of a larger network that offers passengers many choices of origins and destinations. Internal subsi- dizing of some routes is acceptable because the operator receives incremental revenue across the net- work. Cross-subsidization becomes a problem, how- ever, if the number of weaker routes becomes too large for the stronger routes to support. This had become Greyhound’s problem by 2002. Greyhound traditionally had routed longer-haul passengers via a more rural schedule, often on road- ways off the Interstate Highway System. Schedules were devised to achieve the maximum connectivity and to facilitate passenger flow. Some schedules, however, required connections at both ends of the link to the longer-haul traffic. This practice typically added several hours and many more stops to a long-haul trip. Although intended to increase the profitability of rural routes, the rural routing became a deterrent to passenger satisfaction and repeat ridership. Customers criti- cized the company for making too many stops and taking too long to reach the destination. A Changing Market As these problems were becoming evident, other fac- tors had begun to influence the demographics and demand of Greyhound’s traditional customer base. In the 15 years since the Greyhound–Trailways merger, the country’s rural population had declined and the urban population was increasing; discount airlines had increased service; and car ownership per house- hold was continuing to grow. The newest coach in Greyhound’s fleet, the MCI-D4505, seats up to 50 passengers and has leather seats. A model that focused on low-volume, frequent- stop routes in rural areas became less profitable as changing national demographics began to favor urbanization. P H O TO : G R EY H O U N D P H O TO : G R EY H O U N D TRN_303.e$S_TRN_303 7/1/16 11:46 AM Page 12

TR N EW S 303 M AY–JUN E 2016 13 These developments combined to redefine the type of customers who sought intercity bus service. Recognizing that the customer base was changing, Greyhound began in the late 1990s to invest in improvements to route data and reporting. By 2002, however, the company’s profitability had dropped dramatically, and the declining financial performance led Greyhound to assess its route net- work critically and to make fundamental revisions. To survive, the network would not only need to undergo contraction but to align with a changing customer base. Although customers taking longer trips with con- nections were still important for profitability, the company had to shift the emphasis from rural and long-haul trips to urban center–to–urban center trips. Greyhound also sought to make travel easier and faster for all passengers, whether on long or short trips. In 2003, Greyhound assembled a team from within to work with consultants to plan changes in the company’s business approach and structure. Data mining was crucial to a highly analytical and quan- titative examination of each route’s contribution to network traffic and profitability. Informed by these steps, Greyhound methodi- cally reduced its schedule network in five phases over 2 years. This contraction reduced the company’s route miles by 32 percent, eliminating service to entire states and to 900 locations overall. These actions were necessary to stabilize the company’s profitability and to inform actions to modernize and revitalize the company. Diversifying Services With financial performance no longer a pressing issue, Greyhound was able to focus on growth and reinvigoration. In response to the increasingly pop- ular curbside intercity bus carriers (see the article by Schwieterman, page 4), Greyhound launched Bolt- Bus in 2008 in the Northeast Corridor. The new brand started as a clean-sheet concept. BoltBus offered passengers more legroom than other network services, 110-volt power outlets, free onboard Wi-Fi, convenient curbside boarding, a tick- etless process, a loyalty program, and dynamic pric- ing. The intercity bus industry already had implemented some of these elements, but BoltBus packaged them all together. At least 70 percent of BoltBus service connects with local transit providers. To compete with curbside carriers, the BoltBus brand features free onboard Wi-Fi, curbside boarding, ticketless reservations, and more. P H O TO : G R EY H O U N D PH O TO : G R EY H O U N D TRN_303.e$S_TRN_303 7/1/16 11:46 AM Page 13

TR N EW S 30 3 M AY –J UN E 20 16 14 The goal was to create an enticing value proposi- tion for the customer, offering many amenities at affordable prices. The service was tag-lined “Bolt for a Buck,” as every schedule offered at least one $1 fare. The new line’s performance on three city-pair routes in the Northeast exceeded Greyhound’s expec- tations for the first year of operation. Surprisingly, the brand attracted customers who were younger and more educated than those using traditional intercity buses, indicating newfound appeal to the millennial generation. Today, 70 percent of BoltBus customers are between 18 and 34 years old; of these, 82 percent have completed some college education. These statistics represented distinct changes from the typical profile of a Greyhound passenger, and the result was significant growth in market share for Grey- hound overall. BoltBus therefore expanded from its original three routes to operate in three regions, on both coasts, and in more than 40 city-pair markets. Adapting Curbside Features BoltBus operates in an innovative and efficient seg- ment of the intercity bus industry. Buses providing curbside service do not require much direct infra- structure. Because tickets are purchased online, a ticket counter is not needed. The operator only needs a safe area to load and unload passengers quickly. The light infrastructure enables low-risk launches of service—the startup costs are limited. BoltBus and other bus industry entrepreneurs can explore routes and locations that provide additional travel options to the public without incurring large and irrecover- able losses if the service fails to attract riders. Three general types of service locations host Bolt- Bus operations: 1. Curbside environments, 44 percent; 2. Outdoor transit stations, 42 percent; and 3. Terminal infrastructures, 14 percent. The space needed to accommodate the curbside service can be fairly small, because the mostly point- to-point service typically does not require a place for passengers to wait for connections. In the United States, 70 percent or more of BoltBus traffic connects with local transit. Transit connections are therefore vital to curbside bus operations, creating a seamless multimodal experience. Dynamic Strategies Curbside bus service has grown rapidly in the past 10 years, in terms of passengers carried and the num- ber of carriers. The original Chinatown bus line, Lucky Star, operates between South Station in Boston, Massachusetts, and New York City’s China- town district. Megabus began curbside service in Chicago in 2006 and has added operations in several regions of the United States and Canada. Initially a no-frills service, Megabus now offers amenities such as 110-volt power outlets and free onboard Wi-Fi. Some carriers focus on a single travel corridor and grow by offering additional pickup locations within a metropolitan area. For example, Washing- ton Deluxe, operating exclusively between Wash- ington, D.C., and New York City, maintains several pickup locations in the Washington metropolitan P H O TO : G R EY H O U N D Greyhound adapted many of the successful characteristics of BoltBus to update its traditional network. Greyhound Connect serves rural communities, keeping overhead expenses low with smaller buses and working closely with local municipalities. P H O TO : G R EY H O U N D TRN_303.e$S_TRN_303 7/1/16 11:46 AM Page 14

TR N EW S 303 M AY–JUN E 2016 15 area: traditional terminal berths at Union Station and several curbside locations. Greyhound also uses BoltBus to test concepts and ideas that may be applicable to the company’s larger system and its other new brands. Greyhound applied the lessons learned from the BoltBus niche operation to large sections of its traditional network to create Greyhound Express. The new brand took many of the service ameni- ties and features that had proved popular on BoltBus and adopted them for standard nationwide service on hundreds of routes. Greyhound Express operates from the traditional terminal network and offers free Wi-Fi, extra legroom, and a loyalty program. Grey- hound Express currently serves 1,000 city pairs in 130 markets. Reopening Rural Routes Greyhound created BoltBus and Greyhound Express as new brands to attract new riders. But the company traditionally had provided rural transportation and wanted to revitalize and reopen those markets. The company therefore launched Greyhound Connect to provide rural communities with access to regional transportation and with connections to the larger Greyhound network. Greyhound Connect deploys smaller buses to keep costs down and works closely with local tran- sit providers to increase travel options for customers. Currently in 10 states, the service usually operates collaboratively, with federal, state, and local com- munity support. The brand has reintroduced inter- city bus service to rural communities that had none after the route contraction of 2003. New Intercity Services The shift of population from rural to urban areas has contributed to traffic congestion in metropolitan areas. Greyhound has responded with QuickLink, a brand targeting people who travel frequently between major metropolitan areas for work, family visits, doctor appointments, and the like. The cost and hassle of parking, gas, highway tolls, and traffic delays for these trips can make riding a convenient, easy-to-use commuter bus service attractive. For instance, QuickLink recently launched ser- vice between Baton Rouge and New Orleans, Louisiana. The service is largely nonreservation, operating on a first-come, first-served basis but also gives customers the option of a reservation or a boarding pass. Technology Advances Reworking the passenger network and adding brands has reinvigorated Greyhound, but technological advancements have been critical to the company’s future and to that of the intercity bus industry. Grey- hound is working to advance several technology platforms to enhance customer experience at all phases of trip planning, from the consideration of whether and when to travel to making reservations and purchasing tickets. The company has modernized its website, added a mobile site, and developed iPhone and Android apps. These platforms make it easier to purchase a ticket and to store and retrieve booking information. The design allows the web page to load on any device, including a tablet, phone, or personal computer. New features enable customers to comparison-shop for less expen- sive fares. On some Greyhound brands, customers can travel paperless by using an image on their smart- phones instead of a printed ticket. Greyhound’s Bus Tracker tool demonstrates the benefits of technology for intercity bus travelers. Bus tracking previously involved a simple time-point capture manually entered en route by the bus driver. Today’s systems can track a GPS-enabled bus every 2 minutes and employ algorithms that draw on current traffic data to forecast arrival times. Greyhound cus- tomers can access the tracking system on the website and the mobile apps. Industry Comeback As Greyhound’s experience illustrates, the intercity bus industry is undergoing a renaissance. After years of declining ridership and departures, the industry’s innovations have gained steady growth in passengers and service levels. In the 2014 Year-in-Review of Intercity Bus Service in the United States, the Chaddick Institute for Met- ropolitan Development at DePaul University con- cluded that “intercity bus service providers added more than 100 new daily services across the United States in 2014, resulting in a 2.1 percent increase in daily scheduled operations. While bus service grew, Amtrak train-miles held constant, and the number of airline flights diminished by 3.5 percent.” Greyhound is proud to have contributed to this renaissance, which has demonstrated the efficiency and versatility of the bus in providing intercity trav- elers with more transportation options. Intercity commuter services such as QuickLink are marketed to travelers who conduct business in the cities. Bus Tracker allows users to track GPS-enabled buses. P H O TO : G R EY H O U N D TRN_303.e$S_TRN_303 7/1/16 11:46 AM Page 15