The Renaissance in Inter-City Buses

Given all the bad news about safety problems with the Chinatown buses and all the billions of dollars being pumped into high-speed rail projects, you might be tempted to conclude that it’s just a matter of time before inter-city buses become as extinct as chariots. And you’d be wrong. Inter-city buses are undergoing a renaissance — and with virtually no assistance from the government. Indeed, one gets the impression from reading Randal O’Toole’s new paper, “Inter-city Buses: The Forgotten Mode,” that they represent the future of inter-city transport.

Until 2006, it did appear that inter-city buses were going the way of the stage coach. That year, scheduled, inter-city traffic reached a nadir not seen in decades. Transportation planners had all but written off inter-city bus travel as a viable transportation mode.

Then something remarkable happened: an entrepreneurial revolution transformed the stodgy old business. The old inter-city bus model, epitomized by Greyhound and Trailways, required people to visit central bus “stations,” akin to train stations, where they would buy a ticket and wait for their bus. The system required a lot of overhead. Today, upstart bus lines allow passengers to book and pay over the Internet, and they provide curbside loading and unloading. Furthermore, bus lines differentiate themselves by price: If you want cheap transportation with no frills, you can get it. If you are willing to pay more for bigger seats, leather upholstery, Internet connectivity and even meals and drinks, you can get it. Inter-city buses now appeal to a broader audience than ever before.

As O’Toole describes it, the entrepreneurial vitality came from two sources, both from abroad. In 1998, a Chinese immigrant named Pei Lin Liang began offering bus rides between the Chinatowns in Boston and New York for $25. The business boomed and before long the Fung Wah (Magnificent Wind) bus line was providing seven trips daily. Competition grew as tour bus operators, many of Chinese heritage, crowded into the business. The rivalry got so fierce that a Chinatown bus war, complete with vandalism and two deaths, broke out.

Meanwhile, across the pond, the United Kingdom had privatized and deregulated the government-owned bus service. Those moves lead to the creation of dozens of bus companies, which consolidated under the names of FirstGroup and Stagecoach. In 2006, Stagecoach established a U.S. presence and began expanding service.

Buses have no trouble competing with government-subsidized Amtrak. Many bus lines charge lower fares (although those that provide superior comfort and service might charge more), their trips take no longer than high-speed rail for the most part, and bus lines offer a wide variety of pick-up and drop-off points. Between 2007 and 2010, inter-city bus travel increased by 27%.

I would like to report that bus entrepreneurs accomplished all this with no government assistance whatsoever. That’s not quite true. Bus lines benefit from a lower fuel tax than automobiles (which means they still pay more taxes than Amtrak) as well as federal grants to help them comply with the Americans with Disabilities Act — equivalent to about $17 million a year. But that’s about one one-hundredth of the money dumped into Amtrak, O’Toole says.

The one downside of the buses is safety. Most bus companies have an exemplary safety record, and inter-city bus travel compares favorably with automobile and rail traffic. But a number of high-profile crashes involving the Chinatown buses — see the Gooze’s treatment of this issue in an earlier post — suggest that tighter enforcement of existing safety rules is in order.

If state, local and federal government wanted to help this transportation mode, which pays its own way and contributes less per passenger-mile to greenhouse gas emissions than either automobiles or trains, they don’t need to throw around a lot of money. What they need to do is get out of the way. O’Toole suggests ending Amtrak and high-speed rail subsidies. He also suggests that cities could encourage more bus competition by leasing curbside locations for loading and unloading passengers. (As much as I would like to see inter-city buses flourish, I would end the gasoline tax break. Put all transportation modes on a level playing field!!)

The big takeaway here is what an entrepreneurial revolution can accomplish. If we want to end the dominance of what EMR calls the “autonomobile,” we need to systematically evict government from the shared ridership business, chase out the social engineers, end monopolies and franchises, and turn the entrepreneurs loose. If governments would only stick to the one thing it does well, setting and enforcing safety standards, shared ridership in Virginia, and America, would flourish.

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