June 1 (Bloomberg) -- Greyhound Lines Inc. didn’t take long to try to reclaim a share of the U.S. bus market from newer rivals.
The Dallas-based unit of Aberdeen, Scotland-based FirstGroup Plc offered $1 one-way fares yesterday to passengers stranded after the U.S. Transportation Department shut down 26 discount bus companies as imminent safety hazards. The shutdowns affected dozens of routes out of New York’s Chinatown in the largest U.S. safety sweep of the motorcoach industry.
“The well-run operators are very pleased with this announcement, because it highlights the way these bad guys operate,” said Dan Ronan, a spokesman for the Washington-based American Bus Association, whose members include Greyhound and Stagecoach Group Plc’s Megabus.
The crackdown comes at a time higher gasoline costs, time-consuming airline security and amenities like free Wi-Fi have made bus travel a desirable option for more affluent riders, students and women traveling alone, according to a DePaul University study released last year. Companies, such as the Chinatown carriers, that pick up passengers at curbsides to cut costs instead of at terminals grew by 32 percent last year in terms of scheduled departures.
The American Bus Association has been calling for a crackdown on unsafe operators and supports the Transportation Department’s effort, Ronan said in an e-mailed statement.
“Anytime one of these bad guys has a bad accident it puts pressure on the entire industry and it takes a hit,” he said.
The Federal Motor Carrier Safety Administration’s enforcement action primarily targeted three Chinatown operations in New York and Philadelphia: Apex Bus Inc., I-95 Coach Inc. and New Century Travel Inc. The government ordered 10 bus company owners, managers and employees to cease all passenger transportation business, including selling tickets, according to a Transportation Department statement.
“By ignoring safety rules, these operators put passengers and other motorists at risk,” Transportation Secretary Ray LaHood said in a phone news conference yesterday. “This is a notice to every bus company out there. Follow the rules and keep people safe, or we will shut you down.”
The crackdown followed a yearlong investigation that began shortly after a series of fatal crashes last year, Federal Motor Carrier Administrator Anne Ferro said yesterday.
Fatal crashes surged last year as intercity bus travel became the fastest-growing U.S. mode of commercial transportation. In 2011, at least 28 people died in eight fatal crashes, including three in an 11-week period involving carriers operating out of, or carrying passengers between, Chinatown neighborhoods in East Coast cities.
Curbside bus operators have a fatal crash rate seven times higher than terminal-based operations, the U.S. National Transportation Safety Board reported in October.
The three primary targets in the U.S. crackdown controlled a network of other companies, leading to the 26 separate shutdown orders, the Transportation Department said. The companies’ networks included one ticket seller, nine active bus companies, 13 companies already ordered out of service that were continuing to operate and three companies applying for permission to operate.
The department’s actions cover companies operating in New York, Pennsylvania, North Carolina, Georgia, Maryland and Indiana. Besides New York and Philadelphia, there are affected routes in Washington; Atlanta; Richmond, Virginia; Charlotte, North Carolina; Orlando, Florida and more than 20 other locations, according to a Transportation Department fact sheet.
The carriers involved had multiple safety violations, including drivers without valid commercial licenses and drivers violating federal driving-time limits; failure to test for drugs and alcohol; and vehicles that hadn’t been regularly inspected or repaired.
Sophia Xu, who sells tickets at I-95 Coach in New York’s Chinatown at 87 Chrystie Street, said Transportation Department officials came to the shop May 30 and said the company needed to close, without explaining why.
Signs posted on the glass outside and inside at the ticket counter gave a phone number to call for online ticket refunds and say people who paid cash can get refunds at the counter.
Chen Chen, a fellow ticket seller, said Chinatown buses are being unfairly targeted.
“This doesn’t happen to Greyhound,” he said, holding a Chinese-language newspaper with pictures from the shop of police he said were rude.
The buses are safe, the two workers said.
A few people wandered to the New Century’s Washington office on H Street to find a handwritten sign taped to the front gate, “Don’t go upstairs -- Close.”
If New Century gets back in business, Oliver Oree said he wouldn’t hesitate to use the line again. The 56-year-old retired plumber bought tickets twice a month for trips from Washington to New York, preferring the $20 one-way fare to $70 on Greyhound.
“I don’t know what their problem is with safety,” Oree said. “I take my grandkids on it all the time. I’ve never had any difficulties.”
The FMCSA shut down some curbside bus companies last summer. Follow-up investigations found safety defects with other carriers operating on the Interstate 95 corridor, and agency investigators worked to establish links between bus networks.
The NTSB, in a separate investigation of a March 12, 2011 crash that killed 15 people in the Bronx, found the driver had been hired by a discount operator even though his license had been suspended 18 times and he’d been fired from two previous transportation jobs, according to documents released earlier this month. The board is holding a hearing to discuss its investigation of that crash June 5.
In its report last year, the safety board found that curbside operators outnumbered traditional terminal-based companies like Greyhound, 71 to 51.
To contact the reporter on this story: Jeff Plungis in Washington at firstname.lastname@example.org
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