Could Greyhound have done more to keep buses running?
Posted July 10, 2018 11:33 am.
Last Updated July 10, 2018 2:06 pm.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – As Greyhound prepares to cut nearly all its B.C. routes, a business analyst says it’s unclear it the company could have done to keep its service going.
Greyhound announced Monday it will cut all routes in Western Canada by the end of October, except the U.S.-run route between Vancouver and Seattle. The company cited decreasing ridership, unprofitable rural routes, increasing competition from subsidized services, the growth of low-cost airlines, regulatory constraints and the growth of car ownership as the causes behind the cuts.
“The real issue is [internal] subsidization,” said Peter Tingling, associate dean at the Beedie School of Business. “To what extent should their profitable routes subsidize the not so profitable ones?”
Most businesses will take a loss in some area, Tingling says, but use it as a tool to draw customers in and make up for it somewhere else. As the transportation industry continues to see new markets and technology emerge, bus services are also in a state of transition, he says.
“We’re living in a space where people want things delivered immediately, at high speed. So, the bus service doesn’t really lend itself to that,” he said.
Greyhound could then be caught in a downward spiral, he says, where ridership declines so the company cuts service and convenience, which circles back to a drop in ridership.
“The real question is ‘should the government subsidize them?'” he said. “Well, that’s a tricky thing. You could subsidize them in the interest of national unity and access to services, and so on. But that’s a slippery slope.”
He says if you subsidize one industry, another might ask for the same, setting a precedent and “game of threats,” according to Tingling.
However, Transportation policy analyst Todd Litman says while people can’t expect a private company to take on unprofitable services, saying in order to break the downward spiral, the government could step in.
“The ministry of transportation builds highways, but takes no responsibility to make sure people who don’t have a car can travel on those highways,” he said. “No one bats an eye when governments subsidize airports. So we recognize airports are essential and worth public support, and most [passenger] train stations are subsidized in various ways, but the poor little bus gets overlooked in British Columbia.”
He says subsidizing unprofitable routes by 20 to 40 per cent of the total costs could kick-start a positive feedback cycle where fares go down and ridership increases.
He points to Washington state which invested money into public buses along the Olympic Peninsula and has bus terminals in various communities.
However, in Saskatchewan, the government recently pulled the plug on its publicly subsidized bus service after saying the service was costing as much as $17 million a year.
‘Do you want to die the death of a thousand cuts?’
Tingling says cutting service all at once was probably a better choice than slowly announcing cuts over weeks or months.
“Do you want to die the death of a thousand cuts? Or do you want to make one tough decision now?” he said.
Tingling admits it could also be a gambit to get the federal and provincial governments to the table to discuss subsidies.
Litman doesn’t think that’s likely.
“I think [that’s] blaming Greyhound, a corporation, for doing something that is rational from a corporation’s perspective,” he said.
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Bus service has been a staple of transportation for a long time in B.C.
“It tied communities together,” says Tingling. “If you lose that lifeline, that’s not good. The company can say, correctly, that ‘Guess what? We’ve got higher penetration of cars, personal transit,’ and so on and so forth. But that doesn’t apply to everybody. There’s still some people where that bus ticket is basically what they’re relying on. This is going to be missed. Make no mistake.”
A man from Maple Ridge told NEWS 1130 Greyhound was the only affordable way for his 13-year-old to visit his mother, who lives in West Kelowna. He says driving his son to and from the Okanagan was not a viable option and flying is too expensive.
Another man says his daughter goes to school in Kamloops and uses Greyhound to visit the Lower Mainland.
Tingling wonders if Greyhound’s massive cuts on routes is part of what he calls “the inevitable march” of technology.
“Every now and then, when you see a horse on the street, you think ‘Wow, that’s kind of interesting.’ Guess what? There was a point in time we saw lots of horses. Not anymore,” he said. “To certain degree the industry is in a state of transition and no business gets to survive forever. We sometimes act like we can but the reality is that creative destruction comes to all of us, sooner or later.
