Week 2: A Price to Pay

Welcome back! As I’d promised last week, I spent a long period of time this week sitting in newspaper archives. I’ll discuss my findings, as well as some renewed interest in somewhat tangential topics, below.

Through the 60s, 70s, and 80s, Greyhound found itself in a tough position in the brutal intercity travel market. Eisenhower’s Interstate system was a mixed bag for bus travel: the buses could move much, much quicker between major population centers, but at the expense of much of the middle class audience who would opt to drive personal vehicles instead. Furthermore, airline deregulation made short-haul, low-cost airlines a sustainable business model, undercutting Greyhound’s traditional selling point of being the cheapest way to travel. Finally, Amtrak’s nationalization in the 1972 made passenger rail viable again in the United States, often running at overwhelming deficits but backed by taxpayer dollars.

Greyhound was as expensive as the train, as slow as a train or car, and as uncomfortable as a modern flight. But, despite everything, the company was fine, or at least for the time being. The future of bus travel was uncertain at best, given the walls from external competition had begun caving in and the American economy was slumping.

The company’s higher-ups turn to Washington, desperately lobbying for regulatory reforms to allow them to cut off their worst performing routes and concentrate traffic on high demand routes. And Reagan’s government officially deregulates in 1982, passing the aptly-named Bus Regulatory Reform Act.

Despite Greyhound’s long-held pro-deregulation stance, it quickly forced the company into a position it couldn’t hold. Much like the airline industry, lower-cost competitors were chomping at the company’s bottom line, better positioned for this new industry than the old Greyhound could be; chairman John Teets described this as their “price to pay” for deregulation. The company would upset organized labor during this process as well, with the landmark 1983 strike partly originating from proposed wage cuts in the wake of post-deregulation financial hardship.

The company was hemorrhaging money. Rural service was the next thing on the chopping block. A major part of my research this week was a 1992 survey conducted by the U.S. General Accounting Office on the decline in rural intercity bus service post-deregulation, providing some important data on the short-term impacts on service. The survey provided no concrete conclusion as to specific negative effects on rural service, but did indicate that the existing trend of declining passenger numbers and mileage continued through deregulation without a hitch. A startling statistic did indicate a 52% decline in locales served from 1982 to 1991, which may have resulted from deregulation making it much more pracatical to abandon rural routes, but which is unfair to pin solely on the act itself.

But, just as the government had done for Amtrak, it could step in somehow and preserve these local routes. The study stated over three-fourths of those communities losing service were small towns of under 10,000 people; they’d lose transit access to services like education and hospitals that might not be open in their specific community (the study was aware of these effects, but wasn’t able to quantify them).

Going forward, I want to examine what federal subsidies have done for rural transit since deregulation. The Federal Transit Administration’s Section 5311(f) grants are the current major system of state-supported but privately operated bus transit to rural communities, but the program itself has a presumably convoluted history and inherent flaws.