- The private bus industry — which includes scheduled service operators like Megabus, commuter shuttles, and private charters — faces a crisis of epic proportions.
- The COVID-19 pandemic decimated travel virtually overnight, and while airlines, public transit agencies, and Amtrak all received 10-figure bailouts, the country’s 3,000 private bus companies were left without a paddle.
- Private buses account for 600 million passenger trips each year and serve a vital purpose in the nation’s transportation infrastructure, industry leaders say.
- Without a federal aid package, 50% of private bus firms could go out of business by 2021, taking with them thousands of jobs as well as crucial transportation options.
- Visit Business Insider’s homepage for more stories.
Owosso, Michigan-based Indian Trails — now in its third generation of continuous family ownership — was founded in 1910 and grew over the past century to become one of the major private bus companies in the Midwest. Now with roughly 80 buses in its fleet, the firm transports close to 2 million passengers annually through its scheduled intercity service, private charters, contract shuttles, and Michigan Flyer airport shuttle.
But when the pandemic began to take hold in March, Indian Trails’ 110 years of business was upended virtually overnight.
“I can recall very vividly,” Chad Cushman, Indian Trails’ president, told Business Insider. “It was on a Thursday, I was at a business lunch meeting, and I had gotten a call from our inside sales supervisor that cancellations were coming in left and right.”
The next day, the Big Ten college basketball tournament pulled its reservations, and then it “just started to overflow,” Cushman said. The following week, Indian Trails shut down Michigan Flyer, and the company’s daily scheduled service soon followed.
“We literally went from operating at pretty much 100% capacity down to 10% within about three weeks,” Cushman said.
A similar crisis hit other private bus firms as nonessential travel plummeted, schools closed, events were canceled, and people across the country hunkered down.
But as airlines, public transit agencies, and Amtrak all scored billions in emergency federal aid through the CARES Act stimulus package in March, the roughly 3,000 operators that make up the nation’s private motorcoach industry were left without a paddle in a riptide that threatens their very existence.
“These are small family businesses, many of them multigenerational,” said Peter Pantuso, president of the American Bus Association, a trade group that represents around 1,000 US and Canadian bus companies. “They’ve put their life’s work into running what was a successful company and, really through no fault of their own, their world turned upside down.”
Eight months later, with passenger demand at a fraction of normal levels and a return to normalcy still months or years away, the bus industry faces an existential crisis. The way things are going, Pantuso said up to 50% of bus companies could close up shop permanently by 2021.
That could lead to 30% to 40% of the national bus network vanishing, taking with it 78% of jobs in the charter-bus sector along with 65% of jobs in the shuttle-bus, commuter, and intercity-bus segments, according to third-party research commissioned by the ABA.
To stave off that calamity, the bus industry is pleading for a lifeline from the federal government. Without some much-needed aid, experts and industry leaders say, this vital part of the nation’s transportation infrastructure risks permanent damage.
The private bus sector’s demise would leave large swaths of the country without any realistic transport options
When the pandemic hit the US, bus ridership plummeted and the industry went into a forced hibernation. Now, all three of the industry’s main segments are still operating at a fraction of their normal capacities.
Pantuso said scheduled intercity service is down 75%, commuter lines are down 90%, and charters — by far the industry’s largest sector, which includes sightseeing tours, school trips, transportation for sports teams, and the like — are virtually nonexistent. A majority of the industry’s nearly 100,000 employees are out of work.
And yet, the private bus industry serves a vital purpose: providing low-cost transportation to millions of people annually.
According to the ABA, private motorcoaches provide 600 million passenger trips each year, making the industry second only to commercial flights in terms of ridership. Airlines count around 800 million domestic passengers each year, while Amtrak, by comparison, carried 32.5 million riders in the fiscal year ending in September 2019.
Approximately 65 million people ride scheduled intercity buses annually, according to research from Joseph Schwieterman, a professor at DePaul University’s School of Public Service who runs its urban-policy think tank. Not only is bus travel typically the lowest-cost option for getting between cities — as compared with air travel, private cars, or trains — it serves as the de facto public transit network in many parts of the country, Schwieterman told Business Insider.
“For many cities, intercity buses are the only public mode of travel available,” Schwieterman said. “There’s just so many places where that’s true.”
In addition to providing direct transportation within and between cities, private buses fill a crucial role by connecting people to other modes of transportation, whether that’s public buses, subways, or Amtrak, Pantuso said. And if emergency relief doesn’t come through soon — forcing companies to permanently slash routes or shut down altogether — the impact on regional transportation networks could be devastating.
“The risk is the sector is passing a point of no return, where whole clusters of routes may never come back,” Schwieterman said. “Cities could be left without services they’ve long come to rely on.”
If intercity and charter bus service become greatly diminished, multiple experts said many will be left with no realistic travel options.
“You would certainly see some people turning to private cars, but a lot of the folks that are taking those trips don’t have access to or can’t afford a car,” Paul Lewis, vice president of policy and finance at the Eno Center for Transportation, a nonprofit think tank, told Business Insider. “So I think people just wouldn’t be able to travel, which has huge economic and social consequences.”
The private bus industry’s other critical responsibilities, multiple operators and experts said, include evacuating people during natural disasters and moving troops around the country.
“Who will help when hurricanes rage?” Pantuso wrote in a recent blog post titled “Death of an Industry.” “Who will move our troops? Who will drive our children to school? Who will provide Americans affordable travel?”
Private bus companies have received little to no aid and are teetering on the brink
As parts of the transportation sector got significant bailouts from the federal government to stay afloat — airlines received around $60 billion, public transit agencies got $25 billion, and Amtrak got $1 billion on top of its existing annual subsidies — the private bus industry was left out.
“It wasn’t for lack of effort, believe me, on our part,” Pantuso said. “I think we were just an afterthought. Nobody really considered it or considered the impact of losing a major piece of the overall transportation network.”
After Congress snubbed the industry in March, leaders ramped up lobbying efforts. A caravan of hundreds of bus operators convened at the National Mall in Washington, DC, in May in the hopes of attracting lawmakers to their cause.
Some operators obtained loans through the US Small Business Administration’s Paycheck Protection Program, Pantuso said, but those weren’t of much use, since the plunge in demand meant companies had little reason to keep drivers and other employees on staff. For most firms, the majority of operating costs are fixed and not tied to payroll. That includes buildings, leases, rent, and vehicle loans, and Pantuso said “all that didn’t change when the pandemic hit.”
“I even had some guys who applied for loans, they got them, and then once they realized what they had, they were ready to turn it back in again,” he said.
Congress is mulling over a bailout for the industry — a $10 billion package of grants and other aid called the Coronavirus Economic Relief for Transportation Services (CERTS) Act, which would also help out school bus companies, passenger boats, and other transportation providers. Operators hope it will be attached to the next federal stimulus bill, whenever that arrives.
In the meantime, however, private bus firms of all stripes are suffering.
DeCamp Bus Lines, which was founded in 1870 and ferries commuters between northeast New Jersey and Manhattan, suspended service at the end of March as the pandemic spread. It started limited service back up in early June, but the public-health crisis and the resulting plunge in daily commuters had reduced ridership to a trickle.
Normally, 6,500 to 7,000 passengers rode DeCamp buses daily, Jonathan DeCamp — the sixth generation to run his family’s business — told Business Insider. But on a good day in August, his buses might have seen 400 passengers. He can’t think of a time in the company’s 150-year history when ridership would have been diminished so severely.
“During the Great Depression, World War I, World War II, people were still going to work.” DeCamp said. “Even after 9/11, we were still up and running. After Hurricane Sandy, we were back up within three or four days and moving people, and actually we were helping out New Jersey Transit.”
That drop in demand meant there weren’t enough fares coming in to cover the costs of running service, so DeCamp parked his buses again in August. He laid off all but three of his 160 employees, and hires drivers whenever business comes in on the charter side of his company — less than once a week.
DeCamp said his company needs aid “now” in order to ride out this crisis.
“And I think that’s the industry as a whole,” he added. “Everybody’s been stretched way beyond thin at this point in time.”
Indian Trails was able to bring back a large portion of its scheduled service in August, but that was only thanks to around $2.4 million in CARES Act funding it obtained through the Michigan and Wisconsin transportation departments. Only Michigan, Wisconsin, and New Hampshire have shared CARES Act aid for public transit with struggling bus operators, according to the United Motorcoach Association.
Even so, Indian Trails is only running at 35% capacity and half of its 150 employees remain furloughed. Michigan Flyer and the company’s commuter service remain stalled for the foreseeable future, and it has had to sell some of its fleet to adapt to the new business levels.
Funding through the CERTS Act would allow it to put more buses and shuttles on the road, even as ridership and fare revenue stay low.
“All we’re asking for is a one-time grant to bridge that gap until business returns,” Cushman said, adding that Congress’ inaction “at this point is just frustrating.”
But the pandemic hasn’t only impacted small and medium-sized operators — even industry giants are struggling.
Coach USA, a juggernaut that owns Megabus and more than two dozen other bus companies, employed 4,500 to 5,000 workers before the pandemic hit. In March, the company furloughed 2,800 employees while those who remained took 40% pay cuts, Sean Hughes, the company’s director of corporate affairs told Business Insider.
Taking into account all of its business — scheduled service, charters, and everything else — Hughes said Coach is operating at roughly 15% to 20% capacity. Megabus’ Washington, DC, to New York route, which ran 20 to 25 round trips daily before the pandemic, is down to between three and five trips.
In July, Coach closed down three of its companies — including Lakefront Lines, the largest bus company in Ohio — permanently eliminating more than 400 jobs, Hughes said.
“We need the CERTS Act to pass, because we are in dire straits right now,” Hughes said. “We need relief, and we need it now.”
With a second relief package as far away as ever, the private bus industry faces a bleak outlook
The CERTS Act has gained considerable momentum and bipartisan support in both chambers of Congress in recent months, and 269 representatives have cosponsored the bill to date. But with stimulus talks in a stalemate and the lame-duck session in full swing, aid for the bus industry appears as far away as ever.
And as the pandemic drags on, emergency relief for companies becomes increasingly urgent. Pantuso doesn’t predict any sort of organic recovery for operators until late 2021, given that widespread distribution of a vaccine is still far away and he doesn’t think the busy spring season will happen next year.
“I can’t overemphasize that time is really of the essence for this industry,” Pantuso said. “There are literally hundreds and hundreds of spaces that have been reserved by banks to repossess buses.”
But while the bus industry as whole is weak, some companies have hope for the future. Seeing as Indian Trails is a fairly sizable operator with a diversified business — and a fresh influx of federal money — Cushman is confident his firm will exist in a post-pandemic world, whenever that arrives.
“We survived the Great Depression, we survived two world wars, a number of economic downturns — and this is definitely the biggest economic disaster we’ve ever had,” Cushman said. “We’ll weather it, we’ll get through it. But we’re going to be a lot different company coming out of it.”
Source: COVID could wipe out a vital transport network: private buses
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