Effects of the Bus Regulatory Reform Act of 1982 on the Texas intercity bus industry

Abstract

The intercity bus industry in the United States enjoyed its peak profitability and ridership during World War II. Since that time, the private automobile and air service have taken many of the bus industry's revenues and passengers away. The passage of the Bus Regulatory Reform Act of 1982 was an effort to decrease operating costs and increase ridership by allowing bus companies to discontinue unprofitable routes, have freedom over the setting of fares, and enter into new, competitive markets. While the actual effects the Bus Regulatory Reform Act has had on the bus industry nationwide have been studied, there has been no analysis of the changes in the intercity bus industry of Texas specifically. The objective of this research was to study the effects the Bus Regulatory Reform Act of 1982 has had on the Texas intercity bus industry. Data were collected on the number of places served by the intercity bus in Texas in the last twenty-three years, to see how the number of locations has changed. Financial operating statistics for bus companies serving Texas were compiled for several years both before and after the passage of the Act, to determine how regulatory reform has affected the financial status of bus operators. Surveys of both Texas households and Texas bus riders were distributed and compared against the results of similar surveys performed before the Act to determine the differences in attitudes of both the public and bus passengers toward intercity bus service. The results are consistent with the hypothesis that the Bus Regulatory Reform Act has had an impact on the intercity bus industry in Texas. First, the number of places served by the intercity bus has dropped dramatically, at a rate much greater than the rate at which places were losing service before the Act. Second, the operating ratios (ratio of operating expenses to operating revenues multiplied by 100) of bus companies serving Texas are significantly higher in years following regulatory reform, indicating that the companies have become less profitable. Finally, attitudes of the Texas public and Texas bus riders have become more negative toward intercity bus service. Further research recommended in this area includes an investigation of the effects that Greyhound Lines, Inc.'s recently announced changes (including the introduction of a computerized reservations system and the creation of a "frequent riders" program) have had on Greyhound's profitability and ridership. Because Greyhound is the nation's largest, and only national bus carrier, the results of its restructuring will likely be a harbinger of the fate of the industry as a whole.