Greyhound starting to hit its stride once more - The Buffalo News

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Greyhound starting to hit its stride once more

Suburbanites with schnauzers in white tutus rarely rode Greyhound a few years back.

But on a recent weekday, Philip Stevens of Coppell, Texas, and his festive companion dog, Gigi, waited at Greyhound’s Dallas terminal, bound for Houston on their first bus ride.

They sat among a cluster of passengers who included a couple of middle-age professionals, several millennials and a guy with an orange Mohawk.

It was the sort of diversity Greyhound celebrates these days.

In the past decade, old-world, road-worn Greyhound has spent millions to rebuild and reinvent itself, aiming to add the Internet set and others to its traditional lower-income customer base.

In this, Greyhound’s 100th year in business, the company continues to put a new shine on the old dog with leather seats, Wi-Fi and a growing focus on shorter, nonstop routes.

“The future for us looks really exciting,” said David S. Leach, president and CEO of Dallas-based Greyhound.

Urbanization is luring people back to big cities – particularly 20- and 30-somethings – offering new opportunities for a longtime inner-city bus line like Greyhound.

Many Gen Y’s live close to where they work downtown, and some don’t own cars. When they travel, they want convenience, low cost and portals for their digital devices.

Meanwhile, a growing number of veteran travelers, weary of the hassles of airports, are also looking for alternatives – particularly for intrastate trips.

“More people are moving to cities than ever before, and with it comes issues of congestion, infrastructure and transportation that we can help solve,” Leach said.

Last year, Leach said, Greyhound earned a profit of about $73 million on revenue of $990.6 million, and it expects profit to grow to $80 million this year.

“It’s a pretty cool story – for the city of Dallas and North America,” said Leach, 49, who worked his way through college as a baggage handler at Greyhound.

The transit transformation began more than 10 years ago in the midst of a growth era for privately held Greyhound, a period when its buses ran more miles than ever.

But many left terminals with dozens of empty seats, and those that were filled often had been sold at discounts.

Predictably, revenue was weak and fading.

“We realized the network did not make sense,” Leach said. “We realized the urbanization of America was occurring.”

Rather than send its buses out on long trips between distant cities – stopping at small towns along the way – Greyhound began to emphasize shorter, more frequent routes between cities 300 or so miles apart.

“We took miles driven between New York and Los Angeles and put them into New York to Boston, which we do every 45 minutes,” Leach said. “We continue to rationalize our miles, putting buses on routes that people want to ride.”

The bus line now serves thousands of “city pairs,” he said, nonstop routes like Dallas to Austin or Dallas to Houston.

“You take all these pieces and ask where can we provide value? And it’s in shorter trips,” he said.

New companies like Megabus see some of the same changing urban dynamics as Greyhound and also seek to attract customers on relatively short routes like Dallas to Austin – and with newer buses.

But Leach said the competition should benefit all the carriers because it calls attention to buses.

“We’re the ones with the iconic brand and the established network,” he said. “But the fact that Megabus is coming in just gets buses in general out front and at a time when you’ve got all these great changes going on.”

Although privately held Greyhound declined to provide comprehensive financial numbers, Leach said the express bus services generated $121 million in revenue last year, up from $2 million in 2011.

“That’s getting it right,” he said.

Moreover, the bus line currently serves about 10.5 million customers annually. As urban populations and congestion grow, it has “potential prospects” of 31.6 million people, Leach said.

On a recent Wednesday morning, about 40 people sat in contemporary gray-metal chairs at the Dallas bus terminal, waiting mostly for departures from three gates.

While the exterior of the terminal remains well-worn, the interior has been refurbished with a gray tile floor, blue tile trim on the walls, a couple of flat-screen TVs and electronic signboards.

In 2007, Greyhound was purchased by FirstGroup, a Scottish corporation that Leach said is the largest ground transportation provider in the United Kingdom.

At the time, Greyhound had 1,200 old white buses, most of them tired road warriors in need of replacement.

FirstGroup was supportive – to a point.

“If you replaced all of them at once, it would cost you half a billion dollars,” Leach said. “How do you afford that?”

A year or so later, with the national economy mired in recession, Leach and his executives saw opportunity in all the bleak trends.

They realized that Indiana – a center for the recreational vehicle business – had thousands of laid-off workers skilled at building bus-size vehicles.

So Greyhound rented a 100,000-square-foot building and began hiring the unemployed RV workers to rebuild its old buses.

“Those buses had stainless-steel frames, so those were fine,” Leach said. “But we put new floors in them, rebuilt engines, new interiors and better electronics.”

The workers expect to finish their jobs in August – at an average cost of about $120,000 per bus.

“New buses configured the way we wanted them would have cost $500,000 each,” Leach said. “When you’re able to replace your fleet of buses at way less than half the price you were looking at, it’s the kind of investment that gives new life to a company.”

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