Greyhound Is Part of the Travel Services

Greyhound is part of the travel services industry, providing intercity travel within the United States as well as travel packages and mail services. The environment that Greyhound operates in his been effected by the events of September 11. The safety concerns, the decline in air travel and the decline in international travel creates opportunities for Greyhound. In the current environment, there would be increased interest in travel arrangements other than air travel. This creates an opportunity for Greyhound to take advantage of the situation and promote its services. The main problem that Greyhound faces is how to maintain current demand after the environment has stabilized. After analyzing the various problems and the future scenarios the recommendation is that Greyhound expand its services and create an extensive marketing campaign to promote its services. To ensure that increased demand is maintained there should also be a focus on ensuring new customers become repeat customers and that the marketing campaign has long-term effects. This will allow Greyhound to take advantage of the current environment and carry it through to the future when the environment stabilizes.

OVERVIEW

Greyhound Lines Inc. is a provider of bus transportation services. It serves over 2600 destinations in the United States with 18,000 departures per day. (Greyhound Company Profile)

Greyhound has three lines of business. The first is the basis of their service and is intercity bus transportation. Greyhound states three points that are crucial to them being successful in this area (Greyhound Company Profile):

Everyday low walk-up fares.

Provision of the only means of regular transportation between cities and towns across the United States.

Provision of extra seats during peak travel periods to accommodate passengers.

The other two services that Greyhound offers are Greyhound Package Express and Greyhound Travel Services.

Greyhound Package Express is a package delivery service, specifically for remote locations that other postal servers do not serve. The center of Greyhound's service is its Daily Direct Service. Greyhound Package Express also delivers highly time sensitive items. (Greyhound Company Profile)

Greyhound Travel Services is a new addition to Greyhound and one that is quickly growing. Greyhound Travel Services delivers charter and tour services, offers Greyhound vacations, destination management, sightseeing, charters and shore holidays and package tours.

As well as this, future plans include providing a dedicated fleet for travel services, adding televisions, audio systems and luggage racks. (Greyhound Company Profile) A new addition added to Greyhound Travel Services in 2001 was Greyhound Vacations, which are getaway packages for popular locations such as New York City and Los Angeles. (Greyhound Company Profile).

Important information is also noted in relation to Greyhound's employees, customers, safety and environment.

Greyhound employs over 13,000 workers, 5000 of those drivers. Greyhound and its employees have a cooperative relationship via a labor union. The relationship is based on mutual trust and mutual gains bargaining. (Greyhound Facts & Figures)

In regards to customers, Greyhound reports that many passengers travel by bus because it is safe and more economical. They also report that most passengers travel to visit family and friends and benefit from the low cost of tickets. (Greyhound Facts & Figures)

In regards to safety, Greyhound reports that a recent audit showed that they have an excellent safety record, with one-fifth the accident rate of all commercial vehicles in the United States. (Greyhound Facts & Figures)

In regards to the environment, Greyhound reports that one Greyhound bus takes 17 cars off the road and achieves 162 passenger miles per gallon of fuel. (Greyhound Facts & Figures)

The main issue effecting Greyhound is how the events of September 11 impact upon it. Since September 11 there is a new fear of flying. This is likely to increase the number of people choosing bus travel over air travel. It also means that many people in the United States will choose holidays within the United States instead of overseas travel. The downside is that there will be less overseas visitors travelling within the United States. It has already been noted however, that the majority of Greyhound customers are Americans travelling to visit family and friends. Overall then, we would expect demand for bus travel to increase. This brings with it both opportunities and problems.

This is a changing environment for Greyhound. This report will focus on how Greyhound can respond to these changes and specifically how the problems they create can be predicted so that the opportunities presented can be fully utilized. Five of these problems will now be discussed in turn.

PROBLEM DEFINITION

Problem 1 - Increased Demand

The first problem is due to the increased demand for bus travel. We have already seen that Greyhound is prepared to handle busy times, what Greyhound must now prepare for is a more constant increase in demand. Based on the fact that Greyhound is prepared for busy times, we can assume they have enough buses available to handle demand. What they will need to increase is the number of drivers and other employees. It is reported that Greyhound is currently negotiating a five-year employment contract with its employees. (Greyhound Facts & Figures) It is important that Greyhound remains flexible. A flexible workforce is a must in a rapidly changing environment, such as the one Greyhound is currently in. (Daft 84) Greyhound must ensure that they remain flexible in this time so that they can adapt to change. Even if we assume that the number of required employees will not decrease there is concern in hiring large numbers of new employees. This concern is related to location. It may not be immediately obvious where the increased demand will be for the medium term. Taking on extra workers in an area may lock Greyhound into having employee they do not require.

Problem 2 - The Downturn

While there is a current downturn in air travel, which increases interest in bus travel, this will not last forever. Especially with the airlines and the government taking action, such as employing air guards, this trend may not last far into the future. This may result in problems when the downturn occurs. We have previously noted that extra employees may be required in the short-term. If Greyhound must then lay off employees, problems will result. Firstly, it will be a risk to the cooperative relations between Greyhound, the unions and the employees. Secondly, a downturn will likely cause all employees to be concerned for their jobs. This type of concern results in low morale and could be very damaging to the company. Changes are always stressing to employees, and downgrading is one of the most stressful changes. (BillsBerry 53)

Problem 3 - Keeping Customers

The current decline in air travel means many new customers may try bus travel. This is a major opportunity for Greyhound to retain new customers that previously selected air travel without really considering bus travel as a practical option. The problem that Greyhound has is finding a way to ensure it can retain these customers once the concerns over air travel are no longer there. Greyhound must ensure that people using the services for the first time become fully aware that bus travel is a reliable and practical option, so that they may choose to continue using the service.

Problem 4 - Safety Concerns

While there are currently major concerns about air travel, there are also major concerns about terrorism in general. In October 2001, it was reported that a suitcase of explosives was found within a Greyhound bus station. (CNN) It has also been noted that Greyhound also provides a postal service. The security concerns since the anthrax scare have effected all postal services. While the threat for bus travel does not seem as concerning as bus travel, the threat is still present. Greyhound must be aware that increased security may be required. The difficulty here is that Greyhound by increasing safety measures may also alter their customer's belief that buses are safer than planes.

Problem 5 - Expansion / Changing Focus

As we have seen there have been major changes since the events of September 11. People are choosing local vacations and vacations within the United States instead of overseas vacations. This is an opportunity for Greyhound to promote their services as a viable and safe holiday alternative. We have also seen that Greyhound has launched Greyhound Travel services which provides holiday packages. The current environment is an excellent opportunity for Greyhound to promote this further and generate interest in it. In the current environment, people will be more inclined to try the service and if the service is acceptable they may also choose this option over international travel in the future. The challenge for Greyhound is how to make the most of this time by generating interest and how to ensure repeat sales. The other challenge is how Greyhound can change their focus in a short time, to offer these types of services immediately.

ALTERNATIVES

Now that the problems have been described, the possible solutions to these problems will be looked at. Five alternative solutions will be described along with a discussion of the benefits and drawbacks of each.

Alternative 1 - General Marketing Program

One option is to begin a thorough marketing plan with the aim of informing potential customers of the benefits of bus travel. It is recognized that there may be many potential customers that have never really considered bus travel because air travel suits their needs. The current environment is one where a marketing campaign could be very effective. The marketing campaign would focus on the safety aspects of bus travel, the low cost and the benefits to the environment.

The benefits of this is that the marketing campaign would reach a large range of potential customers. These customers could be ones who have never considered bus travel and would reach people who may use travel for business, personal or holiday reasons. A broad marketing campaign to create awareness would show people that there is an alternative type of travel. It would allow the Greyhound to compete directly with air travel as well as with people's own automobiles.

Alternative 2 - Focus on the Safety of Bus Travel Over Air Travel

The second option is to focus directly on the safety benefits of bus travel as compared to air travel. This would tap into people's current fears and may be very convincing. There are several problems with this solution. The first is that this will not convince people in the long-term. It may be effective in increasing current demand, but once actions are taken to make air travel safer, this method will not work. The other problem is that the airline industry may reply by showing that bus travel is not really any safer. There is risk on any form of travel, as the Philadelphia incident shows. While the risk may be less for bus travel, Greyhound is also less experienced in dealing with threats than airports. This argument would likely be made very quickly by the airlines, making this method ineffective.

Alternative 3 - Focus on the Holiday Travel third option is for Greyhound to focus specifically on providing holiday packages. With decreased international travel there will be an increase in domestic travel. Greyhound is well-placed to take advantage of this. This solution would involve marketing to consumers and also expanding the Greyhound Travel Services. It would involve expanding the range of travel packages and locations available. The benefit of this is that Greyhound as a holiday alternative would be introduced to people. The problems with this is that after air travel and international travel becomes more feasible, the number of packages and locations would then need to be decreased. This would make the company appear as if it was going backwards and be bad for the image and also bad for the employees. There is also the challenge in being able to create new packages in a short time without reducing the quality of the packages. If many people are attracted but many have holidays they do not enjoy, the end result will be negative publicity.

Alternative 4 - Develop a Plan to Retain Customers fourth option is to develop a thorough plan to retain customers. It is recognized that many new customers may try the Greyhound service. If Greyhound can ensure these people are satisfied enough to use the service again, the current environment will be put to good use. The main problem with this is that effort and money will have to be spent on improving the quality of the service. For many of the customers the bus service may never compare with the convenience and speed of air travel. Money spent convincing them that the service is good may be useless since no matter how good, bus travel can never totally compare to air travel.

Alternative 5 - Do Not React to Current Circumstances

The fifth option is not to react to the current circumstances and instead just continue as the company was before the events of September 11. The benefit of this is that it is less disruptive both for the immediate term and in the future. We have already noted that the environment will return to normal. Not reacting will mean that when things do return to normal, Greyhound will not have to adjust. This will also mean that the company will not be forced to make quick decisions and major changes in a short time, but instead can proceed cautiously. The main drawback of this option is that the opportunity that the environment affords is not taken advantage of.

SCENARIOS

As we have seen, the travel industry is in a major period of change and has been since the events of September 11. The changing environment means that the future cannot be exactly known, even less so than in a normal environment. We can imagine various future scenarios. While any number of future scenarios could be imagined, only several that are considered likely will be described.

Scenario 1 - Environment Will Readjust

The most likely scenario is that the environment will readjust. Airlines and the government have taken action to counteract the damage that the initial events had with greater security measures in place. While there was an initial fear of air travel, this will be reduced over time until the environment returns to the state it was before September 11.

Scenario 2 - Increased Demand for Bus Travel, Then a Decline

This scenario is related to the first. With concern over air travel, bus travel demand will increase in the short-term but then decrease in the longer term.

Scenario 3 - Decreased Travel to America, Then an Increase

Travel to America from oversees has decreased since September 11. As the world readjusts, it is likely that this travel will begin to increase again.

Scenario 4 - Increased Holiday Travel Within the United States

The events have also meant that many people are preferring not to travel out of the United States but are instead holidaying locally.

Scenario 5 - Economy Declines

Since September 11 there has been a general decline in the economy. With this, there is a greater focus on saving money. This could result in people travelling less but could also mean people travel more cheaply.

RECOMMENDATIONS

The recommended solution is that Greyhound use the current environment to their advantage by promoting bus travel and especially holiday travel. This would involve expanding their coach services in general and especially offering more holiday travel packages.

This process would also include launching a marketing campaign that sells the benefits of Greyhound's services. This campaign would not focus on selling the safety benefits of bus travel over air travel but would focus on the other reasons. This would include the convenience, the economical savings and the benefit to the environment. For holiday packages, the marketing would promote bus packages as a viable alternative to international holidays.