Greyhound Lines Strategy After September 11: A Case Study

Overview of Greyhound Lines Inc.

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 in which Greyhound operates has been affected by the events of September 11. Safety concerns, the decline in air travel, and the decline in international travel all create opportunities for Greyhound. In this environment, there is increased interest in travel arrangements other than air travel, giving Greyhound an opportunity to promote its services. The main problem Greyhound faces is how to maintain current demand after the environment has stabilized. After analyzing the various problems and future scenarios, the recommendation is that Greyhound expand its services and launch an extensive marketing campaign. To ensure that increased demand is sustained, the company should also focus on converting new customers into repeat customers and ensuring the marketing campaign has long-term effects. This will allow Greyhound to take advantage of the current environment and carry that momentum into the future.

Greyhound Lines Inc. is a provider of bus transportation services, serving over 2,600 destinations in the United States with 18,000 departures per day (Greyhound Company Profile).

Greyhound has three lines of business. The first — and the foundation of its operation — is intercity bus transportation. Greyhound identifies three points as crucial to success 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; and provision of extra seats during peak travel periods to accommodate passengers.

The other two services Greyhound offers are Greyhound Package Express and Greyhound Travel Services. Greyhound Package Express is a package delivery service focused specifically on remote locations that other postal carriers do not serve. Central to the service is its Daily Direct offering, which also handles highly time-sensitive items (Greyhound Company Profile).

Greyhound Travel Services is a newer and quickly growing division. It delivers charter and tour services, Greyhound Vacations, destination management, sightseeing, shore holidays, and package tours. Future plans include a dedicated fleet for travel services equipped with televisions, audio systems, and luggage racks (Greyhound Company Profile). A notable addition in 2001 was Greyhound Vacations, offering getaway packages for popular destinations such as New York City and Los Angeles.

Regarding its workforce, Greyhound employs over 13,000 workers, 5,000 of whom are drivers. The company and its employees maintain a cooperative relationship through a labor union, based on mutual trust and mutual-gains bargaining (Greyhound Facts & Figures).

On the customer side, Greyhound reports that many passengers choose bus travel because it is safe and economical, and that most travel to visit family and friends (Greyhound Facts & Figures). In terms of safety, a recent audit showed an excellent record — one-fifth the accident rate of all commercial vehicles in the United States (Greyhound Facts & Figures). Environmentally, one Greyhound bus removes 17 cars from the road and achieves 162 passenger miles per gallon of fuel (Greyhound Facts & Figures).

The main issue affecting Greyhound is the impact of the September 11 attacks. Since September 11, a new fear of flying has emerged, which is likely to increase the number of people choosing bus travel over air travel. It also means that many Americans will opt for domestic holidays rather than overseas travel. Although there will be fewer international visitors travelling within the United States, the majority of Greyhound's existing customers are Americans visiting family and friends — meaning overall demand for bus travel is expected to rise. This brings both opportunities and problems.

This report focuses on how Greyhound can respond to these changes and, specifically, how the problems they create can be anticipated so that the opportunities presented can be fully utilized.

Problem Definition

Problem 1 — Increased Demand

The first problem stems from increased demand for bus travel. Greyhound is already equipped to handle busy periods, but it must now prepare for a more sustained, ongoing increase in demand. Based on its existing capacity for peak times, it is reasonable to assume Greyhound has enough buses available. What will need to increase is the number of drivers and other employees. Greyhound is currently negotiating a five-year employment contract with its employees (Greyhound Facts & Figures). Maintaining workforce flexibility is essential in a rapidly changing environment (Daft 84). A particular concern with hiring large numbers of new employees is location: it may not be immediately clear where increased demand will be concentrated in the medium term, and taking on extra workers in a given area could lock Greyhound into having employees it does not need.

Problem 2 — The Eventual Downturn

While the current downturn in air travel is increasing interest in bus travel, this will not last indefinitely. With airlines and the government taking steps such as deploying air marshals, the shift toward bus travel may reverse sooner than expected. If Greyhound takes on additional staff in the short term and then must lay them off, serious consequences follow. First, it risks damaging the cooperative relationship between Greyhound, its unions, and its employees. Second, a downturn creates job insecurity across the workforce, lowering morale. Organizational change is always stressful for employees, and workforce reductions are among the most disruptive (Billsberry 53).

Problem 3 — Keeping Customers

The decline in air travel may bring many new customers to bus travel for the first time. This is a significant opportunity: if Greyhound can retain customers who previously defaulted to air travel without seriously considering bus travel as a practical alternative, the long-term customer base could grow substantially. The challenge is ensuring that first-time users come to see bus travel as a reliable and practical option so that they continue using the service even after concerns about air travel subside.

Problem 4 — Safety Concerns

While air travel is the primary focus of current safety fears, terrorism concerns extend to other modes of transport as well. In October 2001, a suitcase of explosives was reported at a Greyhound bus station in Philadelphia (CNN). Additionally, Greyhound's postal service has been affected by the broader security concerns surrounding the anthrax scare. Greyhound must acknowledge that enhanced security measures may be necessary — while also recognizing the risk that increased visible security could undermine the perception that bus travel is safer than flying.

Problem 5 — Expansion and Changing Focus

The post-September 11 environment has prompted many Americans to choose domestic holidays over overseas travel, creating a timely opportunity for Greyhound to promote its services as a viable and safe holiday alternative. Greyhound Travel Services — which already offers holiday packages — is well positioned to capitalize on this shift. The challenge is twofold: how to generate sufficient interest during this window, and how to ensure repeat sales. There is also the operational challenge of rapidly expanding holiday offerings without sacrificing quality. Poor experiences for first-time holiday customers would generate negative publicity at a critical moment.

Recommendations

The recommended course of action is for Greyhound to use the current environment to its advantage by promoting bus travel generally and holiday travel specifically. This would involve expanding coach services and developing a broader range of domestic holiday packages.

Central to this strategy is a marketing campaign focused not on the safety disadvantages of air travel but on the other merits of bus travel: convenience, economical value, and environmental benefits. For holiday packages, the campaign would position bus travel as a compelling alternative to international holidays.

This marketing campaign is economically viable because the current environment means a large proportion of the public is already receptive to hearing about domestic travel alternatives. The campaign would therefore reach a wider and more engaged audience than it would under normal conditions. By emphasizing benefits beyond safety, the campaign would remain effective even after air travel is no longer perceived as risky — sustaining awareness that bus travel is a practical, affordable option.

Customer retention is equally critical. With increased demand in the present, Greyhound can expand operations, but it must maintain elevated demand once the environment stabilizes. This requires ensuring that the travel experience is genuinely positive, so that new customers choose bus travel again after air travel concerns have passed.

It has also been noted that business from international travelers will be low in the short term before increasing again. Greyhound can smooth demand over time by targeting international visitors: the holiday packages developed for American travelers can be adapted and marketed internationally. When domestic American demand declines as the environment normalizes, rising international visitor numbers can help offset the difference.

With initial expansion, new buses and employees will be needed. Avoiding future layoffs — which would damage the cooperative relationship among Greyhound, its employees, and the union — depends on sustaining demand through the marketing campaign and through delivering a consistently high-quality service. Every passenger should leave with a clear understanding of the economic, environmental, and safety advantages of bus travel, ensuring that Greyhound remains a credible alternative to air travel, holiday travel, and the private automobile.