Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 4, 1993 TAG: 9307040017
SECTION: BUSINESS PAGE: B4 EDITION: METRO
SOURCE: TERRY MAXON DALLAS MORNING NEWS
DATELINE: DALLAS LENGTH: Long
While its counterparts in the airline industry used technology to cut costs and new marketing techniques to keep customers loyal, Greyhound plodded along in its traditional ways. All its technology rode on its axles. Its marketing efforts did little to entice people to ride the bus. Most customers still can't even buy a ticket over the phone.
Now, the 'Hound says, it's about ready to run.
Since emerging from bankruptcy 1 1/2 years ago, Greyhound is trying to reshape itself into a modern transportation company, with advanced technology and more sophisticated marketing. The simple goal: increase ridership by 5 percent a year.
To do that, Greyhound is embracing strategies borrowed from other industries, particularly the airline business, by:
Installing a computer system that will allow it to sell each ticket at the highest price the market will bear, while knowing how many cheap seats must be offered to fill buses.
Guaranteeing, for the first time, seats on buses for every passenger. The computer will enable Greyhound to match passenger demand with the right number of buses and drivers each day.
Readying a test "frequent-riders" program, like the airlines' frequent-flier programs that reward repeat customers.
The steps are significant because to sustain its momentum, Greyhound must continue to improve productivity, boost revenue and keep its high-flying stock rising.
Greyhound showed a $10.9 million net profit in 1992 mainly by cutting costs and becoming more efficient. Its revenue of $681.8 million, down 7 percent from 1991, was disappointing as a series of events, including half-price airline fares, hurt its ability to fill buses.
Greyhound President Frank Schmieder acknowledges Greyhound's new efforts are similar to established practices at most airlines. However, the size of Greyhound makes its task considerably more complex, he said.
Greyhound provides service to more than 2,700 locations, he said, more than four times the number of cities served by all U.S. airlines combined.
Greyhound must operate - and sell the seats for - 1,800 buses on the road every day, with about 47 seats per bus. The largest airline, American Airlines Inc., has fewer than 700 airplanes, with an average of 170 seats each.
"A lot of people said, `Why didn't you do this before?' I think the computer models that were available before required such large pieces of equipment that we couldn't afford to do," Schmieder said.
"Now, we've got it down to a manageable size, and we have equipment at a reasonable cost to do it," he said. "I think it took the technology revolution to get to us."
By mid-July, Greyhound plans to have its new computerized reservations systems, called TRIPS, up and working at about 225 of its busiest locations nationwide, as well as a toll-free reservations number. The company has been testing the system since late 1992.
Until then, Greyhound customers must go to a bus terminal to buy a ticket, which doesn't actually guarantee a seat. The bus they want could be oversold or filled up by passengers who boarded at a previous city. To get an advance-purchase ticket, customers had to go to the terminal twice, once to buy the ticket and once to travel.
Customer surveys had shown that passengers - especially the older travelers who are a significant portion of Greyhound's customers - place a high priority on getting discount seats in advance and being assured that they will have a seat, Schmieder said.
Older travelers "have a much higher fear factor in traveling than younger people, or they're more demanding" and less tolerant of travel hassles, Schmieder said.
Without a computerized system, Greyhound found it difficult to adjust the system to demand or to keep track of advance sales. It also could not balance the number of discounted advance-purchase tickets with the number of full-fare tickets sold.
"Historically, this company did a lot by paper and pencils," said analyst Vivian Lee of Smith Barney, Harris Upham & Co. "They would track everything after the trips were taken. They really didn't have an accurate means of forecasting demand."
The new computer system should also encourage Greyhound passengers to book and buy tickets earlier and make promotions such as advance-purchase sales more successful.
"As we implement our reservations system and tickets-by-mail in midsummer, we'll have an opportunity to see what happens when we offer an advance-purchase option and it's easy for them to do something about it," said David R. Swift, senior vice president of marketing.
Schmieder said Greyhound considered offering assigned seats as most airlines do, but dismissed the idea. However, its boarding system will be more sophisticated than airlines in one way.
As passengers get on the buses, an electronic wand will read information off tickets and cancel them. The information will be stored in computers and transmitted to the main reservation system every night. That data will help Greyhound know precisely how many people are traveling on each bus throughout its system every day.
Greyhound also is planning to test a frequent-rider program - possibly called "Easy Rider" - in the Northeast this summer. Although details are still being worked out, the company is looking at giving program members discounts on future travel, with the discount increasing for each trip they take. After a certain number of trips, the member can accumulate enough points for a free trip for the passenger or a companion.
by CNB