Chinatown Buses’ Death Rate Said Seven Times That of Competitors

By Jeff Plungis - Nov 1, 2011 3:12 AM GMT+0700

Curbside bus operators such as ones involved in crashes this year in New York, New Jersey and Virginia are seven times more likely to be involved in a fatal wreck than intercity lines with more conventional business models, U.S. safety investigators said.

Companies that pick up passengers at street locations, such as so-called Chinatown buses, had 1.4 fatal accidents per 100 vehicles, compared with 0.2 crashes for terminal-based operators like Greyhound Lines Inc., the National Transportation Safety Board said in a report today.

The study -- the most detailed look at curbside lines to date -- shows regulation hasn’t kept pace with the fast-growing industry, Senator Charles Schumer, a New York Democrat, said in a telephone interview.

“It cries out for action to make this industry safer,” Schumer said. “The consumer now buys a ticket in the dark.”

Fatal crashes have surged as intercity bus travel becomes the fastest-growing U.S. mode of commercial transportation. In 2011, 28 people have died in eight fatal crashes, including three in an 11-week period involving carriers operating out of, or carrying passengers between, Chinatown neighborhoods in East Coast cities.

“For too long, some bad apples have played fast and loose with passenger safety,” Schumer said today at a news conference on a block of Allen Street in New York’s Chinatown where three curbside carriers operate. “We’re here to say enough is enough.”

Business Model ‘Morphed’

Led by FirstGroup Plc (FGP)’s Bolt Bus and Stagecoach Group Plc (SGC)’s Megabus, as well as Chinatown lines such as Sky Express, U.S. bus departures increased 24 percent last year, according to Joseph Schwieterman, professor of public service at DePaul University in Chicago.

Curbside operators, which offer fares as low as $1, now outnumber terminal-based companies 71 to 51 in the U.S., the NTSB found. “It’s time to recognize that traditional transportation services have morphed into new business models that challenge existing regulatory constructs,” NTSB Chairman Deborah Hersman said in a statement.

The Federal Motor Carrier Safety Administration, which regulates the trucking and bus industries, doesn’t have enough people to do adequate oversight, the NTSB said. The 878 FMCSA and state inspectors are responsible for 765,000 motor carriers, a ratio of 1.15 investigators for every 1,000 companies, it said.

Multiple Identities

Curbside companies make it difficult for regulators to track them, the NTSB said. Some operate under multiple names, the board said. This can spread safety violations among several entities, hindering regulators’ ability to spot patterns and target the correct companies for enforcement actions.

Many curbside carriers use unregulated ticket brokers rather than selling directly to consumers, which also creates problems for regulators, the NTSB said. The Transportation Department has no legal authority to oversee ticket websites, the safety board said. It has asked Congress to change the law.

The motor-carrier safety administration needs better information on the carriers once they’re operating, Hersman said in an interview in New York today. The agency relies on data that’s often wrong, incomplete or out-of-date to flag the riskiest companies, she said.

New Companies

The ease of starting a new company is another challenge for regulators, Hersman said. An operator can pay a $300 application fee, get a minimal amount of insurance, lease a vehicle and begin carrying passengers before the trucking agency inspects it, she said.

“This is backward,” Hersman said. “They don’t give them an audit or a review until after they give them operating authority.”

Consumers often don’t know which company they’ll be traveling on when shopping on sites like Gotobus.com, making it impossible to check safety records before buying tickets, the NTSB said in its report.

Companies should have letter grades from A to D for their safety records posted in bus windows, online and on ticket- broker websites, Schumer said.

Restrictions in U.S. law against regulators stopping buses while they’re in transit has made it difficult to do meaningful inspections, the safety board said. Curbside carriers have few locations where unscheduled inspections can be carried out, it said.

Firstgroup agrees with the NTSB’s conclusions and hopes they start a push for bus-safety legislation, Maureen Richmond, a company spokeswoman, said in an e-mail.

“The NTSB noted the industry has a great safety record overall,” Peter Pantuso, chief executive officer of the Washington-based American Bus Association, said in a telephone interview. The association represents companies include Firstgroup and Stagecoach.

“It is a small number of bad actors we’ve got to get off the road,” he said.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net