Friday, September 4, 2009

Greyhound Chases Cash Rabbit. Time to Nationalize?


As Greyhound uses the economic downturn to put a gun to the heads of provincial and federal governments by announcing the elimination of bus routes in Ontario and Manitoba, the Alberta Report asks, why not nationalize Greyhound?

According to Greyhound, there's simply too much regulation, too much cost, to run a for-profit transportation system.

In a bizarre string of press release, Greyhound stated that operations will cease in Ontario and Manitoba. Greyhound will also be "reviewing its operations in Alberta, Saskatchewan, British Columbia, Yukon and the Northwest Territories."

The company wants "assistance to cover its losses...in order to maintain this essential services."

Stuart Kendrick, Senior VP of Greyhound said that the company needs $15 to $20 million in public funding in order to be profitable. He said Greyhound has tried repeatedly to "right-size" [shudder] bus routes, but federal and provincial government wouldn't allow Greyhound to abandon some routes.

A few things to note:
  1. Greyhound acknowledges that its services are essential, as do some MPs and officials in the provinces directly affected.
  2. The company (Greyhound Canada Transportation Corp.) is a subsidiary of Scotland's FirstGroup Plc. Stock prices look good.
  3. Greyhound operations in Canada and the US made a profit of $86.3 million CAD last year (48.5 million GBP) - see page 12 of the Annual Report and Accounts 2009 - although we can't find a route-by-route profitability breakdown.
  4. In the above annual report, FirstGroup Plc. says, "We have reduced mileage by 7.6% in the US and in Canada, where we have to seek regulatory approval prior to network
    changes." Yeah...right.
Maybe we should give them $15 to $20 million in public assistance. Heck, maybe we should give them a lot more and nationalize cross-Canada bus service.

Or, at the very least, some sort of government intervention to allow Canadians who don't own a car access to national transportation, something we have a long history of doing.

Manitoba NDP MP Jim Maloway has even suggested the province develop its own bus service.

Someone will blink in this standoff, either Greyhound, Manitoba, Ontario or the federal government.

Our bets are on the feds to make the first move. With an election ever more immanent, look for the Tories to make a move to appease their rural supporters who rely on small town bus service.

Any bets?

comments

1 Response to "Greyhound Chases Cash Rabbit. Time to Nationalize?"
  1. Anonymous said...
    September 8, 2009 at 12:12:00 AM MDT

    In 2000, unionized auxiliary nurses in Alberta went on strike in violation of the province's now unconstitutional (but as yet unchallenged) labour legislation, which declares basically all government and health care workers to be providing "essential services" and makes strikes by them illegal. Their union was fined $400,000 for civil contempt. So how come when a corporation says it will stop providing an essential service it's considered a legitimate tactic to blackmail money from taxpayers. Just wondering. I'm with Alberta Report - nationalize 'em. Here in Alberta that would have the added benefit of making bus strikes illegal!

 
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