10

STRUCTURE OF THE TRANSPORTATION INDUSTRY

Bus Industry

Major Bus Events in 2001

Legislative and Regulatory Changes

Motor Vehicle Transport Act, 1987 Review

The June 2001 amendments to the Motor Vehicle Transport Act primarily dealt with the regulation of carrier safety for both truck and bus operators. The provincially administered motor carrier safety fitness regime required under these amendments will apply to extraprovincial bus operators, effectively capturing most of the Canadian intercity and charter bus sectors. The amendments are expected to come into force during 2002. When they do come into force, carriers will receive a safety fitness certificate and a safety rating. The safety rating will be based on the carrier's record of safety compliance. Carriers with a poor record will be subject to sanctions; in extreme cases, these could include the removal of the right to operate.

This safety regime is an addition to the economic controls (i.e. entry, tariff, route and exit controls) in jurisdictions that still maintain economic regulation of the bus industry.

On the economic regulatory front, the intercity and charter bus industries are subject to significant economic controls in five provinces; British Columbia, Saskatchewan, Manitoba, Quebec and Nova Scotia; to lighter economic controls in three provinces and one territory; Alberta, Ontario, New Brunswick and the Yukon; and are deregulated in two provinces and two territories; Prince Edward Island, Newfoundland, Northwest Territories and Nunavut. These jurisdictional regulatory regimes apply also to extraprovincial operators under the provisions of the Motor Vehicle Transport Act, which were unaffected by the 2001 amendments.

In May 2001, the Minister asked the Senate Committee on Transport and Communications to examine the issues facing the Canadian bus industry, including the impact of the fragmented regulatory situation. The Committee has until December 2002 to conduct the investigation and submit a report.

Industry Events - 2001

After significant losses in two consecutive years, Laidlaw filed voluntary petitions for bankruptcy protection in both Canada and the United States, in June 2001. The company wanted to reassure the public that this would not affect its intercity bus operations (in Canada, Greyhound Canada Transportation Corporation and related companies). At year's end, Laidlaw was still in the process of restructuring under bankruptcy protection in both countries.

Industry Structure

The Canadian bus industry is made up of approximately 1,000 operators that collectively move more than 1.5 billion passengers each year. In 2000, the industry generated more than $6.2 billion in total revenues, including subsidies.

There are two main ways of categorizing the bus industry: by type of establishment (i.e. principal company activity) and by the type of bus service provided.

Revenue by Type of Establishment

Transit is by far the largest of the sector subdivisions, both as service line and as type of establishment. Moreover, transit establishments are typically dedicated to transit operations, with only a fraction of their revenues coming from the other service lines. All major Canadian cities have some form of urban transit services. Excluding subsidies, transit companies accounted for half of total bus industry revenues in 2000. Urban transit services are subsidized by both municipal and provincial governments and transit revenues and subsidies combined account for 68 per cent of total bus revenues. Some transit operators also offer school bus, charter services and accessible services to those travellers with disabilities.

Among the other carriers, however, the situation is very different. Almost all operators, regardless of their primary business, provide at least some charter service. Many operators provide some intercity and school bus services. Charter bus services are generally characterized by the rental of a bus to a person or group where all passengers embark and disembark at the same point. The charter operators have the flexibility to offer a broad range of services (e.g. half-day school trips, three-week excursions, one-way trips, local sightseeing tours).

Scheduled intercity bus service can be defined as a regular scheduled service between two or more urban areas, i.e. operated over a fixed route with a limited number of stops.

Scheduled intercity bus services are offered in all Canadian provinces and territories with the exception of the Nunavut territory. The Canadian scheduled bus industry provides essentially regional services. There is one national network operated by the Laidlaw companies (Greyhound, Grey Goose, Voyageur Colonial, and several others) offering services from Montreal and Southern Ontario to the Pacific Coast, and significant local/regional service in Ontario, Manitoba, Alberta and British Columbia as well as services to the United States.

Direct competition between bus carriers is currently limited to the Edmonton - Calgary - Fort McMurray corridor (Greyhound and Red Arrow) and routes in Southern Ontario, particularly around Toronto and on the Toronto - Niagara corridor (Greyhound, Trentway, PMCL, Ontario Northland).

Revenues by Service Lines

For the non-transit establishments, service line revenues are the most reliable way of tracking trends in industry activity. In 2000, total revenues (excluding urban transit) were $2 billion. School bus revenues accounted for almost half of this ($965 million), while scheduled and charter service revenues ($719 million) accounted for one third.

The revenue breakdown by service line shows better than any other indicator the cross-sector relationships in the bus industry. The school bus sector, for example, is not only far bigger than any of the others, but also the largest single provider of scheduled service ($164 million).

Generally, the service line approach also gives the best indication of the relative growth or decline of scheduled and charter services. Overall, the industry grew from $5.2 billion in 1995 to $6.2 billion in 2000, an average annual growth rate of 3.5 per cent. However, this growth was unevenly distributed among the service lines, averaging about two per cent in scheduled and school bus services, 5.7 per cent for transit, and 8.2 per cent for charter and tour services, the best performance of any of the service lines.

Table 10-7 shows the industry data for 2000 arranged by both type of establishment and service line.

The Canadian bus industry experienced an overall 9.2 per cent increase in revenues (excluding urban transit subsidies) in 2000. Within different sectors, revenue reporting is subject to variations. These variations have been caused, in large part, by consolidated financial reporting resulting from mergers and acquisitions as well as the shift to the North American Industry Classification System (NAICS)Note 5 by Statistics Canada.

Table 10-8 tracks data for both establishments and service lines over a five-year period.

Corporate Structure

The corporate structure of the industry reflects the complex mix of services it provides. The largest carrier group in Canada and in the United States is Laidlaw Inc., based in Burlington, Ontario. Through its ownership of Greyhound and a number of smaller carriers, it is the largest scheduled intercity operator in both countries. It is also the largest school bus operator in both countries and, in the United States, has a presence in the transit sector.

Although it has a smaller presence in Canada than Laidlaw, the United Kingdom-based Stagecoach PLC is also a major player. It operates in both Canada and the United States through Coach Canada and Coach USA. In the United States, it is the largest charter operator. In Canada, although also a charter operator, Stagecoach PLC has a significant presence in the scheduled intercity market in central Canada.

A third large carrier group is Calgary-based Pacific Western, which has a significant presence in the charter, scheduled intercity, shuttle and transit markets in Ontario, British Columbia and Alberta.

Although most of the other players in the Canadian market are far smaller than these three, few are exclusively dedicated to one type of bus service.

STRUCTURE OF THE TRANSPORTATION INDUSTRY

Rail Industry Structure

Trucking Industry

Bus Industry

Marine Transportation Industry

Air Transportation Industry

Appendix 10-1 Canadian Air Transport Security Authority (CATSA)
Appendix 10-2 Bill C-42:  The Public Safety Act

NOTES

5. Following the 1995 North American Free Trade Agreement, Canada, the United States and Mexico developed the North American Industry Classification System (NAICS) to replace the Standard Industrial Classification (SIC) system. NAICS covers the following bus industries: urban transit systems; interurban and rural bus transportation; school bus transportation; charter bus industry; shuttle services; and scenic and sightseeing transportation by bus.