State Subsidies Threaten to Drive NC Bus Operator Out of Business

Published January 24, 2011

A private bus service owner in Hickory, North Carolina claims another bus operation has illegally landed government subsidies that could put his transit company out of business.
John Chamberlain, founder and owner of the Hickory Hop shuttle service, has accused Coach America, also known as Mountaineer Express, of using taxpayer funds to provide a cheaper service from Boone and Hickory to Charlotte-Douglas International Airport (CLT). The state’s Umstead Act prohibits North Carolina government agencies from competing with private commercial enterprises.
The alleged violation may have occurred after Coach America advertised its cheaper rate on its Web site, in its terminal, and on its telephone reservation lines. In the ads,
Coach America informed passengers they could get from Boone to CLT for a one-way cost of $17.75.

In contrast, Hickory Hop—which receives no taxpayer subsidies—charges $70 for the same service.

Coach America won a contract with the North Carolina Department of Transportation in September to secure federal funding for the service. NCDOT and the U.S. Department of Transportation subsidize several fixed-route, scheduled bus lines between North Carolina cities.
15 Percent Drop
“They are undercutting my business using state subsidies,” said Chamberlain. “It is hurting my business. I’m already down 15 percent since they started offering service. I’ve gone from a small measure of profitability to just breaking even again. I am struggling hard.”

“This is a waste of taxpayer dollars,” he added. “I feel like I am paying my taxes to put myself out of business.”

When NCDOT Director Miriam Perry got wind of Chamberlain’s complaints, she told Coach America Vice President and General Manager Steven Crossken to stop both the ads and the service between Boone and CLT.
“[Crossken] said he was contacted by the Boone Area Chamber of Commerce to provide service to the airport,” she said. “That’s not what we committed to. I told him not to do that.”
Perry said the state’s contract with Coach America was meant to provide one trip daily between the bus stations in Boone and Charlotte. “The intent was not to provide trips to the airport,” she said.

Apparent Scheme
In a written statement, Crossken said his subsidized bus service was not going directly to CLT, which is correct. Even so, e-mail messages obtained by Carolina Journal revealed Crossken and Dan Meyer, president and CEO of the Boone Area Chamber of Commerce, were planning to undercut the Hickory Hop service.
Perry was one of several people copied on the e-mails in which Crossken told Meyer how passengers could ride Coach America to the Charlotte Greyhound bus station and then transfer to another bus service for a total one-way cost of $17.75.

“We can now say with certainty that we have the ability to service passengers very conveniently from every stop between Boone & Fayetteville to Charlotte Douglas International Airport!” Crossken wrote to Meyer.

“I think that the combination of students, tourists, and business people will make for a very successful Mountaineer Express to CLT!” he wrote. “Just wish it went to the CLT airport—maybe in the future.”

Meyer also suggested Crossken provide specific information regarding a shuttle to CLT from the Greyhound bus terminal, stating it would “significantly impact” his company’s ridership.
“Tourists are particularly interested, and so are business people who are flying out of CLT,” he said. “Having that specific shuttle info ‘attached’ to your flier will encourage many to take the Mountaineer Express.”

Way Around Rules
The e-mails suggest both Crossken and Meyer were aware of the legalities and constraints of the government-subsidized route and were looking actively for ways to circumvent the rules.

“I just had a very good call with Dan [Meyer] and wanted to share his feedback with you,” Crossken wrote to a third party. “As we discussed on the call this morning, he
understands that we cannot add the CLT airport location as a stop at this point in time. However, he is interested in providing communication directly to in-bound travelers as well as local residents in the Boone area about how they can connect with the Mountaineer North/South to reach the airport. Would you be able to conduct some research to identify the opportunities to connect directly between the Greyhound Terminal in CLT and the CLT Airport?”

When asked whether Crossken or Meyer was aware of the Hickory Hop service, Meyer replied that he was, as Chamberlain is a member of the Boone Area Chamber of Commerce.
However, Meyer said the steep cost of ridership on the Hickory Hop made it restrictive and “somewhat limited” for many passengers traveling to and from the area.

Threat to Business
Chamberlain had applied for access to the government-subsidized route, since Hickory Hop already was supplying service to the Greyhound station and CLT. He was turned down early in the process.

Chamberlain believes decisions were made behind closed doors that may sink his fledgling business and put his 12 employees out of work.

He said the state has put out a bid for the intercity bus transportation from Boone and Hickory to Charlotte for the past five years, but no one else applied until his business started showing a profit.

Chamberlain has contacted the office of Sen. Austin Allran (R-Catawba), whose staff is researching the situation.

Karen Welsh ([email protected]) writes for Carolina Journal, where a version of this article first appeared. Used with permission.