|In Chinatown, Vans Give Rise to a Bus War - NY Times
In Chinatown, Vans Give Rise to a Bus War
By MICHAEL LUO
Published: February 21, 2004
The economics are hard to fathom, Pei Lin Liang, the owner of Fung Wah Bus Transportation, admits. At a time when a cab ride from Midtown to Chinatown might cost close to $10, how can a four-hour, 215-mile journey to Boston aboard Fung Wah or any of its competitors cost the same?
Mr. Liang, 41, a gaunt chain-smoker who regularly staggers through 15-hour work days, offers his explanation through a translator. It is "business by suicide," he says.
Budget travelers up and down the Northeast know Fung Wah as the original "Chinatown bus." The company was the first to start running vans and buses between Boston and New York at bargain rates, becoming something of a cult phenomenon. Today, it is just one of many players in the hypercompetitive Chinatown bus industry. With companies locked in a price war, rates have plummeted on Fung Wah's route, reaching a new low last spring at $10 for a one-way trip to Boston. Yes, $10.
Prices from New York to Washington, D.C., were similar at one point, but went up after a few months when companies decided that they could not hold out any longer. But the price to Boston has held steady for months, with a new company even joining the fray.
On this January evening, Mr. Liang is scheduled to drive the 9 p.m. to Boston. His day began at 7 a.m., when a co-worker woke him at home about a bus that refused to start in Boston. Mr. Liang and a mechanic drove up to fix it. But on the way back, their car broke down outside New Haven.
While his colleague waited for a tow truck, Mr. Liang flagged down a passing Fung Wah bus for the ride back, rushing into the company's garage in Sunset Park, Brooklyn, just after 8:30 p.m. After a last-minute repair on a loose window, he was on his way to Manhattan.
At Fung Wah's bus stop on the corner of Canal and Chrystie Streets, a crowd has already gathered. Mr. Liang's sister hops aboard to take tickets. Although boarding is notorious for being chaotic, this evening it is orderly. By 9:10 p.m., almost every seat is taken.
Once the exclusive province of middle-aged Chinese, ridership on the Chinatown buses has exploded. Fung Wah now offers 18 departures a day in Boston and New York and boasts a fleet of more than 20 buses, some owned, some rented.
"It was really interesting to see the transition," says Kenton Beerman, a Columbia University graduate student who started riding Fung Wah four years ago and estimates he has taken it more than a hundred times. "You started seeing more and more white people coming on, black people, Indian people. It was a very eclectic mix."
More than a half-dozen bus companies operate within blocks of each other in Chinatown. There have even been incidents of violence, including a murder, linked to the bus competition. Mr. Liang says he would sell his business if he could. His wife, Ling, who works every day from 6:30 a.m. to 10 p.m. in Fung Wah's tiny ticket booth, wants them to give it up as well.
"The work is never over," he says.
Bus industry officials say these are difficult times for mainstream operators, with fuel and insurance costs climbing. Many companies have gone bankrupt. Profit margins at surviving firms, which charge far more than the Chinatown buses, are often as low as 1 percent.
"Greyhound as a company has not made money in a number of years," says Peter J. Pantuso, president of the American Bus Association, which represents more than 3,500 companies, including Greyhound. "If they're not making money at a higher price, nobody that I know has been able to figure out how other operators who charge as little as $10 can make money."
Mr. Liang explains his ledger this way: it costs about $800 to cover the driver's salary, tolls, fuel, maintenance and insurance every round trip; on a 57-passenger bus, if the bus is full, he makes about $340; if it is not, he could lose money.
Some have wondered if the Chinatown buses are cutting corners. But officials at the state's Department of Transportation say Fung Wah's inspection record is good. Out of nine buses inspected in the last fiscal year, only one was cited, for mechanical problems including a broken axle and an exhaust system leak.
Federal Motor Carrier Safety Administration records show the company has not had any serious accidents recently and has adequate insurance coverage.
But officials for the safety administration say they are investigating several Chinatown bus companies, including Fung Wah, although they declined to be specific. The company garnered only a conditional rating in a review conducted last September, meaning it violated one or more safety standards.
Andy Beck, a spokesman for the safety administration, said he would not elaborate on the violations because of the investigation.
Mr. Liang says he had no idea that his company received a conditional rating. He spoke with investigators through a translator, he says, and admitted that he never knew until the review that some federal safety rules were stricter than state ones.
Federal officials, for example, require that he test his drivers for drugs and alcohol, a rule he says he now follows. He pointed out, though, that his drivers have always been properly certified by the state's Department of Transportation.
Currently, there is a police investigation into violence and intimidation associated with the bus routes. Neighbors in Chinatown have complained of gang-like violence, and last week a bus driver was stabbed.
In a series of surprise police inspections of Chinatown buses this week, two Fung Wah buses were towed for a variety of infractions, including a broken windshield wiper. Mr. Liang insisted, however, that the violations had no impact on passenger safety, and many longtime riders say they ride Fung Wah because they feel it is the most professional of the Chinatown companies.
This evening, Mr. Liang does not have time for dinner, shrugging off his wife's suggestion that he take something with him. He calls out in heavily accented English for everyone to take a seat.
Soon, he is cruising north on the I-95, while most of his passengers doze. Traffic tonight is light. A respite, for once.
It has been nine months since a new bus company showed up on Canal Street, a few blocks away from Fung Wah. They used no advertising. Just a simple sign: "Boston - $10."
At the time, Mr. Liang was charging $25 for a one-way ticket, $45 for round-trip, almost half of what mainstream bus lines charged. Even so, he had no choice but to lower his prices: "Otherwise, I'd lose customers."
It is hardly what Mr. Liang envisioned when he started his bus company. After emigrating from China in 1988, he worked as a bus boy. He eventually landed a job as a deliveryman for a noodle factory. To earn extra cash to support his wife and two daughters, he ferried passengers from Sunset Park to Chinatown for $1.50 a trip.
In 1997, he took a risk, borrowing $60,000 from relatives to buy four vans and go into business for himself.
"Some people start restaurants," he says. "I started a van service."
He quickly decided that the competition between Sunset Park and Chinatown was too fierce but noticed that many Chinese families had children attending elite schools in Boston.
After Labor Day in 1998, he bought a permit to transport passengers on federal highways and printed up some crude fliers.
At first, he drove once a day, leaving New York at 9 a.m. and Boston at 2 p.m., charging $25 each way.
Less than a month later, he was up to three times a day. Most of the time he was driving an empty van back and forth.
But Thanksgiving proved to be his breakthrough. Fung Wah vans were packed. Excited, he borrowed more money to buy several 20-passenger buses. By the end of 1999, he was operating seven departures a day with a mixture of vans and buses.
Back then, the operation was decidedly less professional. Vans were cramped and crowded. Drivers would often drop off passengers upon request in Queens and Brooklyn, or even along the way.
But now, Fung Wah was facing competition. A travel agency, called TravelPack, began offering one-way tickets at certain times for $15. Other companies soon joined the fray. To give himself an edge, Mr. Liang hired a company to design a Web site for Fung Wah in late 2002. Other companies did the same. Soon about half of Fung Wah's tickets were being sold over the Internet. Mr. Liang also switched exclusively to buses.
When prices dropped, Mr. Liang fired six employees, whittling down an already thin work force. His basic operation now consists of 25 full- and part-time drivers, a smattering of ticket sellers and a group that works overnight in Sunset Park to get the buses ready for their runs the next day.
Pay is not high. Drivers receive $100 for every round trip.
Mr. Liang took on more work himself. He now works seven days a week and jokes that his role is that of "general help." Sometimes a boss, sometimes a driver, sometimes a mechanic.
Jimmy Chen, whose company, Ivy Media, runs the Web sites of more than a dozen Chinatown bus companies, including Fung Wah's, is mystified by the math: "At $10, I cannot figure it out, how they can stay alive."
But he believes if anyone can make it, Fung Wah will, because it is has been around the longest.
Mr. Liang has survived so far. Although his revenue initially fell by half, business has increased about 40 percent since the drop in price, prompting him to go out and buy two more buses.
"I see how there are so many customers," he says. "That means I have to fight harder."
Just before 1 a.m., Mr. Liang pulls up just outside the gates of Boston's Chinatown. He has made good time. After his passengers troop off, Mr. Liang steers the bus back on the road, heading to an apartment that drivers use.
He will drive back in the morning.