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Greyhound Air Essay

900 words - 4 pages

GREYHOUND AIR: COULD THE DOG FLY? Many airline industry observers have called it one of the worst new product launches in Canadian history. Greyhound Air was started by Greyhound Canada Transportation Corp. in July 1996, and had to be shut down on the 21st of September 1997 after losing almost $30 millions in about 15 months of operations. The shutdown was required by Laidlaw Inc., who had meanwhile acquired Greyhound in a friendly takeover.Although it is unusual for a bus transportation company to start an airline business, the decision was not surprising given the company's situation and the background of its management. Greyhound made a profit in each year of operations yet bus travel had been declining since the early 1990s, because of competition from charter and discount airlines. Huiseman, named CEO at Greyhound in 1988, was a former Canadian Pacific Airlines executive. He had started introducing some elements of airline management at Greyhound a long time ago. His idea was to upgrade the bus company's image by making it an "Airline on wheels". He experimented with wider seats, arm rests and video entertainment in its buses. In 1989 Huisman brought in John Munro as vice-president of marketing. Before that, Munro had worked for Canadian Airline International Ltd. and CP Air. In the beginning Munro's initiative was to raise the standard of service at Greyhound to the airline level. Soon, however, the idea of starting a new airline surfaced. As Huiseman said, they just wanted to offer the public a new opportunity to travel.Initially, the new airline was oriented towards value-conscious travelers. Its ticket prices often were only one third of the fares charged by major national carriers on the same routes. Although Greyhound could not match the frequency of the larger airlines, it operated on all major routes across Canada. It had a hub in Winnipeg, where most of the flights had a stop. Major airlines saw Greyhound's low-fare strategy as a threat. Air Canada soon noticed that with the advent of Greyhound Air, its yields had started falling on domestic routes. In fall 1996 both Canadian Airlines and Air Canada matched Greyhound's fares in economy class on competing routes.The start-up company did not have access to a computerized reservation system. In the beginning it was selling most of its tickets through bus terminals and its 800 number. Starting April 1997 Greyhound allowed agents to book their flights and by June 25% of bookings were coming through these intermediaries.Greyhound's TV commercials advertising the new service were a big success with the public. For the first time in Greyhound's history a live dog was used to enhance the company's image. Even after ten months the viewers could...

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