Needs of the Intercity Bus Industry and its Importance in the Transportation Network

Number C-02-01

U.S. Department
of Transportation
Federal Transit


400 Seventh St. S.W.
Washington, D.C. 20590

Dear State Transportation Colleague:

In recent years, increased state and Federal funding for public transit has contributed to an expansion of mobility options, not only in America’s larger cities, but in rural and small urban communities, as well. Although many rural areas are now served by public transit systems that provide general mobility and effectively coordinate human service transportation, others still have little or no public transportation service.

Privately operated intercity bus transportation is also an important part of our nation’s overall surface transportation network, particularly in smaller communities and rural areas. Intercity buses provide linkages among smaller communities within a region and to larger urban areas that offer services and opportunities not available in less populated areas. It is particularly important for communities where air or passenger rail travel options are unavailable.

Unfortunately, like other transportation providers, the economic base of intercity bus operators has been adversely affected by the recent terrorist events. These operators often generate a significant portion of their total revenue from charter and tour business, which has significantly declined in the current environment. In addition, the intercity bus industry has experienced increased security threats in recent months and is facing the need to enhance security measures to ensure the safety of drivers and passengers.

Since the passage of the Intermodal Surface Transportation Efficiency Act (ISTEA) in 1991, states have been required to use a portion of the annual apportionment of non-urbanized formula funds (Section 5311) to support intercity bus service, unless the Governor certifies that the intercity bus needs of the state are adequately met. This provision has resulted in a number of creative public/private partnerships. Research conducted for a Transportation Cooperative Research Program project "Effective Approaches to Meeting Rural Intercity Bus Transportation Needs" has identified dozens of partnership projects, including the provision of operating subsidies to preserve essential route segments, capital projects involving intermodal facilities and vehicle acquisition, joint marketing initiatives, operation of transit feeder service to scheduled intercity routes, and transit providers serving as ticket agents for commercial bus companies. The final report, which the Transportation Research Board expects to publish early in 2002, will document many successful approaches to working with the industry.

In addition to support for rural intercity bus service under Section 5311(f), a provision of TEA-21 (Section 1108) allows Surface Transportation Program (STP) funds to be used directly to support "vehicles and facilities, whether publicly or privately owned, that are used to provide intercity passenger service by bus."

Given the important role that your state agency plays in determining how Federal funds are allocated, I wanted to call your attention to the needs of the intercity bus industry and the important role it plays in our transportation network. I also want to encourage you to include the intercity bus industry in your state transportation planning process as you make long-range plans and determine how you will use STP and FTA formula funds to improve mobility in your state.

Public-private partnerships, whether through contracts for provision of transit service, joint ticketing, shared facilities, or support for specific capital projects such as security enhancements, help ensure the continued vitality of this valued part of the transportation infrastructure and enhance mobility for all. We’re in the mobility business together, and, together, we can keep our communities safe and moving.


Jennifer L. Dorn