Feds had eye on Sky Express before Tuesday's deadly bus crash

US regulators had begun work to suspend operations of the Sky Express bus line even before a company bus flipped over Tuesday on an interstate highway in Virginia, killing four.

The US Department of Transportation on Wednesday shut down the Sky Express "China Town" carrier involved in a deadly bus crash in Virginia this week, citing the bus line's long record of safety violations, including the use of fatigued drivers.

Regulators moved quickly against North Carolina-based Sky Express for a reason: They had already begun work to suspend operations at Sky Express, which had racked up dozens of citations and had been involved in several recent crashes. Driver fatigue has been implicated in the 5:30 a.m. crash Tuesday, which occurred when a New York City-bound Sky Express bus veered off I-95 near Fredericksburg, Va., and flipped, killing four and injuring 50.

Suspending Sky Express operations "was something that had been in the works, had been planned, but unfortunately it was a day late and a dollar short," says Pete Pantuso, president of the American Bus Association (ABA), who receives regular policy updates from federal regulators.

The Department of Transportation revealed Wednesday that, before the crash, it had given the company time to appeal an unsatisfactory safety rating. Had the appeal not been granted, the carrier's permission to operate would have been revoked. Transportation Secretary Ray LaHood says he is directing the department to end its practice of extending appeals periods for operators found to be unsafe, according to the Associated Press.

Four deadly crashes in 2011 involving cut-rate regional bus carriers, including Tuesday's crash and one that killed 15 people near the Bronx in March, probably means "a critical mass has been hit, where we'll see a flushing out of the business and [where] more capitalized people will expand into markets that were marginal before," says George Hofer, a transportation economist at the University of Richmond, located near Tuesday's crash site.

"What's happening in the bus industry is the epitome of what should have happened with deregulation, but when it comes to safety regulations, clearly the wheels of government don't turn fast enough," adds Professor Hofer. "This is a failure not of economic regulation, but of safety regulation."

The boom in regional bus lines serves both upscale riders in the Northeast and poorer riders shuttling from the South to major cities along the northern Atlantic Coast. They got the nickname China Town carriers because the first successful lines started off with service between China Town in Boston and China Town in New York City.

In 1984, Washington deregulated the bus industry because too many carriers were filing for bankruptcy. Twenty years later, the intercity bus system has its mojo back, thanks in large part to low-rate carriers that restored some of the utility and romance of bus travel, all at an affordable cost, transportation experts say.

In the past three years, intercity bus ridership has been growing at an eye-popping 10 percent a year, at a time when auto and airline travel have declined. The 4,000 US bus carriers benefit the environment, reducing total annual US carbon emissions by 30,000 tons – about the weight of a cruise ship. The explosion of low-cost regional bus carriers has spurred innovation in what was once a moribund industry, with Greyhound, for example, launching its low-cost, high-service Bolt line from Washington, its business model ripped neatly from the pages of the "China Town" bus lines.

But the new bus business model, which largely works by turning individual buses into commodities that can be chartered and traded among carriers, has allowed some carriers to cut corners and skirt regulations. It has also helped spawn so-called "chameleon carriers" that are able to easily steal away and reappear in a different form, under a different name.

Sky Express is headquartered in a nice residential area in North Carolina, with no bus maintenance buildings in sight.

Indeed, several dozen operators have managed to rack up substantial numbers of citations as well as minor and deadly accidents, often tied to driver fatigue. As a result, over the past five years the Federal Motor Carrier Safety Administration, the DOT's enforcement arm, has doubled the number of unannounced bus safety inspections, going from 12,991 in 2005 to 25,703 in 2010. Sky Express had racked up 46 citations for using fatigued drivers during that time, according to the DOT.

In a statement released to the media, Sky Express offered its condolences to those killed and said it would cooperate with the government's investigation. "This is the first serious accident" involving Sky Express buses, the statement said. "The bus driver has never before been involved in an accident."

Since 9/11, "more and more people are opting out of flying and going back to the bus carriers," says Naomi Lede, emeritus director of the Center for Transportation Training & Research at Texas Southern University, in Houston. "That means you actually have shifted a substantial responsibility to those entities to make sure passengers traveling on them are just as safe as those who go through checkpoints at the airport."

In Manhattan, borough leaders have become frustrated enough by the bus lines to propose a city permitting program for the buses, thousands of which pour into a 10-block region of Manhattan every day near China Town – a call that was reiterated after Tuesday's accident. "Right now there’s a Wild West atmosphere," state Sen. Daniel Squadron told the Gothamist.com website.

Heeding such concerns, Secretary LaHood announced on May 5 some new and proposed department rules, including a $25,000-a-day fine for bus carriers found to be operating outside US DOT authority and the imposition of a new commercial learner's license. Mr. LaHood also wants more authority to crack down on "chameleon carriers" that, if they feel the regulatory heat, create a new company, shift buses from the old company to the new one, and carry on as before.

Problems in the intercity bus industry notwithstanding, more funding for DOT enforcement won't be easy to secure. An inexpensive option for Congress, which could have immediate impact, would be to change statutory language to allow DOT to identify rogue carriers quickly and shut them down. In the case of Sky Express, such congressional authority may have saved lives, says Mr. Pantuso of the ABA.

The DOT said a compliance review of Sky Express, which led to the decision to suspend the company's operations, revealed multiple violations touching on matters from vehicle maintenance to drug and alcohol testing.

“Safety is our No. 1 priority,” LaHood said in a statement Wednesday. “We will use every resource at our disposal to pursue and remove from our roads unsafe, reckless bus companies.”