Front of the Bus

Success at Jefferson Lines

When buses joined the list of deregulated industries last fall, many travelers feared that large bus companies like Greyhound and Trailways would abandon small-town stations where only a few passengers boarded. The giants plan to eliminate 1,300 stops, but dozens of small operators have entered the field, and in many places, bus service is improving.

One company that has profited handsomely from deregulation is Jefferson Lines of Minneapolis. The company was skidding into the red and facing a strike in 1978, when Louis Zelle, 59, a Minneapolis real estate developer who owns 60% of the company, set out to find someone with "no background in the bus industry" to run the firm. He explains: "Most bus executives are only interested in meeting schedules. Passengers are incidental."

Daniel Prins, 40, was his choice. Born in Holland, Prins came to the U.S. in 1970 and worked in marketing for a variety of companies from TWA to Procter & Gamble. Prins knew nothing about buses, but figured that he "could market bus travel just like a box of Tide or Cheer."

Prins first persuaded his new employees to call off the strike, then talked them into accepting a profit-sharing plan instead of increases in salary and benefits. Next he traded in Jefferson's aging fleet of 120 buses for 100 new red-and-white ones that carry more passengers in greater comfort and at lower cost.

Then Prins set out to fill the new buses. He installed sleeper seats for Kansas City ski buffs taking the overnight bus to Colorado resorts. He also put video games in some buses and movies on others. Prins' biggest revenue booster was special, cut-rate tours. Example: for $49.95, passengers can take a two-day trip from Des Moines to Minneapolis, complete with dinner and one night at a good hotel. Greyhound and Trailways charge more than $80 for the same round trip, without the hotel or the meal, and airfare is $100 one way. Jefferson now offers tours from coast to coast, and has even jumped the Atlantic to carry vacationers to Paris, Venice and the castles along the Rhine.

In addition to introducing imaginative marketing, Prins also found new sources of income inside the company. Jefferson began selling the service of its mechanics to competing firms. And while maintenance is usually a heavy drag on earnings in the industry, Jefferson's operation now produces $3 million in revenues. A training school for bus drivers that Prins started in 1980 also makes money and earns Jefferson a 30% reduction in insurance rates. The result of the new services: in the past four years, the privately held company's revenues have increased by 33%, to $20 million, and profits have quadrupled.

Prins predicts his company will continue prospering despite the twin threats of increased competition and the prospect that falling gasoline prices and a strengthening economy will tempt passengers to drive their cars instead of taking the bus. One reason for Prins' optimism: "As the economy picks up, more people are planning to take tours." Indeed, Jefferson's 1983 tour bookings are already up 80% over last year's, and its European jaunts are almost sold out.

Prins now has a new plan to turn bus deregulation into still more profits. Last week Jefferson began offering new bus companies a package of services, ranging from the financing and maintenance of buses to advertising, promotion and accounting, to help them get started. Prins' fee: up to 15% of profits. This file is automatically generated by a robot program, so viewer discretion is required.