Wednesday, November 21, 2007

immigrant innovators: the Chinatown bus

I saw this article in the Economist a few weeks ago about the impact of the Chinatown bus on travel prices on the Eastern seaboard:

The Chinatown bus business developed in the 1990s to offer recent immigrants an inexpensive van ride around town and, later on, between cities. By the end of the decade, the Fung Wah bus company had begun shuttling college students and other cash-strapped Americans between New York's Chinatown and Boston's for $10 each way.

Competition soon became so intense that it prompted the 2004 “bus wars” in New York's Chinatown, in which buses were rammed and torched and a decapitated torso was left near a passenger loading zone. Spotty safety records—in 2005 one Chinatown bus caught fire on the road—and reports of drivers working excessive hours also raised concerns about safety. But with prices so low, the buses still left packed.

Greyhound, America's biggest passenger bus line, dropped its prices, offering a name-brand alternative to the Chinatown coaches. Dozens of new competitors also emerged. Hasidic Jews from Brooklyn founded the Washington Deluxe and Vamoose Bus. Most recently, a Marriott executive founded DC2NY, a service between Washington and New York that guarantees customers seats if booked online and charges only slightly more than the Chinatown buses (a $40 round-trip versus $35). It also offers free bottles of water and Wi-Fi internet access. The “luxury” bus carrier has more than doubled its operation since its inaugural trip this summer. Watch as its older rivals start copying its perks.

I’m typing this right now from the DC2NY bus on my way from NYC to DC. Wireless has been a little touch and go, but it’s pretty nice to be able to access the internet at all while traveling.

The Economist story covers the main points. Chinese immigrants needed an affordable way to make short-hop trips on the East Coast and nothing in the existing market was suitable. So immigrant entrepreneurs created a new product that soon caught on outside the Chinese community by dramatically undercutting the competition. A Greyhound bus is no more comfortable than a Chinatown bus, although perhaps less likely to catch fire or trigger gangland killings. For what it’s worth, no Chinatown bus I’ve ridden has ignited. Perhaps the cachet of momentarily escaping sanitized modern life is another draw for the bohemian set.

There’s also a minibus company that primarily serves Latino immigrants commuting from the New Jersey suburbs to New York City—or at least it did 5 years or so ago when I used the service from time to time. $3 from Passaic to Port Authority can’t be beat. Again, an immigrant community was not being served by existing transportation alternatives, so somebody stepped into the breach and created a new product.

This pattern is nothing new—it constitutes the history of New York City and, more broadly, of the United States.

1 comment:

Rob said...

Yeah. I see a lot of that in smalltown Utah, of course. There are two prices for everything, everywhere. 3 examples:
1. Medical prices. No insurance, different price. Enough said.
2. Tuition prices: Local students pay $795 for 4 months at local ESL schools. International students legally here in the states pay over $2,300 for basically the same program, minus a few hours of study a week.
3. Restaurant prices. The other day I went with a few olleagues from work to a local Peruvian restaurant. After looking at the menus where no plate was less than $12, my hispanic colleague talked to the cashier, saying, "This is a lot of food, don't you have anything more economical for lunch?" and they brought us out a massive to-go box with chicken and pasta, potatoes, a seperate bowl of soup, and a drink, all for about $5. That was what they sold the most, I'm sure.