Policy

Why the Government Was Wrong to Shutdown Fung Wah Bus Company

The iconic Chinatown bus service was destroyed by regulatory incompetence

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Curbside bus travel is the fastest growing form of intercity transit in the U.S., thanks to a handful of immigrants from Fujian Province, China, who started their own bus companies in New York City's Chinatown in the late 1990s. These entrepreneurs reversed the long-distance bus industry's half-century-long decline. By charging low prices and picking up passengers right off the street (hence the term curbside), they demonstrated that it was possible to lure hoards of new customers. Established bus companies like Greyhound have responded by starting curbside companies of their own.

The visionary who deserves the most credit for the resurgence was Pei Lin Liang, a former noodle factory deliveryman who started an operation called Fung Wah in 1997. For travel between Boston and New York City, the company originally charged just $10—a price that drew so much business, it turned Fung Wah into a household name in those cities. It was especially popular among college students.

Fung Wah is now defunct. In March 2013, the Federal Motor Carrier Safety Administration (FMCSA) forced the company to cease operations, claiming it was an "imminent hazard to public safety." Journalists, many of whom are former Fung Wah customers, both mourned and applauded the news. In Gothamist, Rebecca Fishbein observed, "the feds might have saved the general public from the wretched grasp of Fung Wah's duct-taped bus fleet, but people are sad to see them go." Singer-songwriter Marc Philippe Eskanazi performed a tongue-in-cheek music video about Fung Wah that was produced and distributed by The New Yorker magazine. "I'll think of you always with nostalgia and fear," he sang.

Fung Wah customers actually have much to be nostalgic for and little to fear. Regulators could have shutdown Greyhound, or practically any bus company, on the same grounds they used to force Fung Wah out of business. And if saving lives is the whole idea, regulators should more logically prohibit intercity travel in passenger cars, while mandating travel in buses run by companies like Fung Wah. (The owner of Fung Wah declined to comment for this article, as did the company's longtime attorney, Michael Lam.)

The bus industry has been subject to an onslaught of new regulations in recent years—a reaction by government to a few tragic accidents that drew widespread media attention. While horrific accidents occur periodically, buses are not only orders of magnitude safer than passenger cars, they're safer than they've ever been thanks to engineering and manufacturing advances. There are about 34 fatal intercity bus accidents annually as compared to 23,000 fatal passenger car crashes. An unintended consequence of the regulatory onslaught is that higher ticket prices will lead fewer travelers to forgo their cars for the bus, making them far more likely to die on the highway. What safety-anxious parent would prefer their college offspring to catch a ride home in a car driven by a fellow student rather than take the bus?

The government initiative also fits the classic pattern in which regulation destroys politically weak businesses to the benefit of the politically strong—like Greyhound, Coach USA, and Peter Pan, which have seen their market share grow. Most of Fung Wah's employees and its owner were Chinese immigrants lacking the language skills and legal muscle required to navigate all the red tape. And Fung Wah is only the best-known victim of this onslaught. On May 31, 2012, the Federal Department of Transportation shutdown 26 bus companies in a single day, and since then it has forced an additional 15 closures. Many of those companies were owned by Chinese immigrants. The American Bus Association, a trade association that primarily represents the large corporate carriers, has cheered the government on.

Before looking at the series of vehicle inspections that led the government to shutter Fung Wah, let's first examine the company's much maligned record on the highway. I've compiled a table of every accident involving a Fung Wah bus using a federal database called the Motor Carrier Management Information System, which I've supplemented with press reports and information provided by transit agencies and police departments in New York, Massachusetts, and Connecticut.

When a bus service operates for 12 years (Fung Wah became an official bus operation in 2001) logging close to 3 million miles annually, there will inevitably be some accidents. There's no evidence that Fung Wah had an unusually high accident rate compared to other bus companies.

Contrary to the claim that the company became more dangerous in its last few years, in the three-year period from 2010-2012 the company's buses didn't have a single accident. In its 12 years operating as an official bus service, the company wasn't involved in any fatal crashes—with the exception of a 2008 incident in which an out-of-control dump truck struck a parked Fung Wah bus, triggering a chain of events that led a pedestrian to have a fatal heart attack. It's hard to imagine a scenario in which a bus company could be less at fault.

There are two serious accidents in Fung Wah's history for which the company deserves blame. The first took place on August 16, 2005, when a New York-bound Fung Wah bus caught fire on I-91 near Meriden, Connecticut. All passengers evacuated before the flames spread and there were no injuries.

This incident tells us little about the overall safety of Fung Wah buses. "If your bus catches on fire, it doesn't mean it's in a state of disrepair; if you're diligent you can still catch on fire," says bus engineer Christopher Ferrone, who in 2008 was commissioned by regulators to study the causes of spontaneous bus fires.

Bus fires are a thorny problem for mechanics and engineers: There are about 160 fires annually, according to a 2012 government analysis, though the actual figure is thought to be much higher since most go unreported. Thankfully, 19 out of 20 reported bus fires don't result in injuries.

Fung Wah had one bus fire in 12 years. To demonstrate how unremarkable that is, over the past three years (the albeit much larger) Greyhound saw its buses catch fire in at least eight different cases, according to news accounts.

The other serious accident in which Fung Wah was at fault occurred on September 5, 2006, when a bus pulling off the highway in Auburn, Massachusetts hit the curb and rolled on its side. Thirty-four of the 57 passengers were taken to the hospital, although nobody was seriously injured.

This accident also says little about the company's overall safety. Fung Wah had one rollover in 12 years. In contrast, from 2005 to 2010, Greyhound had at least seven rollover incidents, according to news accounts.

Journalists repeatedly bring up and dramatize these accidents, which occurred over seven years ago, conjuring headlines like "Penny-Pinching Peril," or "We're a Lot Safer with Fung Wah Buses Off the Road." Fung Wah was a "rattletrap operation" that was "known for carrying shallow pocketed passengers," according to David Wescott writing in Bloomberg Businessweek. According to Adam Martin of New York—the magazine has published several anti-Fung Wah stories over the years—this "wacky-yet-lovable institution" was "even more dangerous than we already knew."

A recent item in College Humor titled "An Important Safety Message from Fung Wah Buses" mimics a company manager telling drivers in broken English that if a bus catches fire, "pull over at either the first sight of flames or the first smell of burning flesh, whichever comes later."

Imagine the press reaction if Fung Wah, not Greyhound, had made news for running a roach-infested bus. Or if it had been a Fung Wah bus, not a Greyhound, aboard which a man stabbed, beheaded, and consumed portions of his seatmate?

Fung Wah's drivers have a relatively good safety record, with four violations in the past two years.[*] Three out of four of those violations had little bearing on passenger safety. In one case, a driver was caught with an improperly formatted doctor's certificate testifying to his good health. Two drivers were cited for sub-par English language skills.

The remaining infraction is serious, though not to the degree that the official record reflects. On August 14, 2012, a Fung Wah driver was pulled over for speeding. The officer then issued the driver a citation for operating a bus without having been issued a commercial driver's license. According to information obtained from the Connecticut Department of Motor Vehicles, the officer actually caught the (licensed) Fung Wah driver not wearing his glasses and then mistakenly gave him the wrong type of citation. Unlicensed driving is considered is a far more serious offence by the Federal Motor Carrier Safety Administration. In the past two years, Greyhound drivers have been cited twice for operating a bus without having been issued a commercial vehicle license.

Fung Wah's real troubles began in February, when safety inspectors in Boston found multiple cracks in the frames of its buses during a series of inspections. "Not trivial stuff," said Ann Berwick, chair of the Massachusetts Department of Public Utilities, which oversaw the inspections.

But these frame cracks were, for the most part, "trivial stuff." The inspectors who examined Fung Wah's fleet, Steve Boleyn and Dyann Prouty, placed 11 Fung Wah buses out of service because of frame cracks. What the two inspectors didn't seem to know is that all active tour buses have frame cracks. Because tour bus bodies are fabricated in one large metal piece, these cracks don't threaten the structural integrity of the vehicles. School buses, on the other hand, have assembled frames, so cracks need to be treated more seriously. Boleyn and Prouty seemed to be unaware of that distinction. (Boleyn and Prouty, through a DPU spokesperson, declined to be interviewed for this article.)

"Most frame cracks have no safety impact," says bus engineer Christopher Ferrone. "People that do a very good job of running their buses are getting wrongly impounded for frame cracks," he says. (Ferrone has no direct knowledge of Fung Wah's fleet.) He says that some cracks are beneficial because they relieve stress on the vehicle. Others should be "monitored or repaired," but generally are of "no safety consequence."

Bus safety experts have long been concerned that field inspectors overreact to frame cracks by taking vehicles out of service; while it's too late for Fung Wah, the closing of a major company because of frame cracks seems to have finally prodded them to take action.

Lieutenant Donald Bridge, Jr., is head of the Passenger Carrier Committee of the Commercial Vehicle Safety Alliance, which determines safety inspection criteria for commercial vehicles in all 50 states. One month after Fung Wah was shut down, Bridge says his committee began the process of rewriting the guidelines for field inspectors with the goal of "alleviating some of the misdiagnosed violations" stemming from frame cracks. (Bridge, who works closely with federal and state regulators, characterized bus inspectors overall as "awesome," and denied that it was Fung Wah's closure that directly led his committee to rewrite the guidelines.)

Cracks in some parts of a tour bus frame require more attention than in others. The cracks Boleyn and Prouty discovered in the drive axle area of Fung Wah's buses had been repaired, though not to their satisfaction. But the two inspectors may not be the best judges of what constitutes an adequate repair.

In Boleyn's vehicle examination reports, which I obtained through a Freedom of Information Act request and have posted here, he repeatedly claims that the repairs were not appropriate according to a work procedure issued by the bus manufacturer Van Hool.

There's strong evidence that Boleyn was being overly literal in interpreting that document. The work procedure Boleyn consulted, WP449, was issued in April 2007. In April 2013, just one month after Boleyn used WP449 to take much of Fung Wah's fleet out of service, the procedure was revised and made less stringent—likely a reaction to his misreading of the 2007 document. (A representative with ABC Companies, which is the North American distributor for Van Hool buses, declined to comment.)

Beyond the claim that Fung Wah's buses were in disrepair, the Federal Motor Carrier Safety Administration's shutdown order lists several internal procedures Fung Wah allegedly failed to comply with, such as failing to monitor their drivers' work schedules and their drug and alcohol testing. The rules governing internal procedures have become so stringent in recent years, an aggressive regulator might find similar fault with any bus company. The shutdown recites a series of offences, but lacks any specifics.

The most serious charge in the shutdown order is that Fung Wah drivers "made fraudulent or intentionally false entries" on the simple inspection forms they're required to fill out at the end of every shift. When asked how the FMCSA knows that Fung Wah drivers were knowingly committing fraud on these forms, agency spokesperson Duanne DeBruyne declined to comment.

The new regulatory regime that ensnared Fung Wah is in danger of bringing intercity busing back to what it was like for much of the 20th century, when a cartel of large companies (particularly Greyhound) dominated a declining industry. President Reagan deregulated busing in 1982. That made it possible for Pei Lin Liang and others to open their own companies and reinvent the business 15 years later. The new competition forced Greyhound and the other big carriers to relearn how to fight for customers; with all the shutdowns, they won't have to fight so hard.

[*] Only the past two years of driver and vehicle violations are available on the FMCSA website. Through a Freedom of Information Act request, I've asked for data for all 12 years of Fung Wah's service. Once I receive the information, I'll post an update on Hit & Run.