EDMONTON - Alberta is parking its decades-old bus service policy that relied on Greyhound Canada to move passengers to smaller communities and is throwing the door open to competition.

The province says the change, which goes into effect Oct. 1, was driven by a plan by Greyhound to reduce service on some routes. The U.S.-based transportation giant was also seeking a government subsidy to maintain the system after losing millions of dollars in recent years.

"The province is not subsidizing private business," Tammy Forbes, a spokeswoman with Alberta Transportation, said Monday.

"Greyhound has made a business decision. They had indicated that they were losing money and they have indicated that they would have to reduce service. This is the province's response."

Since the 1960s, Greyhound has operated in Alberta under a government deal that protected it from competition in exchange for maintaining minimum service levels to remote or rural communities.

Alberta Transportation Minister Luc Ouellette said the old system is no longer economically viable. Under the new plan, no bus company will have protected routes or be required to meet a minimum service level.

Greyhound Canada praised the government's new policy and said it would make changes to some of its passenger routes after Oct. 1. Details on which routes are to be cut or have reduced service were not available. The changes will not affect its more profitable freight and parcel service in Alberta.

"The government of Alberta deserves credit for clearing the path to success and creating new opportunities for transportation services to the travelling public," Greyhound Canada vice-president Stuart Kendrick said in a release.

In 2009, Greyhound requested annual subsidies worth $15 million from provincial governments and threatened to pull out of northern Ontario and all of Manitoba.

Later that year, Greyhound backed off of its threat in Manitoba after the province agreed to pay the company a subsidy to maintain service. Other provinces have refused to pay such subsidies.

Forbes said bus passengers have nothing to fear by Alberta's decision to deregulate its bus service.

New operators will be required to apply to the province for a certificate to carry passengers, must use properly licensed drivers, carry insurance and have their vehicles checked by safety inspectors.

Forbes said most rural communities are onboard with the change and the government will hold information meetings in municipalities next month.

"What we are hearing from communities is the current system is limiting options for busing," she said. "And I think that most communities and most people in the bus industry are going to be very supportive of this move."

Gerald Rhodes, executive director of the Alberta Association of Municipal Districts and Counties, said the government's announcement Monday has taken his organization by surprise.

Rhodes said the association will be pressing for more details when members of the executive meet later this week with Ouellette.

"We just got the information and it was not something that we were aware was coming," Rhodes said Monday.

"We certainly do have concerns about access for people in remote and rural areas, so we are going to investigate this one for sure."

Alberta NDP Leader Brian Mason said the new policy will reduce or eliminate service in rural communities and drive up costs for small business owners.

Mason said the province should consider setting up a Crown-owned service similar to the Saskatchewan Transportation Company to ensure that people in remote areas have reliable bus service.

"The Progressive Conservatives are severing a lifeline to rural and remote communities that passengers and small business depend on," Mason said.

"Where business can't provide an essential service, government must step in."