Bloomberg News

Megabus, BoltBus Overcome U.S. Stigma With Cheap Travel

January 07, 2013

Megabus, BoltBus Overcome Stigma to Cover U.S. With Cheap Trips

Passengers wait to board a Megabus in Washington, D.C., on Jan. 4, 2013. Photographer: Rich Clement/Bloomberg

A U.S. bus-transportation boom that began seven years ago is accelerating as travelers ditch their cars and avoid airport security lines to buy cheap tickets on Wi-Fi equipped motorcoaches.

Bus transportation was again the fastest-growing form of U.S. intercity travel last year, with scheduled departures up 7.5 percent, the most in four years, according to a DePaul University study released yesterday. The study excluded so- called Chinatown lines that don’t publish regular schedules.

Between 1980 and 2006, the industry declined an average of 2.9 percent a year. Since then, it’s grown between 5.1 percent and 9.8 percent a year.

“Buses have gone from a niche product to a national force,” said Joseph Schwieterman, director of DePaul’s Chaddick Institute for Metropolitan Development in Chicago.

Discount companies like Megabus, owned by Perth, Scotland- based Stagecoach Group Plc (SGC), and BoltBus, co-owned by Firstgroup Plc (FGP)’s Greyhound Lines Inc. and Peter Pan Bus Lines, have benefited from a U.S. safety crackdown on Chinatown competitors, increasing their departures 31 percent last year, Schwieterman said in an interview.

Today’s bus industry is experimenting with services the way airlines did three decades ago, Schwieterman said. “There’s a general malaise in the rest of the U.S. travel network,” he said.

Bus operators are targeting the 3.3 billion intercity trips a year currently taken by car or on airlines, said Dale Moser, president of Megabus, which offers discount prices on double- decker coaches in more than 120 U.S. cities.

Safety Focus

“You save money, you don’t have the same headaches or stress,” Moser said in an interview. “Consumers are finding us a great alternative to all those other forms of travel.”

The growth happened even with an increase in fatal bus crashes and a Transportation Department sweep in May of bus companies operating in and from New York’s Chinatown -- the largest bus-safety enforcement action in U.S. history.

The Federal Motor Carrier Safety Administration targeted three operations in New York and Philadelphia: Apex Bus Inc., I-95 Coach Inc. and New Century Travel Inc. The government ordered 10 bus company owners, managers and employees to cease all passenger transportation business, including selling tickets. Twenty-six bus lines were affected.

The focus on safety has helped Megabus, which has equipped all of its motorcoaches with seat belts since 2006 even though they haven’t been required, Moser said.

Still, less than 2 percent of Megabus’s growth is from Chinatown bus passengers, he said. About 73 percent are coming to the Elizabeth, New Jersey-based company from cars or planes, he said.

“There’s plenty of market for everybody,” Moser said.

Niche Lines

Other travel industries aren’t growing as fast as buses. Passenger rail service grew 3 percent last year, based on available seat-miles. Air and car travel grew at about 1 percent each based on available seat miles and traffic volume, according to the study.

Technology is driving the growth of discount carriers like Megabus, which added routes in Texas and California, Schwieterman said. Companies can use smart-phone alerts to inform customers of last-minute changes in pickup and drop off locations. By using Internet-only reservations, they’re able to guarantee paying travelers a seat.

BoltBus expanded beyond the East Coast for the first time, with buses running between Portland, Oregon and Vancouver, British Columbia.

Yo, Crucero

Greyhound, Peter Pan and Trailways Transportation System Inc. have reversed years of declining ridership by trying new business models, sometimes copying the Chinatown carriers that had been taking market share from them, the study said.

Greyhound is selling tickets for Yo!, which is derived from the Chinese word meaning “to protect,” through Chinese- language agents in a Chinatown office. It started Crucero Direct in July to target Latino travelers between San Diego and Los Angeles.

Buses aren’t tied to expensive rail networks or established, out-of-town airports, said Peter Pantuso, president and chief executive officer of the American Bus Association, a Washington-based trade group. They’re no longer tied to terminals, so companies can step in and add service directly in neighborhoods where there’s a market, he said.

“This is not your grandfather’s bus, and it’s not your grandfather’s bus industry,” Pantuso said.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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