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Long-Distance Bus Travel

The City Fix recently posted about the growing popularity of long-distance bus lines connecting big cities. I think another interesting question is: why are the fares on these bus routes so cheap? Prior to a few years ago, if you wanted to travel by bus, Greyhound was basically the only choice. Now, depending on where you live, there can be a dozen or more options for bus travel.

(from flickr user compujeramey)

I don't have a lot of experience with these bus lines - I did ride a Megabus once. I didn't think it was the greatest thing in the world; but for the price, it was certainly reasonable.

If I wanted to make a trip from Cleveland to Chicago during an upcoming weekend in October, I have two bus options: Greyhound or Megabus. The Greyhound fare is $132. The Megabus fare is $30. Not only that, but Megabus has only one stop, in Toledo. The Greyhound has two stops in Ohio and another five stops throughout Indiana. For the Cleveland-Chicago city-pair, only a fool would buy a ticket on Greyhound.

Still, $102 is a huge fare discrepancy. How do these megabus-type companies manage to keep prices so low? Here are a few ideas:

1) Overhead - Greyhound operates a network of 2400+ bus stations in cities throughout the U.S. and Canada. That means they also employ thousands of people to sell tickets, clean bathrooms and manage other employees. It means they pay rent (if they don't own the stations - I'm not sure whether or not they do). Megabus, on the other hand, picks up and drops off on street corners. Megabus has no infrastructure to maintain or non-driver employees to worry about. I think this is typically the most common assumption for why their fares are so low.

2) Unions - Greyhound drivers are organized in a union, Megabus drivers are not; and frankly, Megabus drivers seem a bit aloof, from my experience. I wouldn't be surprised to find that Megabus drivers are paid much less than other unionized commercial vehicle drivers.

3) City-Pairs - You can basically get from any two cities on Greyhound, Megabus-type lines are much more limited in their city pairs. Think about this: let's say that Cleveland-Chicago is a profitable route. If there is someone who wants to go from, say, Sandusky, Ohio to South Bend, Indiana, they take a seat from someone who might otherwise travel from Cleveland to Chicago. Surely Greyhound has some profitable city-pairs and some money-losers. It seems reasonable to think that Greyhound uses its profitable city-pairs to subsidize the money-losing ones. Megabus-type lines eliminate this problem by only running routes between profitable pairs.

Greyhound has a reputation as being a pretty terrible way to travel, so the fact that Megabus-type lines are becoming so popular says something... Traveling by bus might not necessarily be more comfortable or fast as travel by plane or high-speed rail, but given the low price of fares, it's an interesting value proposition.

Comments

catfood said…
It would be sad if everyone who could went to Megabus for price, and then Greyhound lost all the profitable passengers, and then Greyhound had to drop service to all the small cities and towns that don't have any other options.

The thing is, Megabus really is pretty cool, and you really can't beat the price for Cleveland to Chicago.
BeyondDC said…
One interesting aspect of this that you've missed is that BoltBus, which is a MegaBus clone that only operates on the east coast, is 50% owned by Greyhound.

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