Megabus has had smooth sailing in the discount bus business
By Chicago Tribune
Published: Friday, Nov. 2, 2012, 6:28 p.m.
ABOARD MEGABUS, NEAR ELGIN, Ill. — We're running late this weekday afternoon and the road is a bit bumpy en route to Madison, Wis.
For Megabus, the still-growing discount intercity bus line, however, the ride has been faster and smoother than anyone would have guessed when it made its debut 61⁄2 years ago, linking eight Midwestern cities to a Chicago hub for as little as $1 a ticket.
Within two years, Megabus was carrying 2 million passengers annually. That number is approaching 6 million riders in about 100 cities in the United States and Canada, including Pittsburgh. Its North American fleet of 194 double-decker buses last year has grown to 260, and its network of hubs has expanded to eight cities.
The intercity bus industry's indelible image of Dustin Hoffman's destitute Ratso Rizzo in “Midnight Cowboy” expiring on the way to Florida is giving way to a new reality from the curbside operators, so named because they spare the expense of maintaining traditional bus stations.
There is free onboard Wi-Fi, power outlets and tables on which riders can eat, play or set up a laptop and phone and get to work on, say, a newspaper column.
Along the way, the carriers have breathed life into a mode of transportation that was practically in hospice care for close to a half-century. Not even a spate of incidents this summer that raised safety concerns across the curbside bus business seems to have slowed the revival.
“The bus sector was flat on its back,” Joseph Schwieterman, a DePaul University transportation professor and the director of DePaul's Chaddick Institute for Metropolitan Development, said. “Megabus started its Chicago hub in spring of ‘06, and that began the whole curbside boom. It's spreading across the U.S. really rapidly, so we think this year the curbside bus (service overall) is up in scheduled departures by about 15 percent, and that's after huge growth the last few years.”
“Greyhound (a traditional intercity company that's a partner in Megabus rival BoltBus) and others have tried to argue that the whole curbside sector is going to collapse of its own weight,” Schwieterman said. “I don't think that's true. But it is a hard way to make a buck.”
A part of Coach USA, which itself is a subsidiary of United Kingdom-based Stagecoach Group PLC, Megabus is racking up about $125 million in revenue and turning an overall profit, according to a spokesman. FirstGroup PLC's BoltBus, a 2008 venture between Greyhound and Peter Pan Bus Lines, also has said it's in the black, but it hasn't broken out figures.
Schwieterman said it usually takes about four years for a hub to become profitable, which would suggest Chicago and New York are carrying Megabus, while Philadelphia, Pittsburgh, Atlanta, Dallas, Houston and San Antonio are still establishing themselves.
Megabus routes from Pittsburgh to points as far as New York City, Philadelphia, Washington and Detroit have been full, with 50 to 70 passengers on every run who pay an average of $30, said Charles Lenzner, who oversees Pittsburgh operations.
“It addresses the needs of young people, and business travelers, too,” he said.
Buses still use a curbside stop beneath the David L. Lawrence Convention Center, after officials complained last summer about disruptions to events and asked Megabus to move.
Since then, “Everyone has adjusted to it” and buses stop at the 10th Street and Penn Avenue corner when the center is very busy, said Lenzner, also general manager and president of Lenzner Coach Lines.
City officials have discussed moving the stop to a site near Port Authority's First Avenue transit station but Joanna Doven, mayor's office spokeswoman, said nothing is new on that.
An attempt to expand Megabus into California, Nevada and Arizona a few years back was aborted after just a few months, an example (both bad and good) of just how nimble the company can be, unsubsidized and unbeholden to anything but its own needs.
Half of the intercity curbside bus passengers are 25 or younger, and three-quarters are no older than 35. Amtrak has taken a hit, as more than a quarter of the bus passengers have been diverted from rail travel, leading some to wonder what impact sustained growth of the curbside buses might have on future rail subsidies.
Megabus and the others benefited from rising fuel prices, a bum economy, digital technology that facilitates cost-cutting by moving most ticket sales online, and, well, that oft-touted $1 fare ($1.50, when a booking fee is added).
“It was price first,” explained Michael Alvich, Megabus' vice president of marketing and public relations. “That's what got everybody's attention. They couldn't understand how we could do it for a dollar. They thought it was going to be a promotional gimmick only out there for a short time.”
Instead, it was a promotional gimmick for which the company would be best known, available on at least a few seats on every bus on every route., with prices going up as available seats dwindle and departure nears.
Because of the low cost, growth of the curbside sector and the way the bus industry is monitored, there have been concerns raised about safety despite the government giving Megabus a satisfactory rating on that front.
The Federal Motor Coach Safety Administration, which oversees 4,000 companies, announced in May it was shutting down 26 bus operations after a yearlong investigation. And the agency and the National Highway Traffic Safety Administration this summer warned of the blowout danger posed by double-decker buses exceeding their tires' weight limits.
Indeed, a tire blowout was said to have figured in the Megabus crash in August that killed one person and injured almost 50 in Litchfield, Ill.
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