Megabus rolling down the road to success

  • Article by: PHIL ROSENTHAL , Chicago Tribune
  • Updated: October 31, 2012 - 8:03 PM

It has helped revive an industry that once looked to be on its deathbed.

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ll roads lead to Chicago. At least, that’s where it all began for Megabus. It still offers that $1 fare for at least some seats on every bus it runs. Within its first two years, Megabus was carrying 2 million passengers a year, on its way now to 6 million carted in its 260 buses.

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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 guessed when it made its U.S. debut 6 1/2 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 in about 100 cities in the U.S. and Canada. Its North American fleet of double-decker buses has grown to 260, and its network of hubs has expanded to eight cities.

Intercity bus service got a new identity 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 work.

These carriers have breathed life into a mode of transportation 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," said Joseph Schwieterman, a DePaul University transportation professor. "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. I don't think that's true."

$125 million in revenue

A part of Coach USA, itself 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.

Half the intercity curbside bus passengers are 25 or younger, and three-quarters are no older than 35. More than a quarter of the passengers have been diverted from rail travel.

And Megabus benefited from that oft-touted $1 fare.

"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.

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. But it's in the interest of Megabus, BoltBus and others that safety concerns not deter travelers.

"There's been nothing like this since airline deregulation in terms of the excitement it creates," Schwieterman said.

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