Comments on: the economics of intercity bus services

Question: the economics of intercity bus services

waylaid — Wed, 09 Jul 2008 07:00:32 -0800

Long-distance bus service in many countries is often pretty good, and there are multiple carriers - especially in many low to middle income countries. In the US, there are only two real major players (Greyhound and Peter Pan, which work together), and then a bunch of short haul operators like the many DC-NYC express buses. Does anyone know much regarding the economics of the long-distance bus industry?

I am imagining that with the continuing rise in gas prices, that the appeal of long distance bus travel might increase in the US - especially because there is no real need to build new infrastructure (the major problem facing long distance rail) - and that creating express service involves no real extra expenditure.

Does anyone know much about the economics or planning that goes into long-distance bus service? Is there ever any subsidizing to service small and rural areas?

For instance, in the northeast, the plethora of low priced Chinatown bus carriers forced Greyhound and others to lower their prices, and eventually offer better service (and better express service as well)

By: OilPull

OilPull — Wed, 09 Jul 2008 07:20:00 -0800

I know that long-distance bus service in the US is subsidized to a certain extent just about everywhere it runs. Most of the Greyhound-style line run motorcoaches you see are actually owned by state or federal government and leased to the carriers. Despite having a large Greyhound paint scheme, they also carry a government ownership statement printed on the side.

Also, in Michigan, there are smaller carriers like Indian Trails which exist primarily as charter companies with their own motorcoaches, but that also operate line runs in conjunction with larger carriers (like Greyhound) with the government-leased coaches, too.

Indian Trails is all over the place in Michigan, including line-runs to many, if not most, rural communities. I suspect that only direct charter services are profitable for these companies, and that's why the line-runs are subsidized.

I would also imagine there are competition-limiting controls in place where the government-owned and leased motorcoaches are used.

The biggest problem I've experienced with long-distance bussing is that with so many stops, it takes forever to get anywhere far away.

By: OilPull

OilPull — Wed, 09 Jul 2008 07:23:02 -0800

I would add that, in Michigan, there are often county-wide small bus dial-a-ride style services that operate between rural communities. These can also take you to outlying areas of larger metropolitan areas where you can then hop on a regular city bus. These services are also subsidized in every case I know of.

By: jessamyn

jessamyn — Wed, 09 Jul 2008 07:30:49 -0800

Just another data point on economics. When gas started getting expensive, Greyhound in Vermont [well, Vermont Transit, but it's sort of all the same thing now] decided to pull the bus stop nearest to where I live because very few people were using it. So, in Randolph Vermont there is now no more long distance bus service.

What that means is that people who live here have to find a way to get to Montpelier [30 min sorth] or White River Junction [45 min south] where they used to just have to get a ride to the park and ride by the highway a few miles for most people. This is incredibly destabilizing for marginalized people who live in rural areas and I am sure that my location is one of many that this is happening to. I can afford to get a ride to these further bus stations, many people can't.

So, in bigger areas like Boston you get increased competition driving prices down, but in hard to serve areas like mine you get companies basically being unable [they claim] to afford to continue providing services. We do have a heavily subsidized service like the one OilPull describes that is used often by seniors getting to the supermarket or to medical appointments and isn't really a substitute for good public transportation.

By: jenkinsEar

jenkinsEar — Wed, 09 Jul 2008 07:32:46 -0800

FWIW, long-haul service in the US is a very long distance- NYC to LA is five times farther than Paris to Berlin. Do other large countries (China, Russia, Canada) have multiple long haul carriers that travel those distances? The US has dense populations on the edges, not so much in the middle, which makes slower travel less economical to provide.

By: oaf

oaf — Wed, 09 Jul 2008 07:40:23 -0800

there is no real need to build new infrastructure

There is a need to maintain that infrastructure (a lot of which is made from crude oil). Roads need to be repaved a lot more than tracks need to be replaced.

By: peeedro

peeedro — Wed, 09 Jul 2008 07:43:25 -0800

Here is an interesting, but somewhat old, article that touches a little on your question concerning the DC/NY Chinatown bus services.

By: waylaid

waylaid — Wed, 09 Jul 2008 08:08:38 -0800

@oaf: That is very true, however - i was referring to the bus companies themselves, who don't have to pay for road wear/tear and maintennce directly and thus, don't have to pass that cost on to their customers. Rail, on the other hand, is responsible for paying for the maintenence and operations costs of its own infrastructure.

By: ofthestrait

ofthestrait — Wed, 09 Jul 2008 08:10:27 -0800

You should know there is a bus service in the Midwest region now with a fairly expansive network of bus service, mainly operating as a hub-and-spoke with Chicago as the hub. Goes to most larger cities in the Midwest; my guess is we will see more of this type in the future if highspeed rail continues to be elusive, with connections between regions best made by flying.

By: waylaid

waylaid — Wed, 09 Jul 2008 08:11:02 -0800

Yes, Megabus started in the east coast as well (they are originally from the UK). They opened but failed on the West Coast.

By: rongorongo

rongorongo — Wed, 09 Jul 2008 08:32:56 -0800

Have a look at the history of The Stagecoach Group which started in the UK in the 1980s after long distance bus travel was de-regulated [they also own the "Megabus" brand you mention]. A little more research on this company might help you find the answers you want on the relevant economics. I remember taking early stagecoach services from Scotland to London in the 80s. At the time they were able to beat the existing competition (buses and trains) easily in terms of comfort, customer service and price. They also used their experience to become efficient at bidding for transport franchises for cities and regions when they became available. Recently discount airlines have probably become their biggest competitor on longer distance routes.

By: Mitheral

Mitheral — Wed, 09 Jul 2008 10:40:52 -0800

jenkinsEar writes "Do other large countries (China, Russia, Canada) have multiple long haul carriers that travel those distances?"

Non transit bus service in Canada is regulated such that you need to have a licence to ply any particular route. Greyhound is the major carrier with some small regional services competing directly and interconnecting with Greyhound. As far as I know greyhound and other operators are not generally subsidized by the goverment though their may be specific routes that are (for example there is a staff bus that runs between downtown and the local ski resort that I think has some costs covered by the ski resort). Greyhound here makes a large portion of it's revenue from package delivery to the point that it is common to see buses pulling cargo trailers.

By: yohko

yohko — Wed, 09 Jul 2008 13:48:31 -0800

Peter Pan is hardly a long distance bus service, only serving the Northeast. Until I read this question I´d never heard of them. They are a separate company from Greyhound but have a ticket and route sharing agreement. Where I live, there is a company called TNM&O that has a similar arrangement with Greyhound and goes to all the little towns that Greyhound doesn´t go to.

You might be interested in finding out more about Trailways.