One of the many excellent speakers at this year’s American Dream conference was Dale Moser, CEO of Coach USA and Megabus. Coach USA is owned by Stagecoach, one of the two large private transit companies that emerged when Britain privatized much of its transit industry. (The other is First Group, which among other things owns Greyhound.)
Just seven years after it began, Megabus covers scores of cities in the East, South, and Midwest as well as several in the California market. Click image for a larger view.
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Moser stated that, after Megabus began operating in 2006, it took 18 months for it to carry one million passengers. Now, it is carrying one million passengers every 33 days. While intercity buses do receive a slight subsidy in the form of reduce fuel taxes, for the most part Megabus is an unsubsidized operation that would never have been conceived or implemented by government planners. The Antiplanner was glad to have the opportunity to meet someone who was able to turn around what had been considered a moribund industry.
A bit of a red herring Mr. O’Toole. I wonder why planners couldn’t concoct a service from Chicago to Philly? Hmm.
Anywho, I too like privately run intercity services because intercity services is one area where the private sector can offer service and make a profit. The same cannot be said for intracity services, hence government intervention.
Hmm, point of information, I think the “Chinatown busses” were before Megabus… not sure.
Megabus is great, coworker had to ride local WMATA bus with a one-way fare of $5.25. Megabus should take over local commuting routes also! Design design design.
Wish they’d let me privatize the first car in the WMATA subway system. Who wouldn’t pay a little extra to ride in a comfort with better finishes (carpet, lighting, curtains, wood trim, wood hand rails, computer info-screens, dependable lighting/climate control, polite public address system and… seats big enough you don’t have to touch your fellow rider).
It is surprising that the federal government actually allows Megabus to exist.
There is still some hope out there.
It is surprising that the federal government actually allows Megabus to exist.
Don’t worry, they’re working on that.
“intercity services is one area where the private sector can offer service and make a profit. The same cannot be said for intracity services, hence government intervention.”
There are many historical examples of private intra transit being profitable, and there are some contemporary examples, such as Hong Kong’s MTR.
MJ,
CoachUSA and Greyhound were major catalysts for the shutdown of the Chinatown buses.
Frank,
There are lots of historical examples of profitability that seemingly don’t apply today. There was a time when almost all American transit services were privately run. There was a time when American manufacturing was more competitive than and out paced almost every other place on the planet. I could go on forever. Historical context is important, but not as important as present day context.
For many it’s a chicken and egg scenario. Do government services crowd out private enterprise or does the government sometimes pick up where the private sector is unwilling to go? I suppose it’s a little of both depending on the services, but for local bus services (that are professional and safe) there is little to no chance for profitability in today’s America.
p.s. I’m leaving local rail services out of the argument on purpose, for reasons discussed ad nauseam on the Antiplanner.
MJ,
CoachUSA and Greyhound were major catalysts for the shutdown of the Chinatown buses.
Who initiated the hearings on the safety of Fung-Wah and other Chinatown carriers?
“Who initiated the hearings on the safety of Fung-Wah and other Chinatown carriers?”
NTSB with a whole lot of urging from other carriers. As the article you link to puts it “Notably, BoltBus and Megabus, a service owned by CoachUSA, continue to operate despite their curbside status. Why the feds chose to clamp down on some curbside bus operators and not others raises questions of who, exactly, has the privilege of running a private transportation company in U.S. cities. Curbside operators with corporate owners still do business, while those with independent owners — often Chinese immigrants — have gotten the boot.”
So no, they’re not “working on that.” They’re working WITH that.
Many people mistakenly think that big businesses hate government regulation. Au contraire. Big business loves government regulation because it blocks competition and gives big business an upper hand over small business. Not to mention the symbiotic relationship that develops between regulators and the big businesses being regulated.
Sandy is right on with big business and regulation.
The greatest example was the settlement of the tobacco litigation. Big tobacco gave several billions to various governments (which was mostly used for political purposes and not to help tobacco victims).
In return, regulations were created that made it financially impossible for any competitors to enter the market. Giving them a government approved (and paid for) monopoly.
@bennett
Sen. Chuck Schumer, who represents New York, called for the NTSB study after a March 2011 bus crash in the Bronx that killed 15 people. According to the NTSB, the bus, which was returning from a Connecticut casino, had been traveling at 78 miles per hour at the time.
As the article by Jim Epstein, which is linked from this article, makes (more) clear, Schumer was largely behind this witchhunt. I don’t doubt that Megabus’s competitors played a role in generating momentum for the NTSB’s “study”, but the reality is that that investigation goes nowhere unless Schumer says so. He was looking for any passable reason to hassle the Chinatown operators. The complaint was the impetus and the “study” was just rhetorical ammunition for Schumer to go forward with.
He didn’t care about the quality of the evidence — appeals to authority (NTSB) are good enough for Congress and the media. He and the authors never counted on the report receiving as much scrutiny as it did. Now the house of cards is falling apart and they’re hoping that nobody will notice.
Mj,
I don’t dispute you position re: Schumer’s position. I dispute your argument that the federal government is working on eliminating Megabus operations. They’re not. The federal government is working with Megabus and Boltbus in bringing down the hammer on the Chinatown buses.
Is should also point out that the NTSB investigation found some really disturbing information re: the Chinatown buses regarding improper insurance, safety and driver hours that does not apply to mega and bolt. In other words, they were cutting corners taking the lives of their customers hands in way that the competitors could not. Keeps their prices low, but some of the practices were illegal.
Bennett, Where do you get the idea that intracity bus services cannot be run for a profit. I submit that they can because in all the nations where they are permitted to exist, they do. Only in the US, Canada and Europe do they outlaw private intracity bus service.
Is should also point out that the NTSB investigation found some really disturbing information re: the Chinatown buses regarding improper insurance, safety and driver hours that does not apply to mega and bolt. In other words, they were cutting corners taking the lives of their customers hands in way that the competitors could not. Keeps their prices low, but some of the practices were illegal.
Did they find any differences among them in terms of actual safety outcomes?
Not this is directly what this blog post is getting but an offshoot of the gains bus service like Megabus has made is it’s affect on passenger train service. Recently an Iowa state senator called for the state to give up on it’s passenger plains for service to Iowa City (later stages would take it to Des Moines and Omaha ). What I find sad and entertaining is that planning for the line was done without taking into account the then new Megabus service.
While many of these projects like the Iowa City service self-apply the label of High Speed Rail ( HSR ), they’re anything but that. They merely state that at some undetermined time in the future they hope to be reaching speeds that would qualify it as HSR by the FRA’s low speed standards for HSR.
Because of that they are in fact in close competition with bus service. They offer similar transit times and, usually, higher ticket prices than bus service on the same routes. It’s not uncommon for plans like the Chicago – Iowa City service to not only not take into account the affect of the bus service in their projections but to also end up costing the tax payers more than if they merely put that money into buying bus tickets for passengers.
http://blogs.desmoinesregister.com/dmr/index.php/2013/10/21/branstad-cites-considerable-skepticism-about-iowa-city-train-but-awaits-dot-study-before-deciding-its-fate/article
http://www.fra.dot.gov/Page/P0230
Megabus is not even “for the most part” unsubsidized. It receives plenty of subsidies in the form of free streets, free roads, (mostly or nearly) free highways and bridges, and free curbside space. If the federal and state governments built a vast rail network equivalent to our highway and road network, along with a vast network of train station platforms akin to our curbs, I have no doubt private rail operators providing nothing but the trains and the fuel to run them (albeit at a somewhat subsidized cost here, too, to be fair) could make a substantial profit.
This is not to knock megabus’s business model. I think it’s great and more power to them for taking advantage of the subsidies the government is already providing to add value to society while reducing congestion. However, let’s not pretend that this is an argument against funding rail.