Why cheap bus travel is disappearing in America

Business Insider

Megabus was once known as an affordable travel service but its parent company, Coach USA, has filed for bankruptcy. The bus industry at large is half the size it used to be. Can bus travel be saved?

Transcript

00:00If you were in college over the last 20 years or so,

00:03you might have some memories of Megabus,

00:06the big blue double-decker bus with

00:08a giant yellow mascot painted on the sides.

00:11Maybe you went on a neat little weekend getaway with friends.

00:14Other times, you probably got stuck in

00:16traffic or the bus broke down on the trip.

00:19For all of its flaws,

00:21Megabus was a decent and affordable way to get around for years.

00:24But now, it's in trouble.

00:26The parent company, Coach USA,

00:29has filed for bankruptcy and Megabus is handing over

00:32some of its routes to other operators and discounting others altogether.

00:36Business insiders, Emily Seward,

00:38looked into what's happened to Megabus and

00:40whether the double-decker icon can or should survive.

00:44These buses are actually pretty important to get people from point A to point B,

00:48especially people who maybe can't afford a train ticket or can't afford a plane ticket.

00:53Stagecoach Group, which is based in the UK,

00:55first launched Megabus there in 2003.

00:59It offered seats for one pound or a quid,

01:01which is where the mascot, Sid the Quid, gets his name.

01:04They brought Megabus to the US in 2006.

01:07Megabus was kind of hip.

01:09It had outlets that worked most of the time,

01:13if not all of the time,

01:14so you could put your phone in.

01:15It had Wi-Fi that worked none of the time,

01:18but you can pretend like it was going to work.

01:20You could also buy the tickets online,

01:23which was novel.

01:25So Megabus felt cooler than a Greyhound.

01:28And it was cheap.

01:29Megabus could lure people in with $1 tickets.

01:33Now to be clear, maybe there was like a seat on the bus that was a dollar,

01:37and that wasn't going to be your seat.

01:39Millennials loved it.

01:40Along with Greyhound, Megabus became one of the two main inner-city bus carriers in the US.

01:46But in the mid-2010s, the tides started to turn.

01:49Gas prices fell in 2015 and 2016,

01:52which made other forms of transportation that customers might prefer,

01:56like driving and flying, cheaper.

01:58And Flixbus, an operator out of Germany, launched in the US in 2018,

02:03which meant more competition.

02:05While Megabus was ahead with the power outlets and Wi-Fi,

02:08everybody else caught up.

02:10And some high-profile accidents may have left some with safety concerns too.

02:15Then in 2019, Stagecoach sold Coach USA to Variant Equity Advisors

02:21in a $271.4 million deal.

02:25So basically, when this private equity firm comes in and buys Coach USA,

02:32they do what a lot of private equity firms do,

02:34which is that they load it up with a bunch of debt.

02:36That happens in 2019, and in 2020, the pandemic hits,

02:39and the bus industry, like a lot of travel, just completely grinds to a halt.

02:44And so if they're not bringing any money in,

02:46there's no way to service those debt payments.

02:50A lot of that debt is still outstanding.

02:52And so Coach USA filed for bankruptcy in the middle of 2024.

02:57Megabus is sort of a microcosm of what's happening in the inner-city bus industry,

03:01which has been struggling.

03:02I was trying to take a bus from New York City to Atlantic City over the summer,

03:06and I was kind of shocked at how few buses there were.

03:09I could still get them, but it wasn't like I,

03:12at least I felt like it was five years ago

03:14when there were a bunch of options at all times.

03:17According to one insider,

03:18there were about 3,000 licensed bus and motor coach companies

03:22before the pandemic.

03:25Now it is about half the size.

03:27The industry has had a hard time recovering,

03:30in part because it didn't get the government assistance

03:32the airlines did during COVID.

03:35Policymakers tend to treat it as an afterthought.

03:38There are also problems on the operational side,

03:40like rising costs for parts

03:42and the shortage of both drivers and mechanics.

03:45Bus terminals are becoming a problem, too.

03:47Some localities are pushing back against them

03:49because they sometimes have an unsavory reputation.

03:53I've taken a bus before, and I think, you know,

03:55sometimes it is nice to be in a terminal

03:57and not just waiting on the side of the road,

03:59wondering if this magical bus is going to appear or not.

04:03Making the issue even worse is that 33 of Greyhound's terminals

04:07have been sold to a commercial real estate investor,

04:10and they have other plans for the space

04:12that can make them more money.

04:13One thing that hasn't really helped the bus industry

04:15is the involvement of finance.

04:18They don't really care if the public has a great place

04:21to pick up the local bus.

04:23In other words, the intercity bus industry

04:25is facing a lot of headwinds.

04:28Of course, if you want to hop on a bus

04:30from Boston to New York for the weekend, you still can.

04:33It just might not be a megabus.

04:35It'll probably be a Peter Pan or Greyhound or Flix

04:38or something else.

04:40But your options might be more limited

04:41than they were before and more expensive.

04:44I think it's tough to think about a solution.

04:46I did find that there was kind of mention

04:49of trying to lobby a little bit more in public policy spaces

04:53to try and kind of get across to policymakers,

04:56to lawmakers that buses do matter,

04:58whether it be providing more funding

05:01so that they can get to rural areas

05:02or that they can get to underserved areas.

05:05You want a bus terminal in your city,

05:07and you don't want it to be 20 miles out of town

05:09where nobody can get to it.

05:11Still, travel in America may never be what it once was.

05:14And the days of dollar receipts and Sid the Quid

05:17rolling down the highway could soon be gone for good.

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