Megabus Plans California, Texas Hubs
Stagecoach Group Plc (SGC) plans to extend its Megabus long-distance bus service to California, Florida and Texas to tap surging demand from cost-conscious U.S. travelers.
Megabus aims to build hub-and-spoke networks in the three states in a nationwide extension of a system based on Chicago, New York, Philadelphia, Pittsburgh and Washington, Stagecoach Finance Director Martin Griffiths said today in an interview.
“We’ve come a long way in a short period of time and the plan is to continue to grow and to grow aggressively,” he said. “Americans like their comfort, but they also like value, particularly with the way things have been with the economy.”
Stagecoach’s Coach USA unit, now limited to the northeast, Midwest and Canada, once operated a broader North American business focused mainly on shorter routes and charter services, Griffiths said. Megabus, established in 2006, offers fares from $1 for services as long as 3.5 to 8 hours and competes mainly with discount airlines and the private car, he said.
“The next stage is to roll it into parts of the U.S. where we don’t have any infrastructure -- meaning depots -- right now,” the executive said by telephone. “We would like to go back to California, Texas and Florida with this product in the next few years because we think there is a huge opportunity there.”
Megabus, which currently serves about 60 destinations from its five hubs, carried out trials in the Los Angeles-San Francisco-Las Vegas triangle a few years ago before opting to focus on markets further east, Griffiths said.
Sluggish U.S. growth has since pushed more people to take the bus, with the world’s largest economy expanding at a 1.9 percent pace in the first quarter and the jobless rate climbing to 9.1 percent in April. There’s also wider acceptance of bus travel, with business people increasingly opting for that mode of transport instead of driving so that they can work en route, especially where flying isn’t an option, the finance chief said.
“The economic conditions have helped, but when we get them most people generally like the experience,” Griffiths said. “The trick is to offer quality, comfort and the internet at a price that’s attractive.” Bus-based rivals include Greyhound Express and BoltBus, units of Aberdeen, Scotland-based FirstGroup Plc. (FGP)
Stagecoach, which also runs rail businesses including Southwest Trains, Britain’s biggest commuter franchise, boosted net income 58 percent to 176.4 million pounds ($282 million) in the year ended April 30 as sales advanced 10 percent to 2.39 billion pounds, it said today in a statement.
Perth, Scotland-based Stagecoach said that the outlook for bus and rail services is “positive.” Its stock was little changed at 249.8 pence as of 9:58 a.m. in London.
To contact the reporter on this story: Chris Jasper in London at cjasper@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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