Buses Found Cheaper Than Driving Between Largest Cities

Riding BoltBus, Megabus and other discount bus lines costs less for average trips between the largest 50 U.S. cities than taking a train, plane or car, a DePaul University transportation institute study found.

Bus riders save 52 percent compared with trips by rail on the same itinerary, and pay 79 percent less than airline fliers, according to the report released today by DePaul’s Chaddick Institute for Metropolitan Development in Chicago. On trips of 80 miles to 500 miles, bus riders pay 38 percent less than automobile drivers, the study concluded.

“We have found over 50 percent of our customers are people who would have previously driven,” Mike Alvich, vice president of marketing and public relations at Megabus, said in a phone interview. “That was astounding to us.”

The intercity bus has become the fastest-growing U.S. transportation mode in the past seven years, offering bargain fares and onboard Internet while letting riders avoid airport security and highway traffic hassles. After a decline in the 1980s and 1990s, buses have regained popularity by luring customers beyond college students and immigrants.

Transportation companies competed in 2012 for an estimated $855.4 billion in direct travel spending by domestic and international visitors, according to the U.S. Travel Association, a Washington-based travel industry trade group.

Air Passengers

As bus travel increases, Amtrak is carrying more passengers than ever. U.S. airlines also are booming, and the 10 largest carriers reported net earnings of $4.5 billion in the first nine months of 2013.

U.S. airlines have been adding seats for eight consecutive quarters, said Victoria Day, spokeswoman for Airlines for America, a Washington-based trade group for the largest U.S. carriers. Airlines are still winning customers even on short-haul routes where travelers can choose between multiple transportation options, she said.

“There are times when airline customers pay for the convenience to travel a shorter amount of time and have the capability to include optional customer amenities such as food and entertainment than they would otherwise,” Day said.

Amtrak is looking to pick up travelers on routes less than 500 miles, as airlines have cut half of such flights since 2005, Joseph Boardman, the national passenger railroad’s president and chief executive officer, said in a Jan. 10 speech.

Amtrak Push

The companies growth indexes continue to rise and “we’re constantly being asked by everyone, from rural communities to the nation’s biggest cities, to deliver more and better service,” Boardman said.

DePaul researchers considered how much drivers spend on maintenance and depreciation in calculating the cost of driving.

“Driving isn’t as affordable as people think, when you factor in the wear and tear,” said Joseph Schwieterman, director of the Chaddick Institute. “Young people are keenly aware that driving can be a waste of money.”

Michael Green, a spokesman with the AAA automobile club in Washington, declined to comment. The group is a nonprofit federation of 50 motor clubs with than 53 million members in the U.S. and Canada, according to its website.

Bus travelers in the 50 cities studied paid an average of $30.53 per one-way trip, compared with $145.23 for airline passengers and $64.19 for rail, according to the study, which was released at an American Bus Association convention in Nashville, Tennessee.

Adding Routes

The number of scheduled discount intercity bus trips increased 72 percent since 2010, to 1,014 from 589, with the pace slowing to 4 percent last year from 31 percent in 2012, the DePaul study concluded.

Even as growth slows, discount bus operators added routes four times as fast as airlines and more than 6.7 times more quickly than passenger rail, DePaul researchers said.

BoltBus, the Greyhound Lines Inc. subsidiary that emulates Web-based ticketing and curbside pickups of so-called Chinatown buses, expanded in the Pacific Northwest and California.

Megabus, a division of Perth, Scotland-based Stagecoach Group Plc (SGC), expanded in Minnesota, Ohio and southern states.

Stagecoach’s North American bus operations’ profit increased 42 percent, according to the DePaul study, with Megabus revenue up 23 percent. FirstGroup Plc (FGP)’s North American express bus operations, including Greyhound Express, BoltBus and YO!, a service operating between Chinatowns on the East Coast, had 10 percent revenue growth.

Megabus travelers tend to opt for the bus based on word-of-mouth or after seeing the buses on the road, Alvich said. They come back after seeing people like themselves on board, he said.

The discount bus operators have shifted from building out route structures to maximizing revenue from existing schedules, Schwieterman said. When buses are sold out, companies will send a second vehicle for the scheduled trip, he said.

The DePaul studies don’t include Chinatown bus companies like New York’s Eastern or Boston’s Lucky Star because they don’t publish their schedules.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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