With gas prices continuing to increase, it’s hard to imagine being able to travel hundreds of miles on any form of transportation for just $1.50. Yet such a concept is the reality for customers of megabus.com in the east coast, southeast and mid west regions of the U.S.
I first came across Megabus about 8 years ago as a college student studying at the University of Edinburgh. Back then I would take Megabus to Glasgow for shopping trips for £1 each way. Typically with booking fees this worked out as the equivalent of just under $5 for what was approximately a 100 mile round trip. The company’s double-decker buses had plenty of space and while I found the train to be more efficient time-wise for long distance trips to London, the Megabus ticket price for advance travel was hard to beat.
In recent years Megabus owned by the British Stagecoach group has entered the U.S. and Canadian markets offering fares as low as $1 one way plus a $0.50 booking fee. The buses are clean and a lot more appealing in an attempt to readdress the seedy image many Americans have of bus travel. Each bus has wi-fi, power outlets at each seat, flat screen TVs showing movies, panoramic windows and it’s a green way to travel.
Megabus’ business model works by using a yield management model to incrementally increase ticket prices as the departure date nears. This business is reliant on numbers and like Southwest the people booking last-minute pay more, to offset the customers with discounted tickets. In addition Megabus has extremely low overhead. All bookings are made online eliminating ticket agent staffing. Furthermore, Megabus does not have its own terminals, picking up passengers on city streets.
Megabus rethought bus transportation in order to achieve success in a mature industry. Last year Bloomberg Businessweek did a feature on the company entitled “The Megabus Effect” stating that bus travel is now the fastest growing way to travel in the U.S. The article also stated that Megabus had 2010 revenues of approximately $100 million and is continuing to grow.
What do you think? Share your thoughts in the comments section below.
Marie Wiere's Blue Sky Management Blog 
Thanks for mentioning Edinburgh. It brought back good memories of when I visited there in 1997 during a trip to Europe. The Edinburgh Castle is incredible.
While I’ve never travelled on Megabus, I’ve heard really good things about it. They operate out of Knoxville which is the area of Tennessee that I live. People have told me the buses are clean and that they have free wi-fi service.
I just checked the price for a trip from Knoxville to Washington, D.C. (about a 500-mile drive) leaving on April 14th and coming back on April 21st. And the price was at most $39 each way which is a really good deal. Another benefit is that the trips to Washington, D.C. are less than nine hours, so you would get there in about the same time (maybe a little slower, but not a lot) as if you were driving your own car.
I used to see Edinburgh Castle everyday on the way to class for 4 years. Great city!
Thanks for sharing a local example of Megabus in action. Good to know that in practice even close to departure date, it’s still cost efficient.
[…] this month I wrote a post on Megabus, a long distance bus service that had experienced success in the declining transportation industry […]