Megabus, Euro LCC in Midwestern bus market

The Megabus USA service launched online today, with a press conference at Navy Pier closely following some bus-stop ads placed recently. (Just noticed one yesterday on Michigan Avenue.) The pricing model, like the company, is imported from the real-time yield management models used by European low cost carriers like Ryanair, EasyJet, BMIbaby, and budget hotels like Thomson; according to the Trib:

“At least three or four seats on each one-way trip are available for a $1 fare. At the upper end, one-way fares will range from $9 to $27.50, depending on the city.”

The real breakeven point is well above $1, but the supercheap fares entice the revenue paying passengers in a bit of bait-and-switch.

I’m not sure why they’re launching in the Midwest, except that Greyhound here has no competition (Chinatown bus, ahem). I don’t know how deep the intercity travel market is here (in any case, not nearly as deep as the much more densely populated East), but lower fares might just bring out an entire new population of day-tripping or weekly-commuting travelers between closer city pairs.

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One thought on “Megabus, Euro LCC in Midwestern bus market

  1. I mean to do a blog entry about this–saw the AP story in the e-Detroit News. I understand their use of yield management systems is “unique” in the U.S. for inter-city bus transportation sort of (Greyhound does charge less for tickets purchased 2 weeks in advance), but the article quoted a company spokesman talking about how unique this offering is. The fact is it’s not much different than the “Chinese” bus “system” operating on the East Coast, except that our East Coast service has fixed prices. $35 round trip to NY from DC. $28 round trip to Philly. $40 round trip Boston to NYC. Etc. I can’t remember when the service started. Probably 2001.

    I love these buses. I go to NYC a lot more often than I used to. The cheapest train is about $140 round trip…

    P.S. you are on fire with a myriad of great posts that I will be acknowledging… Thank you.

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