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.