Reinventing The Wheels

A fresh look coaxes riders back on the bus

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Jay Mallin / Bloomberg / Getty Images

As millions of americans begin their annual migration home for the holidays, there’s one group that will escape the indignities of airports and the soaring cost of gas: budget-minded, tech-crazed, urban-dwelling young people. They will make Thanksgiving one of the busiest days of the year for Megabus and BoltBus. Living in cities with heavy traffic and limited transportation alternatives beyond cars, 20- and 30-something riders have emerged as the core constituency for this new breed of curbside buses, which are becoming the JetBlue of U.S. highways—fun, cheap and efficient.

Initially launched in Chicago and then operating along the East Coast’s I-95 corridor, curbside-bus companies are expanding across the country. Megabus, owned by U.K.-based Stagecoach Group, started service in San Antonio, Houston and Dallas in June, just six years after its U.S. debut. BoltBus, its main competitor, opened routes in Seattle, Vancouver and Portland, Ore., this year.

By embracing technology, the new companies are trying to freshen the seedy image of bus travel. They ticket online and offer free wi-fi and plug-in capabilities at every seat. They realized that young consumers feel unembarrassed about bus travel—as long as they can stay online. “It’s no longer about my new fancy car,” says Lauren Ames Fischer, a Columbia University researcher in urban planning who studies the industry. “It’s more, ‘Look at the iPad in my hands.’” Bolt has also tried to rebrand bus travel by hiring drivers who can build a rapport with customers. “We try to hire folks that have a quick smile or a little twinkle in their eyes,” says BoltBus general manager David Hall. “It creates a fun image of the brand.”

Even more than high-tech amenities, cost is driving the bus business: prices of gas and train and air travel are near record highs. Drivers pay $25 to $50 in fuel costs to drive from New York City to Washington, D.C. The same trip averages $19 on Bolt and $22 on Megabus. Like JetBlue, curbside-bus companies have cut costs by drastically reducing rent and labor expenses, eschewing bus terminals for city-center curbside pickup. The strategy seems to be working: while traditional bus companies are still growing, curbside companies are booming. Megabus’ North American division doubled its revenue over the past two years to more than $160 million and reported an operating profit of $6.3 million this fiscal year. Bolt, whose Northwestern operations are owned by Greyhound and which is jointly operated by Greyhound and Peter Pan Lines in the Northeast, doesn’t release separate financials. Despite Bolt’s growth, Greyhound is reluctant to adopt the Bolt model entirely, fearing it would lose riders who are used to showing up at the terminal and paying cash for tickets.

Some riders have raised fears that no-frills lines might stint on safety after a spate of accidents involving smaller discount bus lines and the fatal crash of a Megabus outside Chicago in August. Megabus responded by giving its drivers additional training and says its ridership has continued to grow. “We’re bringing the bus industry into the 21st century,” says Megabus spokesman Mike Alvich. And the industry has taken notice. While Greyhound continues to serve longtime customers, the bus company launched Greyhound Express two years ago and has since expanded to more than a dozen cities in the U.S. Its basic amenities? Free wi-fi and power outlets at every seat.