Transcripts

Go Take The Megabus

SUSIE GHARIB: These days, many Americans are choosing not to fly and are leaving the driving to bus companies. New figures show that in the last two years, there’s been a 13% increase in bus service. That’s the first increase in decades. High fuel prices and new innovative bus companies are part of the reason. Diane Eastabrook introduces us to Mega-bus Company offering cheap, chic travel.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: A street corner in the heart of Chicago’s loop. At 8:30 on a recent cold winter morning about 50 travelers loaded their own luggage into this bus’ storage compartment, then hopped aboard the double decker vehicle. Welcome to Megabus,a company that sells bus fares as low as a dollar, but only on-line. The earlier you buy your ticket, the cheaper the fare. Don’t expect to be picked up in a warm terminal Megabus picks up passengers on designated street corners in places like Chicago, Cleveland, and Minneapolis. If the no-frills concept sounds oddly familar, it is. Dale Moser, Chief Operating Officer for Coach USA, the parent of Megabus says think Southwest Airlines on the highway.

DALE MOSER, CHIEF OPERATING OFFICER, COACH USA: We really just took the discount theory of yeild managed pricing and implemented it into a city to city express bus service.

EASTABROOK: With gas prices soaring and congestion mounting at airports, bus travel is making a comeback in the U.S. A recent study by DePaul University’s Chaddick Institute of Metropolitan Development found American cities lost about 60% of their scheduled intercity bus service between 1980 and 2005. But the study found bus servce began rebounding early last year when Megabus started operating. Institute director Joseph Schwieterman thinks more competitors are inevitable.

JOSEPH SCHWIETERMAN, DIRECTOR, CHADDICK INSTITUTE: We’re seeing a lot of entrepreneurship around the country. We have Apex bus out East. We have a new operator out west. All of these companies are poised to expand and its only a matter of time before they come head to head against Megabus and we start to see a little bit of fare wars and so forth.

BUS DRIVER; All I ask is that you sit back, releax, and enjoy the ride.

EASTABROOK: Megabus began in Chicago, offering service to more than a dozen Midwest cities. It recently launched a similar service in Los Angeles. Megabus says it can offer cheap fares because its overhead is low. Selling tickets on the internet eliminates the need for sales and customer service representatives. Parent Coach USA operates commuter services, so it can house and repair Megabus vehicles at Coach USA bus barns. The company says it has cut its fuel costs by hedging. Moser thinks even if fuel prices soar higher, Megabus can still make money.

MOSER: I would say that if fuel goes to $4 a gallon on gasoline, that is going to benefit our service because more people are going to leave their car at home and look for alternatives.

EASTABROOK: Moser says Megabus has a high passenger return rate and many customers say they have recommended the service to others. He thinks that kind of customer satisfaction will help Megabus expand its no-frills business to even more U.S. cities. DIANE EASTABROOK, NIGHTLY BUSINESS REPORT, Chicago.