January 2012

Motorcoaches are an underused, but growing mode

by Frank Di Giacomo, Publisher

Not that many decades ago, there were two intercity motorcoach services that provided full schedules that served both small towns and major cities in the U.S. In some places there were even more services, with strong regional intercity carriers. Next came deregulation under President Reagan and most companies providing such services exited the market for the more profitable tour and charter business. Now intercity coach service is on a comeback, and it's a trend that has gotten some notice among some policy makers.

According to a recent study by the libertarian think tank Cato Institute, intercity coach ridership has grown twice as fast as Amtrak's in the past five years, even though Amtrak's demand is also growing at a pretty healthy pace. Part of this is the result of coming from a depressed demand; 2006 saw the lowest intercity scheduled coach ridership in 40 years. Some of it has also been the result of declining air service. Much of it, however, has also been the result of some innovative marketing, lean and flexible operations, and a focus on what customers value, according to several studies conducted by the Chaddick Institute at Chicago's DePaul University.

Old and new companies part of picture
Some of this new activity is by well-established companies, such as Greyhound and the U.K.-based Stagecoach's Megabus subsidiary. Other parts of the success story are from new companies, however, including immigrant entrepreneurs like the Chinatown service in Boston and New York. Many of these services offer express service between major cities, some with Wi-Fi Internet service and plush seats. The travel times are also competitive with train and air travel in many cases, especially when you consider downtown-to-downtown markets.

This is not to say that government policy should favor intercity coach service instead of intercity rail, as some conservatives and libertarians argue. In fact, policies should encourage both, because both make regional economies more efficient by providing efficient alternatives to driving alone or using airlines for short hops. Both motorcoach and intercity passenger rail also reduce our nation's dependence on foreign oil and make the U.S. economy more competitive. The resurgence of intercity motorcoach service is also good for Amtrak, because the competition makes both better and service agreements can make for a more seamless travel experience.

Encourage the whole network
Like the increase in passenger demand for Amtrak and public transportation, the return of customers to scheduled motorcoach service is also good for domestic suppliers of transportation equipment and infrastructure. Public officials need to encourage these trends, not pit them against each other.


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