Management & Operations

Megabus hits the $1 million mark in sales

Posted on September 13, 2006 by Camella Lobo

Since its online ticket booth opened for business in March, more than 80,000 riders have booked discounted seats with Coach USA’s Megabus service. Touting fares as low as one dollar, plus a 50-cent reservation fee, the company has hit $1 million in sales.

“We truly think we’ve cracked through a niche market that was missing, and we are extremely happy with how it’s going at this point,” says Coach USA President Dale Moser.

The intercity express bus line has eight routes operating between eight cities in the Midwest, including Detroit, Chicago, Milwaukee and St. Louis. In addition to offering the lowest prices available to bus travelers, Megabus has become a business growing largely through word-of-mouth. As indicated by an online survey from www.megabus.com, nearly half of the riders polled found out about the line from someone else.

According to statistics compiled through other company surveys, Megabus passengers escaping escalating fuel prices are extremely likely to continue to use the service for leisure, work and education travel. Additional questionnaires show that passengers conducting social business are taking advantage of the line. They are what Moser refers to as “young white-collar professionals with travel flexibility, driven by a low-cost express service.”

The success of the original Megabus in the United Kingdom, run by Coach USA’s parent company, Stagecoach, prompted executives to expand comparable transit lines into North America. Last year, the company provided more than 2 million European riders with easy, affordable intercity transportation. Since it began three years ago, it has expanded into Scotland and currently offers 40 destinations to its riders. There are some slight pitfalls with the Megabus. The affordability of the service can be compromised by a small loophole in the ticket sale process. It is true — if a ticket is purchased far enough in advance, riders will enjoy a trip of up to 300 miles for a little over a dollar. However, if a ticket is purchased too close to the date of departure, riders may find themselves paying up to $40 for one pass. When compared with the persuasion of a ride for one dollar, the Megabus promise may come up short. The highest fare is still a competitive one in light of those offered by Greyhound and Amtrak.

Various mechanical and technical issues have also plagued Megabus lines. Setbacks, like broken air conditioners and a wheel-well fire, which happened on a trip from Chicago to Indianapolis, have appeared to lower the expectations of some passengers in search of a good deal. Though inconvenient, these isolated situations don’t seem to be affecting the ridership numbers released by Coach USA.

“We anticipated some growing pains,” says Megabus fleet manager Jim Schwartz, “but we believe the service will continue to do well and keep expanding.”

Coach USA hopes that the future brings change in terms of the profitability of the line. As it stands, the company is simply breaking even since it began less than five months ago. If it remains committed to offering inexpensive fares, industry experts predict that Megabus will continue to do well.

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