The annual LCT Operator of the Year Awards recognize the latest and most current in business achievement.
The experience of traveling by interstate bus today varies drastically from riding in a Greyhound in the years gone by. While Greyhound has kept up with the times by adding Wi-Fi and electrical outlets to every coach, they haven’t adopted other technology.
The bus line lacks the dynamic pricing and the convenience of app-based travel Millennial travelers so easily embrace. Megabus.com, which stands as a leading contrast, not only looks for new passengers but new affiliate partners as well to help them run fixed routes in their rapidly growing national network.
You’ve likely seen their bold, colorful double-decker coaches cruising down the highway between cities like Los Angeles and Las Vegas, Chicago and St. Louis, or New York and Washington, D.C. Megabus.com is a division of Paramus, N.J.-based Coach USA that runs 29 ground transportation companies including megabus.com.
Megabus.com has been providing intercity bus service since 2006. The company is able to offer variable pricing through a dynamic website powered by its proprietary sales engine that determines the fare based upon the moment of a ticket purchase. The website calculates the fare based upon the number of passengers already booked on a given route, how many days in advance the trip is purchased, and other factors including travel distance and time of day. Splashed across company-owned coaches and marketing material is the universal claim that tickets can be bought for as low as $1. The bargain rates, combined with the scenic views offered by ground travel, have drawn renewed customer appeal, and create an immediate need to add new partners to serve new routes.
Because of rapid growth and ridership increases, megabus.com could be a revenue opportunity for operators to deploy idle coaches. The best part of a partnership is it costs nothing to jump aboard with mMegabus.com, says Bryony Chamberlain, vice president of megabus.com. Megabus.com is known for using curbside bus stops instead of traditional bus stations. If you have access to a curb with some parking spaces close by and a few late model coaches, you could easily become a megabus.com partner.
Chamberlain says the company is particularly interested in California operators as they seek to expand operations. The company also wants to add routes to the Gulf Coast and the Carolinas. While megabus.com will consider new operators, the ideal affiliate partner is one already running routes on their own. The company can take an affiliate route and switch it to be managed by megabus.com, which then takes over building up the route through marketing efforts to fill more seats and implement the dynamic pricing.
“We have taken poor to mediocre trips and built them up through our efforts,” Chamberlain says. The best routes are determined by local partners who likely know where people from their community travel to regularly.
While there might be fear and intimidation in taking on a fixed route, you will not be alone, says Jeff Greteman, an independent operator who serves as a contractor running a megabus.com route. Greteman’s company, Windstar Lines based in Carroll, Iowa, began working with megabus,com more than 10 years ago by helping them with extra buses as needed before taking on the Chicago to Omaha route two years ago.
“It’s a fantastic relationship with great partners,” Greteman says. Megabus.com provides the backbone support for partners including managing the reservation portal, providing customer service, marketing, fare payment processing, and social media promotions, he adds. Megabus.com even sells fuel to contractors at their company owned hubs such as the one in Chicago. This is just another advantage of the tremendous support offered to independent operators that helps improve profitability, he says.
As megabus.com rapidly grows, the need for more buses increases. While Greteman believes his current fixed route has limited potential for growing ridership, he remains optimistic about taking on additional megabus.com routes within the next two years.
“We would like to grow it (our business) as much as we can and we see megabus.com as a fantastic opportunity,” he says. Chamberlain cites many benefits brought to the table in the partnership including access to a wider customer base, and website promotions and management that smaller operators can’t do on their own due to a lack of knowledge, time, or both.
With a 24/7 call center, operators are relieved of the overhead expense of answering staff. The biggest contribution megabus.com brings is through its proprietary app that automatically pushes up pricing based upon ridership on a particular route. Most operators don’t have the time or technology to monitor bookings and adjust prices. Megabus.com monitors ticket sales at five, 15, and 30 days in advance of a trip and alters the price of the base fare with increases up to 50% on peak travel days.
You might be wondering how megabus.com can offer tickets for $1. “To be blunt, it’s a marketing gimmick,” Chamberlain says. “If they get on the service and they have a good trip, boy do they talk about it. That word of mouth is so valuable. It is a gimmick and we don’t hide that.” Operators are paid according to a base fare per head and a sliding commission that gradually increases over time. As with any business venture, there is a risk of taking a loss on any given trip since scheduled trips must be completed even if there are only a handful of passengers.
Megabus.com monitors each trip and provides reports to operators recommending future departure times based on historical ridership data. Operators can propose routes based upon their local knowledge that might be profitable.
“There are no guarantees any route will be profitable but there will always be exit clauses,” Chamberlain says, adding that she would get an operator out of a contracted route as soon as possible to protect them from financial losses if a route isn’t building.
The bare minimum requirement to join is two buses. They can be anything from a cut-away shuttle bus up to a full-size motorcoach. There is no requirement to paint your bus or place a logo on it, although megabus.com requests its moniker appears on the bus when running a megabus.com route so passengers can spot it. A double-decker bus can be purchased for $750,000 and requires special training for the operator, drivers and mechanics because of the higher operating risk. There are also some retired double-decker buses for sale. Operators must have enough vehicles to meet their proposed schedule and one more as a backup.
Joining the megabus.com network is a simple process that in some cases takes less than one week. Megabus.com reviews the proposed route or even an existing route an operator is already running and implements a contract based upon the route. Next, the company verifies the operator complies with all local, state and federal permit requirements.
The operator and megabus.com mutually decided where the bus stops will be. Megabus.com prefers to use established bus stops, such as intercity hubs or train stations for ease of connections. A safety review is completed to make sure the contractor has a clean Federal Motor Carrier Safety Administration (FMSCA) history.
Megabus.com will out an inspector to conduct a check similar to a state or federal audit but with a “light touch,” Chamberlain says. Once these steps are completed, the route is added to the megabus.com website and sales begin. An operator does not need money up front. “We want to make this an easy thing for operators to join without any high financial commitments,” she says.
Early History of Megabus.com
2006: Launched in the U.S. by Coach USA in March when it began selling tickets with an inaugural service date of April 10. The brand itself had already been established in the United Kingdom with great success by Coach USA’s parent company, Stagecoach. The first routes were based from Chicago, the home of Megabus USA. Those routes initially included 13 cities.
2007: Launched operations in San Francisco, Los Angeles, San Diego, and Tempe, Ariz., contracting with Coach America to operate the routes.
2008: Expanded Northeast operations with a New York City hub serving eight cities including Albany, Atlantic City, Boston, Philadelphia and Washington, D.C.
2009: A division of Coach USA added routes to the Megabus network including Toronto and Montreal. Expanded routes added to Pennsylvania and the Southeast.
2010: Began transitioning from a spoke and hub system to point-to-point routes with buses making a few stops enroute to their destination.
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