there are now at least two companies (Lucky Star and some other one) providing Boston - New York bus rides for $15, plus one of them seems to also provide bus rides from New York to Washington DC. Colloquially this is called “Chinese bus” and back when these enterprising Chinese people started this business, they were underselling Greyhound big time. Now I think Greyhound lowered prices, but the Chinese are still underselling them.
Well, so what is the economic explanation for the fact that they or a whole bunch of other similar companies have not mushroomed on the same model to drive out Greyhound on all the big inter-city routes? Is it the case of Greyhound using some routes to subsidize others, so that perhaps on various other routes the Greyhound rates are closer to the marginal cost than their Boston - New York route? Or has there been an increase in government regulation that prevents formation of new such companies and the expansion of the two existing ones?
I don’t know about the other factors, but the competing Chinese bus lines have gotten a bad rep around here because of their impressive and frequent accidents.
One local station even made up a song about the Fung Wah bus company (to the tune of “The Magic Bus”). The several incidents made the news each time. This acts as a pretty effective "brake’ on the number of people willing to use the bus.
this sounds a bit strange. Maybe it’s hard to get funding now, but back in 2004 I think a successful, credible company could have gotten funding for expansion. And how much money do you need anyway in this business?
Incidentally, maybe my initial assumption is simply wrong? Maybe there are similar low cost bus carriers on other inter-city routes but I am just not aware of them because I only know of the nationally renowned Greyhound? Has anybody noticed similar carriers on San Francisco - Los Angeles or on Washington DC - Atlanta routes?
The three most significant expenses incurred by transit companies are: Fuel, Wages & Maintenance. Obviously, you can’t really skimp on fuel. The other two categories: Quite so much. I would suspect the drivers are being paid damn near minimum wage, work the maximum hours permitted by DOT, and that maintenance is deferred as much as possible.
Greyhound also has brand recognition and loyalty. It seems like it would be hard to build brand loyalty around “It’s cheaper–and it’s Chinese” unless the city had a significant base of Chinese customers commuting between the two cities. Other Greyhound routes have customer bases that are more African-American, Latino (although there are also Mexican bus lines marketed more for long trips), and elderly. Particularly the elderly, I would think, would value familiarity over saving a few bucks.
Some customers may also prefer a bus service that goes beyond the big cities, since they may start and/or end their journey in another town. While the Boston-NY leg may be cheaper on Fung-Wah, the entire trip may be cheaper and more convenient on Greyhound.
In the sense that government provides some safety regulations, like requiring adequate insurance, drivers with the proper commercial license, and consumer protections to make sure people get what they pay for, it is somewhat easier for a larger company to meet these standards. But over time we as citizens decided that it would be a real PITA to have to verify license and insurance every time we got on a bus, or to deal with the havoc of some low-price leader who decided to save money by staffing their busline with 16 year olds.
But government regulation also acts to restrict anticompetitive behavior of a large near-monopoly company like Greyhound. Certain types of price gaming by Greyhound to try to keep Fung Wah et al. out of the market would be prohibited by antitrust regulation.
The Chinese buses in my city don’t seem to stop at the major bus terminals either. They pick up on the street. This limits visibility as well.
There was some discussion on Urban Toronto recently about the traditional bus companies (Greyhound, etc) expressing concern that the regional public transit company, GO, is cutting into their Toronto-Niagara Falls business, but then someone pointed out that the casino buses from Niagara Falls will pick you up in T.O. and take you there for even less, and they’re not getting grief.
Personally, I think Greyhound Canada has internal problems–they’ve been cutting back service for years; they’re proposing to eliminate most service in Manitoba and Northwestern Ontario (and I just found out that that includes service along Hwy 10 to Owen Sound! Not my definition of ‘Northwestern Ontario’); and they’re getting their clock cleaned by Megabus on the Montréal and New York routes. Who wouldn’t rather ride a new doubledecker than a junky old Greyhopund with broken seats?
Greyhound countered with its own brand competitor, Bolt Bus. Another competitor, Megabus operates throughout the midwest, basically running between major cities and college towns. A company called Goto Bus operates in CA (and does the LA-SF run for $50) as well as the eastern seaboard.
The low cost model doesn’t make a ton of sense unless you can rely on the bus generally being full. This is really only true in the Northeast Corridor and in a few other select routes which have a very high volume of people routinely moving back and forth.
There’s a Chinese bus that shuttles restaurant workers from here to NYC. It leaves at midnight from the Dollar General parking lot. If I ever get fed up enough to want to disappear, that will be the last place they ever spot me…OTOH, that Megabus looks like a fun ride!
It’s one thing to operate between major cities and skim off the cream of the traffic and run close to full.
It’s another thing to arrange a network of multi-stop milk runs servicing every community; running a guaranteed schedule of buses that may not be very full some days.
Greyhound is pulling out of Manitoba, at least, because they are mandated by the transport board of that province to run a certain schedule at fixed prices. They are complaining that the traffic does not support this, and want to either reduce service frequency or rasie prices to some small communities. (I.e. twice a week instead of daily). They were told no, so they have 2 choices - accept it or leave it the whole province. They’ve deferred the deadline twice, so I suspect this is a massive game of chicken to improve their bottom line. Nobody’s jumped in to say “we’ll do it” so probably the profit level is nowhere near what it should be; as to be expected when politicians set the price you charge voters.
As others said, it’s high volume that matters. Greyhound is huge and some of the less profitable routes can be subsidized by those routes with huge riderships. Most businesses do this to some degree. A bit of good public relations is good if they can make up for it in money on other properties etc
I know in Chicago, there was some kind of company that got into flack about not complying with Americans with Disabilities Act (ADA)
The biggest problem and I’ll get slammed for this is you’re going to be serving poor people. Yes, I am one of these poor people, and I want go into details, but poor people make exist so others take advantage of them. In return poor people don’t care much about things, so it’s a vicious cycle. I mean most people don’t have enough manners to ride the CTA (Chicago Transit) but at least then you can get off at a stop anytime you want, if they act up too much. So there is a socio-economic issue too
So you’re getting people who aren’t the most “reliable” for lack of a better word, to use your service. Do you think a college student that uses MegaBus is gonna use it when he graduates, gets a job and then makes enough to fly or drive his car? No he won’t. He’ll abandon MegaBus and go to another form of transport, and his space will be filled with another “poor” person.
there are poor people and then there are poor people. Code words and all that… Anyway, maybe a private company can just run the cheap buses on routes with demographics that they can handle. E.g. the New York - Boston route seems to have quiet people for passengers, and they haven’t yet started to use a mandatory Chinese language proficiency test as an admission requirement.
Dude, seriously, can you read? As noted multiple times in this thread, there are already companies that do just that. Some of the companies named include:
Megabus
Boltbus (a division of greyhound)
GotoBus