The Intercity Bus Revolution

Fed train follies fail while freedom actually worksby James A. Bacon

While President Obama dreams about spending hundreds of billions of public dollars building a high-speed, intercity rail network, an entrepreneurial revolution in the old-timey bus industry is scoring dramatic gains in market share for intercity travel – without government subsidies.

After decades of losing customers, the intercity bus industry began experiencing an entrepreneurial renaissance in the mid-2000s. And 2011 was the best year yet. According to a study published by DePaul University’s Chaddick Institute for Metropolitan Development, intercity bus was the only major long-distance passenger mode to grow appreciably this year. Daily intercity bus operations expanded by 7.1 percent.

The most spectacular growth occurred among curbside operations, including BoltBus and Megabus, which eschew traditional bus stations in favor of curbside pickups. This category expanded operations by 32.1 percent. Compare that to the 5.2 percent growth for Amtrak, 1.8 percent growth for airlines and 1 percent decline for private automobiles.

What’s going on? The higher cost of automobile ownership and gasoline is pushing people to consider alternatives to driving. But that’s only half the story. The intercity bus industry is highly competitive and driven by innovation. “Arguably, the explosive growth of curbside service has been the most significant change in downtown-oriented long-distance travel in more than a half-century,” write the authors of the DePaul study.

Even stodgy old Greyhound, which operates out of traditional bus stations, is getting creative. The company has introduced Greyhound Express, a premium service that provides free Wi-Fi and power outlets at every seat, has upgraded waiting areas for its Express passengers and has entered into a partnership with 7-Eleven stores to sell tickets.

Unlike publicly owned mass-transit companies, which face political pressure to maintain money-losing routes, private intercity buses are free to shut down unprofitable routes and redeploy resources to achieve greater growth potential. Flexibility is the hallmark of the curbside bus operators, which aren’t tied down by fixed investment in bus stations. This year, Megabus established new hubs in Pittsburgh and Atlanta, adding service to several new cities in the process. BoltBus set up a new hub in Newark, N.J.

The two giants in the curbside segment face plenty of competition, though. Smaller companies serve other cities and differentiate themselves by price or the quality of amenities they offer, such as more spacious seat configurations.

“The intercity bus is again becoming a force on the intercity transportation scene,” states the DePaul study. “Intercity bus operators are benefitting from an increasing level of demographic diversity among its customer base and from the rising interest among travelers in being able to continuously use port-able electronic technology, which is difficult or impossible when flying or driving.”

One thing intercity buses can’t do is zoom passengers from city to city at twice the speed limit of interstate highways as high-speed rail can. “Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination,” President Obama said when outlining his vision for high-speed rail in 2009. “Imagine what a great project that would be to rebuild America.”

Imagine the cost of fulfilling Mr. Obama’s fantasy! After sinking $10.5 billion into high-speed rail since taking office, the administration proposed earlier this year spending an additional $53 billion over six years to advance the president’s vision for a national network. Meanwhile, despite ridership gains, Amtrak continues to lose money. Sinking tens of billions more into inherently unprofitable passenger rail lines will only accelerate the federal government’s rush to fiscal collapse, and it will bequeath to the nation an intercity transportation system dependent upon subsidies just to continue operating.

Instead of squandering billions on a fiscally unsustainable transportation solution, the federal government should focus on one of the few things it can do competently: safeguarding public safety. A number of high-visibility crashes involving “Chinatown buses” have cast a pall over the industry. Government can promote intercity bus traffic and take automobiles off the road by assuring the riding public that buses are operated safely.

Meanwhile, states and localities should be asking themselves whether private enterprises could operate local bus services more efficiently and creatively than municipally owned mass-transit companies. Private bus companies can operate free from the costs imposed by municipal unions, federal red tape and political resistance to shutting down money-losing routes. Maybe we should bust up the mass-transit monopolies and see what private bus companies can do.

This column was published originally in the Washington Times.

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14 responses to “The Intercity Bus Revolution”

  1. scoring dramatic gains in market share for intercity travel – without government subsidies.


    I think the highways count as a government subsidy.

  2. What’s going on? The higher cost of automobile ownership and gasoline is pushing people to consider alternatives to driving.

    I don’t think the competition is the auto, it is Amtrak, which is expensive, and planes which are slow, considering the door to door time for trips under 400 miles.

    And, the operators only work the best routes. You want a bus from Dover Delaeare to Allentown, you may not have much luck.

  3. sounds like yet another Heritage propaganda piece to me….

  4. Heritage hasn’t caught on to this yet. If they’re paying attention, they will.

  5. I’m all for BRT and intercity bus but I’m also in favor of high speed rail with no more or no less a subsidy than what we give airports and roads.

    it’s neanderthal to believe that we should pay 18 cents a gallon for an interstate highway system or taxes on airline tickets to pay for airports, but we should not have a tax to pay for high speed rail.

  6. Larry, who are you going to tax to support high-speed rail?

    The airport subsidies come from a tax on airline tickets.

    The highway subsidies come from a tax on motor fuels. (I’ll concede that we have moved to more indirect methods of subsidizing roads in Virginia, and I have been more vocal than anyone in criticizing that trend.)

    To be consistent, your high-speed rail subsidy would have to come from a tax on…. rail tickets? A diesel locomotive fuel tax? What?

  7. we have taxes for education and law enforcement – right? what is the nexus ?

    We ALREADY take 1/2% of the sales tax for roads and are talking about more.

    why not 1/2% for transit/rail?

    if we can take sales taxes to build the western transportation corridor why not use sales taxes for high speed rail?

  8. Darrell Avatar

    The Chinese bus is the idea that started this revolution. Then along came Megabus and the $1 fare. Bolt bus is Greyhound owned, while their normal bus service is the interstate version of Amtrak.

    The whole idea of high speed rail got sliced and diced when Congress and the Pres threw the seed money into the wind. Instead of using the cash to build a prototype, the money was spread far and wide with the end result being minimal speed increases from clearing the tracks of freight trains.

  9. I think the “right” proposal that as Darrell intimates freight rail with passenger rail as a bonus… might fly.

    but geeze if we are going to spend sales tax money on roads.. why not a slice for rail?

    VRE is VERY popular in Fredericksburg and is funded by a 2.1% gas tax.

    so there you have it – a 2.1% on gasoline along the I-95 corridor to pay for VRE/Amtrak to Richmond, eh?

  10. Where is the nexus between vre and gas tax?

  11. I do not know for sure but I think the theory is that VRE takes commuter traffic (about 20k people) a day off of I-95 at rush hour.

    The way that VRE is actually funded is interesting and curious.

    The gas tax goes into separate accounts for each locality that have it.

    VRE figures out how much of the money in the account goes to subsidize riders – on a per county basis.

    The remaining money is for the county to spend on other transportation but VRE has to approve it.

    So far…. VRE balances fare increases on riders with subsidy levels from each locality with enough left over for other transpo projects….so far….

    but VRE is strictly commuter rail not inter-city or other variants and it is at the mercy of CSX and weather-inflicted track conditions on low-speed track..stress from heat.. cold..etc.

  12. Darrell Avatar

    Well back in the Western expansion days it wasn’t unusual for railroads to tack on a couple of passenger cars to the end of a freight train. The trick would be figuring out a scheduling arrangement and unit cost per seat. Then all you would need is a mobile app for interested patrons. Kind of a Chinese bus on rails.

  13. smartphone apps may be a path to the future on transit – all modes.

    for the Wash-Richmond corridor – the first thing they need is a 3rd track and it does not need to be high speed.. just a track that allows reliable and dependable service not currently possibly.. since CSX freight owns and has priority.

    Seems to me that if McDonnell is willing to offer cockamamie plans to tax alcohol for transportation … he could do something similarly bold for the Richmond-Washington corridor.

    He could call it the Va Technology Corridor and say – truthfully – that that corridor needs transportation, education, and internet infrastructure to spur a Knowledge-based golden crescent….that weens us off of the Fed dole and heads for the 21st century.

    He could, as Groveton has suggested propose a major new University that concentrates on 21st century knowledge and technology…

    the I95 corridor rail would be one component…

    I think we call this “leadership” but it does require the guts to admit that the govt must at least lead some of he investment….

  14. DJRippert Avatar


    Your economic logic is questionable. You want high speed rail to fund itself before it exists. Did the Hoover Dam fund itself before it was built? You may or may not have a valid point about the economics of high speed rail. However, saying that it shouldn’t be considered because it can’t fund its own construction before it is built is pretty shallow analysis.

    Your study on bus travel is also a stretch. Here’s one comment – ” from the rising interest among travelers in being able to continuously use port-able electronic technology, which is difficult or impossible when flying or driving.”.

    You’ve got to be kidding me! People will take buses that travel at 50 mph instead of airplanes that travel at 500 mph in order to avoid the 10 minute restriction on using electronic devices at take-off and landing? As for wi-fi, many airlines offer it now during flight. It works fine.

    Sometimes, even potentially good arguments can commit suicide by making a few ridiculous claims.

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