Megabus is a tale of two countries
By Doug Jack
A standing joke at the headquarters of the Stagecoach Group, Perth, Scotland, is how the staff must be ready on Monday mornings to hear of some new project that co-founder and chief executive Brian Souter has dreamt up over the weekend. The man is always thinking of novel ideas to drive the company forward, and many of them have been very successful. Stagecoach is without doubt the most innovative bus operator in the United Kingdom.
With more than 7,000 vehicles, the Group also has extensive rail franchises in the UK, as well as bus and coach operations in the Midwest and Northeast areas of the United States.
The establishment of Megabus in the United Kingdom in 2003 has to be one of Souter’s greatest inspirations. In a recent exclusive interview for BUSRide, he told me Stagecoach Group had felt a gap in the market for a long-distance coach travel product using the discount model of low-cost airlines. The group set up Megabus and the network now serves 40 towns and cities, and generated sales equivalent to $50 million last year.
Left: Brian Souter, co-founder and chief executive officer of the Stagecoach Group, Perth, Scotland, stands before one of the British Megabus coaches — a 49-ft Volvo Plaxton.
Passengers who book far enough ahead can possibly travel in the UK from London to Aberdeen or Inverness, each more than 500 miles from the capital, for the equivalent of $1.50. The best bargains tend to be from Mondays through Thursdays, with higher passenger loadings at weekends. The vast majority of seats are booked online, but there is also a national call center.
Stagecoach hedged its bets in the UK by starting mainly with older refurbished vehicles and has since replaced them with new coaches. While unusual for our country, many of the coaches by Plaxton coachwork are 49 feet in length on a Volvo chassis. Despite their length they manage to negotiate the narrow and congested streets of London and other British cities.
The coaches feature 63 reclining seats with safety belts, which have been mandatory on our coaches for several years, as well as restrooms and air conditioning. They are fully wheelchair accessible, using a PLS lift that stores behind the steps of the main front entrance.
Late last year, Megabus UK reached an important milestone when it rewarded its 10-millionth customer with the holiday of a lifetime to New York, complete with a trip to Boston via Megabus.com.
After successfully establishing Megabus and having it accepted, Souter decided to take the concept to the United States.
“We use the same principal of hub cities with feeder routes,” he says. “We recognized the greater distances in the U.S. and looked at routes typically 400 to 600 miles — a radius that works very well. With Chicago as our base, it was a good location to start. Most of the routes are operated in daytime, but we have some longer overnight services.”
By the end of 2008 Megabus.com in the U.S. had served nearly two million passengers on your side of the Atlantic. The company says demand is growing rapidly and now transports close to 150,000 passengers per month.
Last November Megabus.com gave away 100,000 free seats to help customers beat the credit crunch. The offer was available on a limited number of departure dates and times throughout the Midwest and Northeast routes that serve 29 cities.
Megabus.com began in the U.S. with MCI coaches, but last year placed an order with Van Hool of Belgium for 96 TD925 double deck coaches, following the initial successful operation of 17 of the vehicles.
In discussions with his North American management, Souter factored in the .strong growth in traffic on many of the routes.
“It meant either buying more single deck coaches or going double deck to get extra passenger capacity,” he says. “Some of our managers had reservations about whether passengers would be willing to use the upper deck, but when the first coaches came in, there was strong demand to travel upstairs.”
“Van Hool has built double deck coaches for many years, but we had to get them to bring the overall height down from the European standard of 13-ft 4-in to 13-ft, so that they could run through the Lincoln Tunnel,” says Souter. “We thought there might be issues with the restricted headroom on the upper deck, but that simply has not happened.”
Souter says the plan for Megabus.com now is to convert nearly the entire network to a double deck operation.
“They offer the most flexibility,” he says. “If we need to work extra sections two double decks carry more passengers than three single decks.”
We will use the new vehicles to expand what we have, with higher frequencies in some cases, and also to open some new routes.
“We take great care in selecting departure points in the main cities,” says Souter. “They must be points that are easily accessible for local public transport, such as Penn Station in New York City.”
Souter also spoke of future plans in the U.S.
“We will start Dragon Bus using single deck coaches to originate from and travel to the Chinese areas of U.S. cities,” he says. “This will be a more economy product than Megabus.com, but we will do some selected cross-selling.”
Souter says this worked very successfully in Scotland with Megabus.com and Scottish Citylink.
“It enables us to offer customers more frequent services at the times they want to travel,” says Souter. “By the way, all these vehicles will be fully equipped with WiFi.”
Asked if the financial crisis in the United States is affecting Megabus.com, he believes the situation is actually feeding the company more traffic.
“People are looking for more value for their money but they still want to travel,” he says. “Our customer research shows that around 60 percent are car users, and more than half of them would have previously made the journey by car. Just fewer than 20 percent previously travelled with an airline and 11 percent took trains. Also, 65 percent of Megabus.com passengers are female. Motorcoaches make them feel safe and secure.”
Souter also observed young people in North America, just as in Europe, are showing concern for the environment, noting that the new 81-seat double deck coaches have the potential to remove 81 cars from the road, and is 10 times more fuel-efficient than a 737 aircraft and 25 times more fuel-efficient than a single-occupant car per mile.
“Our calculations show on a journey from Washington to New York on a double deck coach, we move each passenger on only four pints of fuel,” says Souter. “We are certainly doing our bit for the carbon footprint.”
Stagecoach runs some buses in the Scottish town of Kilmarnock using recycled cooking oil. The company even encourages passengers to take waste oil to a recycling center where they receive tickets for discounted travel.
Megabus.com will soon start running trials in North America with a 100 percent bio bus, in a further effort to enhance its environmental credentials.
Souter concluded our visit by commenting on the success of Megabus.com in North America.
“It has captured the imagination of the travelling public,” he says. “It takes time to develop new routes and grow traffic, but Megabus.com is profitable and most routes are already making a contribution.”
If anyone needs proof of the success of Megabus.com in North America, the fact that competitors are already trying to work with the same models drive the point home.
Doug Jack is with Transport Resources in the United Kingdom.