New Destinations: 2023 Outlook for the Intercity Bus Industry in the United States
A series of initiatives by intercity bus lines in 2022 surprised observers and are imbuing optimism about scheduled long-distance bus travel. The past year's developments, ranging from the rollout of first-class and sleeperbus service to new partnerships to expanded schedules and reservation options, are accelerating the transformation of an industry that many regarded as stodgy and stuck in a bygone era just a few years ago. The industry is becoming more data-driven and open to experimentation.
Yet, the excitement generated by these developments is tempered by the realization that serious problems persist. Chronic driver and mechanic shortages, the shuttering of traditional bus terminals, the increasing average age of motor coaches, unpleasant customer experiences due to the conditions around curbside pick-up spots and in terminals, and unruly passengers continue to hurt the industry. The intercity bus industry continues to be overlooked in many discussions about the U.S. intercity travel market despite handling a greater modal share than passenger rail and a sizable share compared to air travel on many routes under 250 miles.
New Destinations highlights the notable developments of 2022, organized by geographic region and key nationwide trends, each with a prediction.
We also provide insights on the status of the intercity bus ridership nationally on page 20. We exclude from our review moves to restore schedules dropped during the pandemic, most activity by airport and campus shuttle operators, and efforts by rural bus lines to shift from regularly scheduled service to variable-route or demand-responsive services. The study focuses instead primarily on conventional city-to-city offerings.
• The accelerating integration of FlixBus and Greyhound, which are under common ownership. Greyhound is becoming a reserved-seat service and has a new reservation platform.
• Remarkable expansion at premium service lines, some with onboard attendants and airline code-sharing.
• News about the recent closure of Los Angeles Greyhound Bus Station and several other traditional depots.
• New strategic alliances and our five predictions for the future.
The Intercity Bus Bounceback: The 4th Quarter of 2021 Brings Optimism to a Struggling Sector
The final quarter of 2021 pointed to a strong post-pandemic recovery due to:
- Rising traffic through late November, when the Omicron variant emerged, indicated strong fundamentals and a customer base eager to take bus trips when the time is right.
- FlixMobility’s acquisition of Greyhound Lines, the largest transaction in the industry in many years.
- The emergence of new first- and business class services that provide alternatives to crowded airports, along with the continued inability of the air carriers to satisfy passenger expectations.
- The massive Bipartisan Infrastructure Bill passed by the U.S. Congress in November, with its strong benefit to surface modes.
The effects of pent-up demand for travel, higher gasoline prices, and new service offerings, together with other late-year developments, are providing momentum to the U.S. intercity bus industry, even as the pandemic continues to hinder carrier financial performance. Recent developments indicate that better times are ahead for the sector as the pandemic eases.
The favorable developments come in the wake of a devastating 18 months in which the industry was marred by weak travel demand due to COVID-19, severe driver shortages, and discouraging setbacks on Capitol Hill, which limited federal bailout assistance. As a result, Intercity bus lines have suffered more during the pandemic than most other modes of transportation. According to the American Bus Association, 25 percent of the bus industry has closed due to COVID-19.1 The Omicron variant has largely prevented a recovery in all segments of the industry. Even so, developments from the summer and the 4th quarter of 2021 suggest that scheduled long distance and regional bus operators are bouncing back.
On the Brink: 2021 Outlook for the Intercity Bus Industry in the United States
The prognosis for the intercity bus industry remains uncertain due to the weakened financial condition of most scheduled operators and the unanswerable questions about the pace of a post-pandemic recovery. This year’s Outlook for the Intercity Bus Industry report draws attention to some of the industry’s changing fundamentals while also looking at notable developments anticipated this year and beyond.
Our analysis evaluates the industry in six areas: i) The status of bus travel booking through January 2021; ii) Notable marketing and service developments of 2020; iii) The decline of the national bus network sold on greyhound.com that is relied upon by travelers on thousands of routes across the U.S. Mainland; iv) Trends in bus fares versus those for air and rail travel; v) Legislative trends and service innovations; and vi) Conclusions and predictions about near-term developments likely to affect the industry.
Our seven principal findings presented below show that despite the challenges, signs of optimism are emerging that the intercity bus industry will move from “the brink” onto a more solid financial footing in post-pandemic times.
FINDING 1. Bookings for bus travel ended 2020 at around 16 percent of the previous year in the Northeast and at 24-35 percent of the previous year in other parts of the country. Cash shortfalls will make the next five or six months a tumultuous time for scheduled bus lines, particularly those with asset-intensive business models. Optimism is nonetheless growing that a recovery will gather momentum by mid-summer.
FINDING 2. Although the pace of route development dramatically dropped due to the pandemic, intercity bus lines made a variety of strategic moves last year, including experimentation with new booking platforms and service enhancements. These innovations will likely accelerate as demand gradually rebounds.
FINDING 3. The national network of intercity bus schedules that is sold on Greyhound’s computer reservation system and website, which is supported by extensive interline and terminal-sharing arrangements, has markedly diminished in the past few years. The network’s problems predate the pandemic but are being magnified by tepid demand during the public health emergency. If the network further erodes, it could leave thousands of city pairs without any scheduled intercity transportation service.
FINDING 4. The duration of trips on the intercity bus network has lengthened markedly over the past several years as a result of schedule cuts before and during the pandemic. On 186 routes we evaluated in which the network is critical due to the lack of direct express coach or Amtrak service, the length of the average trip increased by more than an hour between 2016 to 2021. On more than a quarter (26 percent) of these routes, the trip is now two hours longer due to the need to make more stops and accept longer wait times at transfer points.
FINDING 5. Intercity buses remain the least expensive travel option on the vast majority of the country’s major routes. The budget stretching benefits of bus travel are greatest for those buying tickets only a few days before departure, particularly during holiday periods. Persistently low air and rail fares, however, has posed an increasing threat on mid-distance and longer-haul routes.
FINDING 6. Amtrak is proving to be a particularly vigorous competitor to bus lines during early 2021. Those booking trips 10 days in advance will find fares on the passenger railroad below those for bus travel on about a third (35 percent) of the routes evaluated. This vigorous discounting is partially in response to Amtrak’s diminished schedule frequency in many corridors.
FINDING 7. The Coronavirus Economic Relief for Transportation Services Act, enacted in late December 2020, provides temporary relief for the ailing intercity bus industry. The amount of financial support set aside for the motorcoach industry in this legislation however, is relatively meager. Additionally, it does not address the more systemic problems facing the sector, many of which emerged even before the pandemic and have now reached crisis proportions.
The intercity bus industry’s long-term place on the country’s transportation landscape, despite the present challenges, seems secure. The near-term outlook, however, is less sanguine. We expect the following for the remainder of the year and into 2022.
PREDICTION #1. A move by a major carrier (or perhaps some combination of smaller carriers), to dramatically downsize service, or even shut down entirely, and dispose of equipment will occur unless a more favorable set of policies emerge from Washington.
PREDICTION #2. A recovery in traffic will start around mid-July, when travel demand typically is near its summer peak, air and rail fares rise in response to seasonal demand, and vaccines are widely administered to all age groups.
PREDICTION #3. Pro-rail policies of the Biden Presidency will foster enhanced coordination between intercity bus and Amtrak services.
PREDICTION #4. Flixbus, Greyhound, and Megabus will accelerate efforts to expand their booking platforms by adding the services of other carriers that operate as independent brands, including new publicly funding routes to rural and mid-size communities.
PREDICTION #5. There will be more aggressive expansion by “asset-light” brands such as FlixBus and OurBus, which employ business models that give them more versatility.
Making Connections: 2020 Outlook for the Intercity Bus Industry in the United States
For the first time in history, the intercity bus industry rolled into a new year having three carriers with extensive networks throughout both the eastern and western halves of the U.S. mainland. Each of the three are at a strategic crossroad: Flixbus is promoting a bevy of new services, Greyhound’s parent is evaluating options to sell the carrier, and Megabus has new ownership. Premium operators are simultaneously making impressive gains, although two pioneering lines have ceased operations. Part I of this report explores industry trends, while Part II reviews notable service additions and reductions by region in 2019. Part III looks to the future.
SHORT-TERM OUTLOOK FOR THE INTERCITY BUS INDUSTRY: Four trends herald the major changes underway in scheduled intercity bus travel.
- FirstGroup’s plan to sell Greyhound Lines, announced in May, comes at a time of considerable demand variability. Revenues rose last spring and summer due to a surge in immigrant riders but subsided during autumn.
- Flixbus, the Germany-based juggernaut now dominant in Western Europe and rapidly expanding in other parts of the world, is building a U.S. network of considerable size and scope. Recent expansion has brought it to the Northeast, Southeast, Pacific Northwest, and Texas. The carrier’s business model and network strategies, however, differ from its competitors.
- Stagecoach’s Megabus unit and the rest of the Scotland-based company’s U.S. operations were formally acquired by California-based Variant Equity. In June, the carrier rolled out a Partners Program that lays groundwork for more contracting with other bus lines on the megabus.com platform.
- Intercity bus lines and booking platforms are using “first and last mile” strategies to help customers more easily access services. Some strategies involve simple discounts but others fully integrate “on-demand” taxi and rideshare services into booking platforms.
NOTABLE NEW SERVICE: Nearly all regions of the United States received at least some new service in 2019. The frequency of services described in this section refers to the number of trips in each direction.
THE FUTURE: Significant increases in seat capacity on the U.S. the intercity bus system reflects not only growth by Flixbus and OurBus but also expansion by conventional and specialty lines. The growth has been more appreciably on routes between major cities separated by 100 to 400 miles. Meanwhile, new business models are being refined, including premium services aimed at travelers weary of the airports and “branded” state-supported networks.
New Directions: 2019 Outlook for the Intercity Bus Industry in the United States
The intercity bus industry rolled into 2019 with a bevy of new premium-service offerings, more dynamic scheduling to meet fluctuations in demand, and new pickup and drop-off locations that bring bus travel closer to the customer. Several major developments— Flixbus’ launch in the Southwest, Greyhound’s rollout of e-ticketing, and ambitious moves by smaller carriers—have quickened the pace of competition.
- A strong economy helped strengthen demand for scheduled coach travel in major corridors, but low fuel prices nationwide remain a mixed blessing. Uncertainty over demand contributed to Stagecoach’s decision to sell its Megabus unit to a venture capital firm.
- Technology platforms are giving smaller charter companies and regional players a greater ability to compete with well-established operators in some of the country’s most heavily traveled corridors.
- Scheduled bus operators are increasingly emphasizing service linking metropolitan regions rather than just city centers. A related trend is added service to/from airports and train stations, with the goal of providing passengers greater connecting opportunities. New services operated from locations on or near college campuses, including “pop-up” services operating only during college breaks, remain a major area of growth.
- State-supported services – one of the primary growth drivers in the industry over the past five years – are growing more sophisticated through strategic partnerships and sustained federal funding.
- The push to stratify service by offering both economy and premium options continues. In 2018, six carriers rolled out expanded premium offerings in the Northeast, while two others expanded them in other parts of the country.
Running Express: 2017 Outlook for the Intercity Bus Industry in the United States
Intercity bus lines rolled into the new year with an improved short-term outlook due to several factors: a slowly recovering economy, upward movement in the cost of gasoline, and growing customer awareness of new tech-oriented service enhancements. Several potentially disruptive forces, however, loom on the horizon.
- After several years of relatively flat traffic and passenger revenues, culminating in targeted cuts by prominent carriers in 2016, revenues and passenger boardings are likely to grow around three percent this year. Several factors, including an uptick in the price of fuel, suggest that market forces that have marginalized the growth in bus traffic are subsiding.
- Scheduled service in the Northeast Corridor continues to be a focal point for expansion and innovation. Last month, Go Buses became the fourth carrier to offer high frequency service along the entire length of the Boston to Washington, DC corridor, heightening the competition facing BoltBus, Greyhound, and Megabus.
- Whereas public agencies once subsidized bus service primarily to link rural communities with nearby population centers, attention is gradually shifting to giving these places interlined connections to the national network. The federal “Section 5311” program is enhancing the strength of Greyhound’s hub-and-spoke system, restoring some of the connectivity lost decades ago.
- Business class and luxury service remain on a growth trajectory, although expansion centers on specialty lines rather than national carriers.
- The dramatic expansion of Flixbus in Europe could foreshadow new approaches to branding and contracting bus services in the United States. Interest in more sophisticated pricing strategies is also growing, mirroring those employed by commercial airlines.
- New technological platforms hold the promise of transforming the way intercity ground-transport services are marketed and sold. Innovative services such as Flitways, Skedaddle, and UberPOOL are leaders in three app-based sectors that could become disruptive forces in the years ahead.
- Despite being relatively new to the U.S. marketplace, BoltBus and Megabus have grown to operate 247 intercity pairs. Less than a quarter of Megabus’ daily bus mileage competes with BoltBus, while most of BoltBus’ service competes head-to-head against its larger rival.
- Amtrak faces competition from BoltBus or Megabus on nearly three quarters of its short- and medium-distance corridor mileage. More than a third of Megabus bus miles, however, are on routes not served by Amtrak.
The Remaking of the Motor Coach: 2015 Year in Review of Intercity Bus Service in the United States
Calendar year 2015 brought much needed innovation and technological advancement to the intercity bus industry in the United States. More carriers are introducing new business-class amenities and comforts, providing greater ease in mobile ticketing, and rolling out new “tracker” software programs that improve the travel experience. Low fuel prices have made driving more affordable, encouraging major bus carriers to shift their orientation from expanding their schedules by rolling out new value-added conveniences on a relatively large scale.
- Major bus carriers rolled out value-added conveniences on a large scale in 2015, exemplified by Greyhound’s new OnTouch© system, megabus.com’s reserved seating program, and BoltBus’ integration of Uber ridesharing into its mobile app.
- Intercity buses handled an estimated 62 million passengers in 2015, about 35% more than in 2008. The number of seat-miles of service grew at a somewhat faster rate. These estimates are made through analysis of 155 scheduled carriers to fill a void in the understanding of the sector. Growth has recently slowed due to low gasoline prices that make driving more affordable.
- Greyhound launched cross-border service from Texan cities to Mexico while Latino carriers matured and grew in sophistication, accentuating competition for major lines, particularly in the Sunbelt region.
- The Chinatown bus sector is making a comeback, in spite of recent crackdowns by the federal government. These carriers now account for more than 600 daily schedules, heightening competition for major corporate carriers.
- Wanderu.com and Busbud.com, major booking websites specializing in bus travel, created powerful apps catering to mobile bookings, much like Uber and Lyft do for urban ridesharing services.
Adding on Amenities, Broadening the Base 2014 Year-in-Review of Intercity Bus Service in the United States
- Intercity bus service providers added more than 100 new daily services across the United States in 2014, resulting in a 2.1% increase in daily scheduled operations. While bus service grew, Amtrak train-miles held constant, and the number of airline flights diminished by 3.5%.
- A flurry of initiatives to introduce new amenities catering to business travelers and luxury-oriented pleasure travelers are broadening the sector’s appeal. New premium services on Red Coach, Royal Sprinter, and Vonlane point to an accelerating trend to make these features focal points of investment.
- Megabus introduced reserved seating, added extensive new service in Florida, and continues to move aggressively towards building a national network of interconnected hubs that cater to both short- and longer-distance trips.
- Carriers are increasingly “selling flexibility” to allow passengers to change their departure times at only a modest expense—in sharp contrast to the restrictive (and costly) airline policies.
- Bus travel-booking websites, most notably Wanderu and Busbud, are encouraging reluctant bus travelers to try this mode of transportation. These websites offer a convenient means of comparison-shopping, much as Expedia, Orbitz, and Travelocity do for air travel.
The Traveler’s Tradeoff: Comparing Intercity Bus, Plane, & Train Fares across the United States (2014)
This study evaluates the prices of travel on various modes of transportation—air, bus, and rail—in 52 city pairs in the United States with travel distances between 100 and 500 miles. Drawing on a data set of 3,120 fares, it illustrates the difference in prices under various advance purchase (A/P) scenarios (1- day, 7-day, and 28-day). The results show that the differences in fares between modes are significant and larger than is commonly believed:
- Intercity bus fares are 50-55% lower than on Amtrak, depending on the A/P scenario. Amtrak fares are priced 55-73% below airline fares. (Both ranges are based on averages).
- Single-occupant driving is substantially more expensive than bus travel, even for motorists who consider only the cost of fuel and tolls. Amtrak fares are roughly equivalent to driving costs for travelers booking in advance, but somewhat more expensive for those waiting until the last minute to book, with the greatest premium paid by rail travelers in the Northeast.
- The savings from traveling by bus and trains in comparison to air diminish sharply when trip distances are longer than 250 miles. However, even for those booking 28 days in advance to obtain discount airfares, the savings from bus/train travel on these longer trips still average $41-$69/ one-way.
- New discount city-to-city bus service cumulatively saves consumers $1.2 billion annually compared to other models of travel that travelers indicate they would use if these bus services were not available.