Has Megabus Outgrown Its Business Model?

Megabus Chicago, November 30, 2008. Click for full panoramic.

Yesterday I took the Megabus for the twelfth time. As one would expect on the Sunday after Thanksgiving, their Chicago hub was bustling. They ran three buses on the 9am route to St. Louis, and two each to Toledo and Detroit around the same time. When I got to the “station” – a folding table on Canal Street – I had my first feeling that perhaps their business model wouldn’t be able to scale up to a full-fledged national bus line. I’ll start out by ruining the suspense: My bus left only 20 minutes late, made up the time on the way, and got to St. Louis right on time.

Now that that’s out of the way, let’s get down to brass tacks. Megabus is cheap because it doesn’t have bus terminals. Megabus is popular because it’s so cheap. And when you try to herd 500 cold, hungover college students onto the correct buses, there will be something resembling a mild form of chaos.

A quick rundown of observations:

  • Apart from the drivers, I saw only three Megabus representatives: one man checking passengers’ confirmation numbers, and two people directing the buses and helping to load luggage. None of them were wearing Megabus clothing, and I didn’t even notice any I.D. badges.
  • At the check-in table, each rider was given a paper ticket indicating which bus they should board. This was a good move, as it prevented everybody from mobbing the first bus heading to their destination. And the buses all pulled away within about 10 minutes of each other.
  • Possibly the biggest impedance of efficiency was that at a given time, only two buses were pulled up to the curb loading passengers. It appeared that the whole block was intended to be used for bus loading, so I’m not sure whose decision it was to only have two parked at a time.
  • I overheard quite a bit of confusion from passengers about where to check in, which bus was theirs, et cetera, but there was always a Megabus staffer hollering sufficiently loudly for information to disseminate. I know they enjoy their distinction of being a no-frills bus line, but I think a megaphone would be a fantastic investment.

Megabus and its parent company, Coach USA, should be commended for maintaining a semblance of order in a situation which could have easily devolved into complete anarchy. According to a press release, Megabus’s revenue has more than tripled in the past year, but I don’t see how they would be able to manage twice as many passengers next Thanksgiving without some actual infrastructure. It’s apparent that there’s a huge market for cheap inter-city bus transit, especially with the economy and all, so I hope Megabus will be able to expand their service while keeping overhead costs at practically zero. And I hope that everybody gets to know the thrill of snagging the elusive $1 fare, which will be a case study for introductory economics classes for decades to come.