Megabus.com promises $1 fare from Pittsburgh to Chicago
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Pittsburghers soon will be able to ride to Chicago for less than the cost of a Zone 1 trip on a Port Authority bus.
Graphic: Megabus routes
Megabus.com, a subsidiary of Chicago-based Coach USA, will begin operating here April 2, with trips to Chicago, Toledo, Ohio, and Cleveland and fares starting at $1.
How can a bus company make money by charging $1 per trip?
"That's a very good question," said Coach USA President and Chief Operating Officer Dale Moser, who is in town today to announce Megabus' entry into the Pittsburgh market.
He explained that Megabus' business model relies largely on keeping costs low. Created last April as a subsidiary of Coach USA, it did not require a lot of new corporate infrastructure.
Coach already had a terminal in Chicago, and Megabus does not use terminals in the other cities it serves. Instead, it receives and discharges passengers at streetside locations in front of hotels, convention centers and the like.
In Downtown Pittsburgh, Megabus will stop at the northeast corner of 10th Street and Penn Avenue, in front of the David L. Lawrence Convention Center.
And with its sales conducted entirely over the Internet, "I have no ticket sales people out on the street," Mr. Moser said.
Finally, in a pricing model borrowed from the airline industry, fares will start at $1 but vary according to the availability of seats. For travel on short notice, the fares rise. For instance, a ticket from Chicago to Minneapolis/St. Paul with less than 24 hours' notice was priced yesterday at $25.
Still, he said, "our highest fare is lower than other modes of travel, including car," because of the price of gasoline, tolls and parking. Indeed, he said, the company's target is "getting people out of their auto and into the bus."
According to Mr. Moser, the model is working well so far.
Megabus was born in Scotland, home of Coach USA's corporate parent, Stagecoach Group plc. Beginning in late 2003, it ferried commuters to and from towns surrounding Stagecoach's home city of Perth.
The discounted express service was so well received that Stagecoach expanded Megabus across the United Kingdom and then into the United States.
In its first year, the American version has transported more than 275,000 passengers between Chicago and eight other Midwestern cities: Minneapolis/St. Paul, St. Louis, Milwaukee, Indianapolis, Detroit, Cleveland, Cincinnati and Toledo.
Come April 2, it will add Columbus, Ohio, Louisville, Ky., Kansas City, Mo., and Ann Arbor, Mich., along with Pittsburgh.
In Pittsburgh, Megabus brings competition to a bus travel market where Greyhound has enjoyed a virtual monopoly since buying out Continental Trailways in 1987.
A visit to the two companies' Web sites to make reservations online revealed sharp differences. For a trip to Cleveland and back on April 2, Megabus offered two buses there and two back; Greyhound's schedule listed seven buses going there and five back.
Both of Megabus' departing trips were priced at $8; one returning trip was $15, and one showed the $1 price.
Buying any ticket or set of tickets triggers a reservation fee of 50 cents, so a round-trip traveler would pay either $9.50 or $23.50. Upon submitting payment online, the Web site generates a reservation number. There is no ticket.
Greyhound's Web site listed a flat fee of $46 for the round trip, but also presented a wide palette of discounts and specials, ranging from a 10 percent reduction for military personnel to a "companion fare," which gives a 50 percent discount on a second ticket with the purchase of a full-price ticket. Greyhound.com offers the option of receiving tickets in the mail or picking them up at the bus station. Either way, there is a $4 fee.
Greyhound spokesperson Anna Folmnsbee said the company welcomes competition, because Megabus might attract people to bus travel who otherwise would stick to planes and trains.
"That kind of makes the pie bigger, so our piece gets a little larger," she said.
She added that Greyhound has a companywide initiative under way that includes refurbishing its fleet of more than 1,200 buses, renovating terminals and providing new uniforms for its personnel.
But while Greyhound has various discount programs in place, the company will not seek to go head-to-head with Megabus on price.
"We don't necessarily base our fares strictly on competition," she said.
First Published March 8, 2007 12:00 am