Lisa Chow is the economics reporter at WNYC. She tries to explore in her stories surprising aspects of New York’s many economies—in plain view or hidden, in neighborhoods or sectors.
Fare Game: Traveling by Bus This Thanksgiving
Wednesday, November 25, 2009
New York, NY –
Millions of Americans take to the road every Thanksgiving, and for many New Yorkers it's in a bus. Competition among bus companies has intensified this year with big multinationals jumping in and selling one-way tickets to Boston, Philadelphia and Washington for as cheap as $1. WNYC's Lisa Chow reports.
REPORTER: Let's just be clear. No one's making money selling tickets for a dollar. It's a marketing gimmick, something the bus companies are doing to entice riders to check out their service because the theory is, if you ride with them once, you'll ride with them again at full price.
MOSER: You'd experience it and go hey, wow, never heard of it. Now I did. And we have a very loyal following.
REPORTER: Dale Moser is president of Megabus.com, which is owned by a UK-based transportation company. It entered the New York market last year and now operates some 70 trips in and out of the city every day. One of its chief competitors, BoltBus, co-owned by Greyhound and Peter Pan, also offers $1 tickets. But does the marketing work? Are customers really loyal?
WALTON: For Bolt bus, I've gotten it one time for a buck.
REPORTER: Ellie Walton is 28, a filmmaker from DC, and she's been traveling to New York by bus ever since she was 15. Instead of sticking with BoltBus, on this day, she is waiting on line for Megabus.
WALTON: Last week I checked on the internet, and I got Megabus for $5 coming up and $7 coming back.
REPORTER: So at least for the savviest of bus riders like Walton, brand loyalty doesn't trump price or amenities.
WALTON: I also liked to be hooked onto the Internet so having that wifi service, and having a plug is also really good.
REPORTER: Being connected is one area in which bus travel has surpassed other forms of transportation and why it's continuing to draw new customers. Moser says Megabus has seen its passenger volume in the northeast grow by nearly 70 percent this year. And he says he sees his main competitors not as other bus companies but as cars.
MOSER: Sixty percent of our customers come out of a car. Seventeen percent come out of airplanes. Thirteen percent come out of trains. That's almost 90 percent of my market is not coming out of another bus company.
REPORTER: A study from DePaul University in Chicago showed that bus service from city to city ticked up for the first time in 2006, after four decades of persistent decline. The study attributed the rise, in part, to companies like BoltBus and Megabus. They're big players in the market and yet what they're doing, offering low cost frequent bus service, isn't new to New York.
CHEN: Fung Wah is the first company.
REPORTER: Jimmy Chen is president of gotobus.com, an online ticketing agent for several Chinatown buses. Chen says in 2001, Chinatown buses undercut the big player at the time. That would be Greyhound. And the price to go to Boston dropped in half.
CHEN: Price is one thing. The other is speed. Chinatown buses tend to be running faster at the time. And a lot of Greyhound schedules, they stop in between. So clearly Chinatown bus had advantages.
REPORTER: It wasn’t just direct routes. It was curbside pick up. No crowded bus terminals. And Chen says, selling tickets online opened up Chinatown buses to a much bigger market.
CHEN: When we started online ticketing, it's selling like hot cakes.
REPORTER: So hot that Hasidic owned bus companies jumped in, focusing on the New York to DC market. One of them is Betty Ungar.
UNGAR: I was a mom of 10 kids, a housewife. How does that sound? And I decided to become a career woman.
REPORTER: Ungar started her own bus line, Washington Deluxe, in 2002. To attract customers in the beginning, she says she set her prices artificially low, like what Megabus and BoltBus are doing now. Then slowly she increased her prices. Ungar was one of the first bus companies in New York to offer free wifi, and earlier this year, she started another bus company, Tripper Bus.
UNGAR: We work on a low markup, and the way to make money is just by bulk, having a lot of people, transporting a lot of people. Volume is key to profit.
REPORTER: And on Thanksgiving weekend, volume is not a problem. For WNYC, I'm Lisa Chow.