Megabus Gets a Free Ride at Port Authority Bus Terminal

[ML111]

I keep hearing Francis wants to throw his hat into the ring. Now that he has facilities,buses and drivers in CT and MA....theoretically he could. But does he want to really beat his equipment into the ground chasing pennies?

 

What I would love to know: Is MegaBus actually profitable? They seem to only be after market share....I would love to know what their yields are. Because at the these low prices they can fill a DD but still lose money, something the airline industry went though for a long time.

 

Myself personally the long haul line run game is getting to be pretty boring. It's turning in all "Express This and Express That". I don't want to deal with those 3-5 hour nonstop odysseys anymore. I'll stay on my local schedule for as long as I can.

 

Francis does, but not directly. He and his brother Mark are way too smart for that. Why expose yourself completely risk wise when you can sure up yourself by binding an operator/intermediary to contracts? And we both know that they do not play when it comes to contracts.

 

Their business model is based on economies of scale - naturally. Yes they have the drivers all over the Northeast and have equity ownership in a good chunk of the charter operations up and down the East Coast. So why are they going to deviate from their core product? Word is that the Boston Metro terminal will launch in two months or so - when Lenny leaves, and yes he will leave - Peter might as well throw in the towel.

 

DeVivo sees the writing on the wall, which is why he put his eggs into Megabus' basket and diversified the hell out of Dattco. In about a year, the whole NE megaregion will turn blue and white. Frankly though, it's probably for the best. After what Coach did just a decade ago, someone needed to clean the mess up.

 

As for Mega's profitability, they do in fact make money. However they only make money in their mature markets (i.e. Chicagoland and the NE). Dattco's (New England) is pegged to a fixed contracted rate on ticket sales, and Coach America (Southeast) is purely contracted miles. Both operations are subsidized in part by the major corridor services. Their whole "market share" theme is to establish brand recognition and differentiation from the 'hound. And they do a great job of it in all aspects aside from actual operations.

 

Their whole business model is based on the double decker coach. Look at it this way - on one of our regular coaches, the typical break even point is 60% of capacity, somewhere around 30 pax. Mega's break even is 40 pax for the DD - the rest is gravy and goes to subsidize everything else they do.

 

Part of their business model is built upon the fact that they must expand in order to maintain profitability - they have to run more miles to spread around the costs and make the losses "disappear." Their rapid expansion over the past few months is not a mistake nor is it a surprise. They have to do it in order to survive.

 

Mega makes money - but they are crafty in how they arrive at the final margin number at year's end. It's similar to how the locals in the PPB system feed, fuel, and sustain the express runs.

 

I hope that helped.

[BZGuy]

Word is that the Boston Metro terminal will launch in two months or so - when Lenny leaves, and yes he will leave - Peter might as well throw in the towel.

 

If Lenny leaves (which I've been predicting since Academy started their march north) then that will be the end of Chelsea. He will cherry pick his best drivers and take all of his contracts with him. That will probably push Peter to sell.

 

DeVivo sees the writing on the wall, which is why he put his eggs into Megabus' basket and diversified the hell out of Dattco. In about a year, the whole NE megaregion will turn blue and white.

 

I stopped by the New Britian yard a couple weeks ago and was absolutely shocked at the transformation. It's nothing like I left it at all. DeVivo has set a good foundation for the future of the company.

 

Frankly though, it's probably for the best. After what Coach did just a decade ago, someone needed to clean the mess up.

 

This leads me to a theoretical question I've been meaning to ask you.

 

If Coach did not have to sell off it's N.E. properties,do you think Megabus would have even been created? Honestly I think at this point alot of people at both Bonanza and Arrow wish we were still CUSA company.

[ML111]

I think the first point here is that Stagecoach did not have to sell off all of the New England properties. They did it to centralize and streamline their operations to the core. It's funny because the very next year, Leisure Line went bye-bye, and they put a lot into LL. (Again, Francis won that deal - he got Route 9 in exchange for Funaway in the Bronx and Queens).

 

They would have implemented Megabus in a different way is my answer. Right now Megabus is feeding the rest of the CUSA system, and it takes preference over everything else they do (it's the reason they've cut off their charter sales in the NE and sold the school bus faction in Chicagoland). Megabus was coming over regardless because of the wild success it had in the UK against National Express (think "Greyhound"). Brian knew this was the economic engine they've been waiting for and he was going to bring it over regardless.

 

If they didn't sell the New England properties, they would have not pursued a market share strategy in the corridors. I suspect they would've followed suit with what the Chinatown carriers were doing and adapt their operating practices, similar to what they would've done with Dragon Coach (Eastern and Today's Bus), when CUSA purchased them in 2009 before dumping both.

 

They also would've been more cautious about their investments and probably wouldn't have devised the whole equipment cycle operations model. Believe it or not, I think they would've became a Bolt-like product.

 

Strange how things turn out sometimes.

[NYCBus]

With the new pick-up points and their decision to relegate the Boston service out to the 10th ave stop, it looks like Megabus has given up on the Boston service.

 

They used to have hourly service with all schedules operated by double deckers. Now, 5 of the 16 schedules in each direction are operated with Community Coach J4500s or Dattco VH. In the Spring, they go from 16 schedules to 11.

 

Not sure how they were doing in Boston before this move, but it is clear now that they believe they can't compete with the Chinatown carriers and GLI/PP on this corridor with their new location.

 

On a related note, it seems like some Newark Airport Express D4505 were transferred to Megabus NE. They weren't yet repainted, but I saw them being driven Mega drivers. I believe these will be used by Mega to set up a shuttle to the new stop from a subway stop.

[NYCBus]

Does anyone know if the Megabus Chicagoland operations has any other driver bases besides the one in Chicago?

 

The Chicago-Nashville route seems to go over 10 hours so I can't see that being done completely by a Chicago driver.

 

I also don't understand how the Memphis-Knoxville route will be operated. It doesn't like Coach America has any driver locations in TN. Does this mean Megabus has a Memphis driver base set up?

[ML111]

With the new pick-up points and their decision to relegate the Boston service out to the 10th ave stop, it looks like Megabus has given up on the Boston service.

 

They used to have hourly service with all schedules operated by double deckers. Now, 5 of the 16 schedules in each direction are operated with Community Coach J4500s or Dattco VH. In the Spring, they go from 16 schedules to 11.

 

Not sure how they were doing in Boston before this move, but it is clear now that they believe they can't compete with the Chinatown carriers and GLI/PP on this corridor with their new location.

 

On a related note, it seems like some Newark Airport Express D4505 were transferred to Megabus NE. They weren't yet repainted, but I saw them being driven Mega drivers. I believe these will be used by Mega to set up a shuttle to the new stop from a subway stop.

 

There are quite a few reasons why they may have reduced the schedule, and each does not equate to moving the stops. Moving the stop location was a necessity and something that needed to happen if they wanted to operate from Manhattan Here are a few reasons:

 

1. Schedule slotting - in a true market without constraints, you would run capacity as dictated by when and where people are travelling to. Mega has to deal with space constraints on both ends of this route - they only have two gates in Boston with numerous routes leaving from them, and in NYC they can only board two buses at a time. It's a very tricky balance, and believe me when I say it is downright difficult. I've had to work out schedules in similar situations countless times.

 

2. Sectioning - there are also numerous reasons why Community Coach and Dattco equipment is being used - the most prevalent is to make the schedule because there are no Megabuses available (happens all the time), or the scheduled piece of equipment will not make a schedule (also happens all the time, as they operate their services utilizing equipment cycles - if the bus is late, it's late - even if the driver is ready to go - similar to the airlines). The other is that they section a schedule - even though everyone booked for one schedule, they will use two buses to carry the load of 81.

 

3. Margins - sometimes when you operate in transportation, you can lose money with a full bus because either the pricing didn't meet the demand, or the non-peak travel times and lack of passengers at those times drag down the operation. So you re-balance the operation by running fewer schedules into demand during the peak and raise the fares to counterbalance the effect of the midweek drag. (I know this is unconventional, but the fewer miles (schedules) operated with higher fares, the better you are profit wise).

 

4. Infrastructure Strains - have you read the recent articles about how some of the Southeast services are starting to use DD's in the near future? They get those buses from existing pools, as they've already been broken in. So they would effectively take a bus from a corridor route in the NE and send it to a maturing market. Meanwhile, the op is down until new equipment arrives.

 

5. Supply v. Demand - it's also quite possible that the loads do not justify the excess capacity. Mega is dependent on filling up their double decker coaches - the target from my observations/calculations is that they shoot for 70% load factor each schedule. They are concerned first and foremost with getting the seats filled, then worry about the revenue later. Considering that filling a double decker bus effectively serves to subsidize up to three loss-running schedules elsewhere, they need to fill those buses up.

 

Mega does not need a shuttle in New York - they needed one in DC because of the neighborhood they stopped in. But they don't need one there on 10th Avenue - even if they did do something like that, they only need 1 bus. Right now, Mega needs every single bus they can get their hands on. Considering that the Newark Airport Express buses are based out of the same facility in Elizabeth as Mega, it's a logical choice. Besides, people going to the airport don't need to ride on a D4505 - not saying riding an RTS for a premium fare is a fair substitute, but they allocate resources to maximize profitability.

 

It's pure business. Hope this helps.

[NYCBus]

There are quite a few reasons why they may have reduced the schedule, and each does not equate to moving the stops. Moving the stop location was a necessity and something that needed to happen if they wanted to operate from Manhattan Here are a few reasons:

 

1. Schedule slotting - in a true market without constraints, you would run capacity as dictated by when and where people are travelling to. Mega has to deal with space constraints on both ends of this route - they only have two gates in Boston with numerous routes leaving from them, and in NYC they can only board two buses at a time. It's a very tricky balance, and believe me when I say it is downright difficult. I've had to work out schedules in similar situations countless times.

 

2. Sectioning - there are also numerous reasons why Community Coach and Dattco equipment is being used - the most prevalent is to make the schedule because there are no Megabuses available (happens all the time), or the scheduled piece of equipment will not make a schedule (also happens all the time, as they operate their services utilizing equipment cycles - if the bus is late, it's late - even if the driver is ready to go - similar to the airlines). The other is that they section a schedule - even though everyone booked for one schedule, they will use two buses to carry the load of 81.

 

3. Margins - sometimes when you operate in transportation, you can lose money with a full bus because either the pricing didn't meet the demand, or the non-peak travel times and lack of passengers at those times drag down the operation. So you re-balance the operation by running fewer schedules into demand during the peak and raise the fares to counterbalance the effect of the midweek drag. (I know this is unconventional, but the fewer miles (schedules) operated with higher fares, the better you are profit wise).

 

4. Infrastructure Strains - have you read the recent articles about how some of the Southeast services are starting to use DD's in the near future? They get those buses from existing pools, as they've already been broken in. So they would effectively take a bus from a corridor route in the NE and send it to a maturing market. Meanwhile, the op is down until new equipment arrives.

 

5. Supply v. Demand - it's also quite possible that the loads do not justify the excess capacity. Mega is dependent on filling up their double decker coaches - the target from my observations/calculations is that they shoot for 70% load factor each schedule. They are concerned first and foremost with getting the seats filled, then worry about the revenue later. Considering that filling a double decker bus effectively serves to subsidize up to three loss-running schedules elsewhere, they need to fill those buses up.

 

Mega does not need a shuttle in New York - they needed one in DC because of the neighborhood they stopped in. But they don't need one there on 10th Avenue - even if they did do something like that, they only need 1 bus. Right now, Mega needs every single bus they can get their hands on. Considering that the Newark Airport Express buses are based out of the same facility in Elizabeth as Mega, it's a logical choice. Besides, people going to the airport don't need to ride on a D4505 - not saying riding an RTS for a premium fare is a fair substitute, but they allocate resources to maximize profitability.

 

It's pure business. Hope this helps.

 

 

It should be interesting to see what Boltbus's next move is.

Maybe moving to gate 84 has solved all of their NYC bus stop problems.

 

If Boltbus wants to play hardball, why doesn't Boltbus just apply for that same stop as Megabus in the Port? That will cause all types of bottlenecks for Megabus there and probably force them to move some of their schedules to the 10th ave stop.

 

 

I'm surprised they're pulling doubledeckers from the money-making NE routes to support the Atlanta routes.

To me, it would only be logicial to do that if you have excess td925 equipment in the NE. This seems like the wrong strategy to me.

[ML111]

It should be interesting to see what Boltbus's next move is.

Maybe moving to gate 84 has solved all of their NYC bus stop problems.

 

If Boltbus wants to play hardball, why doesn't Boltbus just apply for that same stop as Megabus in the Port? That will cause all types of bottlenecks for Megabus there and probably force them to move some of their schedules to the 10th ave stop.

 

 

I'm surprised they're pulling doubledeckers from the money-making NE routes to support the Atlanta routes.

To me, it would only be logicial to do that if you have excess td925 equipment in the NE. This seems like the wrong strategy to me.

 

Gate 84 is definitely not the solution - no one wants to be there. It comes down to logistics and practicality, can everyone be accommodated in such tight quarters? No they cannot. Also, if you have ever witnessed the Philadelphia stop location at 30th Street, you would know that having both companies at the same area is not good - too many buses, too much volume.

 

The wild card is the community - you have to remember that whatever you do has an impact. Having an operator run close to 100 schedules on peak days can be trying, but then double that and what do you get? Discontentment, complaints, accidents, stress, and lack of communication. You need the community on your side, and by the way both companies operate, neither one has many friends there.

 

Bolt's moving eventually - they've been told this for quite some time. The DOT and community suggested locations, but time will tell. Judging by the lines of people on 10th and 40th, the demand will follow.