Megabus Enters West Coast Markets—At What Cost?

According to several media reports, the no-frills intercity bus operator Megabus (noted for its limited $1 fares) will expand its US operations this August to add a Los Angeles hub serving six destinations, including Las Vegas, Phoenix, San Diego, San Francisco, Oakland, and San Jose. Current operations are confined to the Midwest, emanating from their Chicago hub.

However, articles in the Los Angeles Times, the San Diego Union-Tribune, and the local blog LAist all fail to mention that Megabus’ thus-far money-losing business model is predicated on no physical stations and bleak amenities (if any) at the curbsides they serve. Megabus parent company Coach USA is owned by Scotland-based Stagecoach Group, which recently admitted that Megabus’ first full year of operations lost $1 million (see NARP weekly news hotline #507).

As you can see below, Megabus’ Chicago location “adjacent to Union Station” crowds passengers onto an already-packed curbside location also served by Van Galder Bus Lines, CTA buses, shuttles, and taxis. This location is also right in front of the extremely busy Canal Street main entrance to Union Station for Amtrak and Metra passengers:

Union Station owner Jones Lang LaSalle and main tenant Amtrak make abundantly clear that the shelter of Union Station proper is off-limits to Megabus passengers (a fact not immediately obvious on the Megabus web site):

It remains to be seen whether there’s a market for Megabus in California, which, besides Amtrak, Greyhound, Southwest Airlines, JetBlue, and the new ExpressJet and Virgin America, also has an increasing presence of ethnic-targeted bus services.

Ultimately, the traveling public should take notice that Megabus is not completely upfront about the nature of its bare-bones operations, and yet still has been unable to turn a profit.

—Matthew Melzer