Innovative Companies in the Bus Industry

With the launch of the 2015 Busbud Scholarship of Travel Innovation, we’d like to point out some innovative strategies and business models that are currently out there in the bus travel industry.
 

BOLTBUS (Branding)

Greyhound, a company who has over 100 years of experience in the bus travel industry under its belt started to feel a little bit out of touch with Millennials, who make up the majority of today’s bus travellers. They noticed the bus was starting to make a comeback but they were missing out. They were lacking certain amenities and the brand wasn’t perceived as being a rough way to travel.

What did Greyhound do about this? They knew they needed to revamp their main operation to be more efficient, improve their amenities and update their brand, which they began doing. They also knew that if they didn’t act faster, they’d lose their biggest markets to competitors. So Greyhound went ahead and created a new brand highly focused on consistent quality and ease of use, meeting the demands and needs of a newer, younger and tech savvy clientele. That brand is Boltbus.
 

 

Megabus (Yield Pricing)

Megabus was started by bus industry giant Stagecoach, who, in the early 2000s, discovered that they could apply the ultra low cost airline model of aggressive cost cutting and yield management pricing to intercity buses.

How does Megabus manage to have such low prices? First of all, it’s cost cutting. They’re a curbside bus operator, meaning they avoid paying to use the bus station whenever possible and just pick passengers up directly on the street. Also, they sell almost all their tickets online, and when they do sell tickets by phone or in person they try to pass that cost on to the customer in fees. This saves them the cost of having physical ticket booths or kiosks to manage and keeps call center costs down. Their signature double decker buses aren’t just a good brand recognition gimmick, they have many more seats than regular single decker coaches but still only require one driver, again reducing costs on a per-seat basis. Their infrastructure and overhead is consequently much lower than their more traditional counterparts.

Megabus’ pricing strategy is also part of their brand identity. They were the first company to offer $1 bus tickets. The operator deploys the first ticket for every bus trip at a cost of $1. As demand for the bus trip increases and fewer seats are available, Megabus is able to adjust their prices accordingly.
 

 

Flixbus (Business model)

Flixbus was founded when Germany passed intercity bus market deregulation in 2011, allowing buses to operate between any other city in the country for the first time. This bus company came up with a  business model that would allow them to scale competitively: they don’t own any buses. Rather, they scour for smaller charter and school bus companies and then attract those bus operators to run regular city to city buses under the Flixbus brand as subcontractors. This provides a new stream of revenue for these smaller companies. These local partners own the buses and employ the drivers, while Flixbus runs the route planning, operations, IT, marketing and ticket sales. Flixbus shares revenues with their subcontractors on a route by route basis, giving the subcontractors a vested interest in providing good service and providing feedback to the main company.

This business model resembles that of a franchise business model, common in the fast food industry. Saving Flixbus the effort of needing to hire new drivers and buy buses, they were able to scale faster and with less capital than they would’ve needed to do so with their own buses and drivers.

 

 

Busbud (Booking)

Busbud is not a bus company, but an online bus aggregator that makes it easy to search, compare and book bus tickets all around the world. The website and app allows users to compare bus tickets from various bus operators for a specific route. Busbud’s business model is commission based, earning a commission for every sale they generate for their partners (bus operators).
 

 

Sharethebus (Crowdsourcing)

Sharethebus created the world’s first ridesharing bus concept by applying crowdsourcing principles to interurban travel.
 

 

There you have it, the most innovative companies and business models in the bus industry. You believe you’ve got a fresh idea that can improve the bus travel industry? Feel free to apply for the 2015 Busbud Scholarship of Travel Innovation and send us your ideas at scholarship@busbud.com!