Will Megabus kill High Speed Rail?
The short answer is No.
The slightly longer answer is that while new, innovative bus services on some routes in the United States are winning new customers to long distance buses, they will pose little threat once there are true high speed railway services to compete with. They will probably be price competitive, but speed and service quality of the kind now enjoyed in France, Germany, Japan – and even across the English Channel will secure a much larger chunk of what is now airline travel.
I was a bit taken aback by the tone of the Economist article until I realised that it was not a newspaper article in the Economist’s usual style but a blog post where “our correspondents inform and entertain business travellers with news, views and reviews that help them make the most of life on the road” . So not much analysis or data. Indeed there is not a great deal more in the Business Week article that inspired the blog post.
What is significant is the history of MegaBus and why they are so successful. “Megabus and Coach USA are owned by the British company Stagecoach Group, and they have fundamentally changed the way Americans—especially the young—travel.”
Much of the recent success of the curbside business derives from its nimbleness. … the bus simply uses existing roads, requiring no policy debates, government funding, or land management studies. It needs only a curb and a sign. Bus companies are also able to gauge demand quickly, gather rider input online, then alter pickup locations or routes just by posting changes to their websites. … numerous requests on transit blogs for new service from Chicago to Memphis … A couple of weeks later he has the buses up and running.
While Business Week compares that the uphill struggle that Obama is having trying to get his high speed rail legislation through Congress, I do not agree that this poses much of a threat to high speed rail – though it does make for snappy copy. And the advantages of high speed rail have been discussed on this blog often enough .
So the thing that I really want to comment on is why we don’t see services like Bolt Bus and Megabus here. And the answer is the Passenger Transport Board. This really is a bit of an anachronism and it surprises me a little that it has survived the long run of the BC Liberals – especially with archconservative Kevin Falcon as Minister of Transport and of deregulation during that time. The PTB is the successor to the Motor Carrier Commission who I have also looked at a while ago. Then I was on about taxis but so far as I can see I have not said much about the inter city bus business.
No-one can operate an intercity bus in BC without a licence from the PTB, and they have to determine the fares and the schedules. In fact the process is lengthy and clumsy leading to complaints but no changes. And the key to the results the process produces is in a section of the Passenger Transport Act
28 (1) The board may approve an application forwarded to it under section 26 (1) if the board considers that
(a) there is a public need for the service the applicant proposes to provide under any special authorization,
(b) the applicant is a fit and proper person to provide that service and is capable of providing that service, and
(c) the application, if granted, would promote sound economic conditions in the passenger transportation business in British Columbia.
I have underlined what I see as the key phrase. What that means is the PTB continues the philosophy of the MCC – its purpose is to protect the established operators. There is no taxpayer subsidy for long distance buses as there is with transit. But there are equivalent challenges: basically the hope is that companies will cross subsidize low ridership routes to remote communities with the profits from better patronised services. Of course, those are the ones that attract other operators, who if allowed to “cream” the best business, will lower the profitability of the established operators and lead to cuts in service on the low profit routes.
Actually it does not seem to be working like this either, since there is no way the Board can compel an operator to continue to provide an unprofitable service as the Island case I cited above shows.
So given that we have a very poor level of intercity bus service in BC and many communities that would like better service, why has this regulator survived? I think apart from inertia, there must also be an understanding of the political power of those who currently hold licences. This is most obvious in the taxi business. Presumably, no-one important enough has ever wanted to get into our intercity bus market. It is simply not big enough to attract Stagecoach and the like. There have been innovators – the specialized services aimed at skiers to Whistler and surfers to Tofino testify to that. But we have yet to see anything significant to develop elsewhere. Yet I would bet that the same conditions that make for a good market in the US – high gas prices, rising air fares, slow lines at airport security checks – apply here.
The key to MegaBus success has been its ability to adapt fares and schedules to demand. That is simply not possible here under PTB rules. If you believe the rhetoric of the market driven BC Liberals, then getting rid of the regulations – at least as far as services and prices are concerned (clearly safety must remain a paramount concern) would see all kinds of people who understand their local market getting into the intercity transportation business. And to the extent that cuts into the current need for many people to continue to own a car in case they need to make such a trip, that would actually be good for the environment. A well loaded bus is a pretty good way of reducing emissions per passenger kilometre travelled.
There has actually been a steady increase in competition on some important routes like Vancouver – Victoria. The PCL bus still is first on, first off the ferry, but more people now use transit at each end – and walk on and off the ferry. The Quick shuttle bus to Seattle now offers wifi – and, as the CBC recently noted, there are still lower costs flying from SeaTac than YVR. The Amtrak train service is also often a bus – you have to read that schedule carefully – and even when it is a train, it is very slow. We have to hope that the proposal for high speed rail on this route survives better than the one in Florida.
Meanwhile, I would like to suggest that if we must keep regulation in place for intercity bus services, we do so in the public interest and not solely in the interests of the licensees.