Europe's Intercity Bus Juggernaut Is Rolling Into the U.S. - City Lab

The Flixbus I took from Berlin to Hamburg last month showed up about fifteen minutes late. My seat didn’t recline. The wifi was spotty. The bathroom, reasonably clean. In other words, at 18 euros, the three-hour ride was just fine—a step up from what intercity buses have historically offered, but nothing revolutionary.

And yet Flixbus is the hottest thing in Europe’s long-haul bus business: It boasts 200,000 cheap, daily connections to more than 1,200 destinations in 26 countries, carrying 30 million passengers in 2016. Flixbus created this network in just five years, a growth that has little to do with the quality of the rides themselves.

It’s the business model: As Uber does not own its on-demand cars, Flixbus does not own its buses. Instead, they are operated by other bus companies Flixbus has franchised or absorbed—a Borg-like strategy has allowed this Munich-based start-up to utterly dominate its home market, with nearly 90 percent of the German long-haul bus business. It’s approaching monopoly status on many of the major routes and corridors where it runs.

Now Flixbus has its gaze set on the United States. Last week, it announced plans to set up a base in Los Angeles in the coming year, its first move outside of Europe. Stateside, the company wants to change the perception of long-haul coaches for all.

“Five years ago in Europe, going [on the bus] was something for low-income groups—not a choice you made if you didn’t have to,” said André Schwämmlein, the company’s founder and CEO. “What we achieved was that buses became cool. I see similarities in the U.S.”

The American intercity bus sector is primed for a Flixbus-style disruption. From the 1980s up until fairly recently, the dominant players, Greyhound (which operated jointly with Peter Pan until this summer) and Stagecoach, were caught in a vicious cycle of fewer passengers, shrinking routes, and ever-worsening service quality. That trajectory began to turn around in 2006: with gas prices peaking, and more under-regulated “Chinatown” buses taking off from city curbs, the two operators rolled out their own discount express coaches along major commuter corridors. That year, Stagecoach introduced its first Megabus in Chicago, with fares famously as low as $1; in 2008, Greyhound introduced super-cheap BoltBuses between New York and Washington, D.C.

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