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Megabus pushes regulators to restrict or break up competitor

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Boston Articles
December 28, 2011|By Jeff Plungis
  • Megabus has filed at least three challenges to BoltBus with the US Surface Transportation Board since May 2010.
Megabus has filed at least three challenges to BoltBus with the US Surface… (Jennifer Taylor for the…)

Stagecoach Group PLC’s Megabus, the largest US curbside bus carrier, is trying to get a federal regulator to do what its $1 fares on the East Coast haven’t managed to do: Put its top competitor out of business.

Megabus has filed at least three challenges with the US Surface Transportation Board since May 2010 contending that BoltBus, operated jointly by Peter Pan Bus Lines Inc. and Greyhound Lines Inc., the largest US bus company, should be restricted or broken up.

Greyhound and closely held Peter Pan are exploiting a joint operating arrangement approved by regulators 11 years before they started BoltBus, Dale Moser, chief executive of Coach USA Inc., Megabus’s US parent, said in an interview. If they want to compete with Megabus on Northeast US routes, they should do it separately, he said.

“When the decision to pool was agreed upon, it was totally different times,’’ Moser said. “The whole business environment with intercity buses has changed. It isn’t the 1990s anymore.’’

The legal dispute has heated up as the bus has become the fastest growing mode of US transportation. Daily US intercity curbside bus departures, led by Megabus and BoltBus, increased to 778 from 589 a year ago, or 32 percent, according to a DePaul University study published Dec. 21.

Competition has led to increased bus ridership and has been good for consumers, Timothy Stokes, a spokesman for Aberdeen, Scotland-based FirstGroup PLC, Greyhound’s parent company, said in an e-mail. “This is purely an attempt by Megabus to minimize competition within the industry,’’ he said.

Dennis Watson, a Surface Transportation Board spokesman, said he could not comment on pending matters.

Scheduled departures for the total bus industry increased 7.1 percent to 2,693. That compares with a gain of 1.5 percent for airline seat miles and 1.2 percent for rail seat miles, according to the study.

Megabus and BoltBus offer a limited number of seats for as little as $1 with advanced booking. Typical one-way New York-to-Washington Megabus fares range from $17 to $26, according to its website. BoltBus tickets range from $15 to $27.

Congress deregulated the intercity bus industry in 1980 and eliminated the Interstate Commerce Commission in 1995. The Surface Transportation Board, the commission’s successor, retains some power to break up anticompetitive practices, though it’s rarely done so with buses.

In May 2010, Megabus petitioned the STB, saying it shouldn’t have allowed Greyhound and Peter Pan to start BoltBus two years earlier.

The 1997 agreement allowing Greyhound and Peter Pan to pool operations was approved when overcapacity plagued the intercity bus industry, Megabus said in its petition.

Ending the agreement would increase competition by forcing the BoltBus partners to run separate services, David Coburn, a Megabus lawyer, wrote.

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