Interesting Megabus Observation

[Joel N. Weber II]

But I did know that Megabus was essentially a loss-leader for Coach America. Megabus itself doesn't have to turn a profit--Coach America can afford to take the loss, on the hope that it will pay off big in the long run after Megabus (run super-cheap) drives its competition (Chinatown, primarily) out of business (at which point they can raise the fares on Megabus). All the competing Chinatown bus lines in the east went through a similar price-war several years ago ($5 PHL-NYC), and the couple that emerged victorious raised their prices 100% ($12-15 PHL-NYC) or more after that. Now Megabus is trying to drive Chinatown out of business, and five years from now someone will come along and try to drive Megabus out of business....

There are enough different Chicatown bus companies that I am skeptical that all of them can be driven out of business by something like this. And if only some of them go out of business, that may not really help Coach America at all.

 

[sechs]

Keeping in mind that these Chinatown buses exist primarily to serve the market of Asians going between these primarily Asian communities, I doubt that they will go away. These companies cater to them, and I doubt that they'd ride another service, even if it were superior in most other ways.