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BACON: The intercity bus revolution

Fed train follies fail while freedom actually works

While President Obama dreams about spending hundreds of billions of public dollars building a high-speed, intercity rail network, an entrepreneurial revolution in the old-timey bus industry is scoring dramatic gains in market share for intercity travel - without government subsidies.

After decades of losing customers, the intercity bus industry began experiencing an entrepreneurial renaissance in the mid-2000s. And 2011 was the best year yet. According to a study published by DePaul University's Chaddick Institute for Metropolitan Development, intercity bus was the only major long-distance passenger mode to grow appreciably this year. Daily intercity bus operations expanded by 7.1 percent.

The most spectacular growth occurred among curbside operations, including BoltBus and Megabus, which eschew traditional bus stations in favor of curbside pickups. This category expanded operations by 32.1 percent. Compare that to the 5.2 percent growth for Amtrak, 1.8 percent growth for airlines and 1 percent decline for private automobiles.

What's going on? The higher cost of automobile ownership and gasoline is pushing people to consider alternatives to driving. But that's only half the story. The intercity bus industry is highly competitive and driven by innovation. "Arguably, the explosive growth of curbside service has been the most significant change in downtown-oriented long-distance travel in more than a half-century," write the authors of the DePaul study.

Even stodgy old Greyhound, which operates out of traditional bus stations, is getting creative. The company has introduced Greyhound Express, a premium service that provides free Wi-Fi and power outlets at every seat, has upgraded waiting areas for its Express passengers and has entered into a partnership with 7-Eleven stores to sell tickets.

Unlike publicly owned mass-transit companies, which face political pressure to maintain money-losing routes, private intercity buses are free to shut down unprofitable routes and redeploy resources to achieve greater growth potential. Flexibility is the hallmark of the curbside bus operators, which aren't tied down by fixed investment in bus stations. This year, Megabus established new hubs in Pittsburgh and Atlanta, adding service to several new cities in the process. BoltBus set up a new hub in Newark, N.J.

The two giants in the curbside segment face plenty of competition, though. Smaller companies serve other cities and differentiate themselves by price or the quality of amenities they offer, such as more spacious seat configurations.

"The intercity bus is again becoming a force on the intercity transportation scene," states the DePaul study. "Intercity bus operators are benefitting from an increasing level of demographic diversity among its customer base and from the rising interest among travelers in being able to continuously use port-able electronic technology, which is difficult or impossible when flying or driving."

One thing intercity buses can't do is whisk passengers from city to city at twice the speed limit of interstate highways as high-speed rail can. "Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination," President Obama said when outlining his vision for high-speed rail in 2009. "Imagine what a great project that would be to rebuild America."

Imagine the cost of fulfilling Mr. Obama's fantasy. After sinking $10.5 billion into high-speed rail since taking office, the administration proposed earlier this year spending an additional $53 billion over six years to advance the president's vision for a national network. Meanwhile, despite ridership gains, Amtrak continues to lose money. Sinking tens of billions more into inherently unprofitable passenger rail lines will only accelerate the federal government's rush to fiscal collapse, and it will bequeath to the nation an intercity transportation system dependent upon subsidies just to continue operating.

Instead of squandering billions on a fiscally unsustainable transportation solution, the federal government should focus on one of the few things it can do competently: safeguarding public safety. A number of high-visibility crashes involving "Chinatown buses" have cast a pall over the industry. Government can promote intercity bus traffic and take automobiles off the road by assuring the riding public that buses are operated safely.

Meanwhile, states and localities should be asking themselves whether private enterprises could operate local bus services more efficiently and creatively than municipally owned mass-transit companies. Private bus companies can operate free from the costs imposed by municipal unions, federal red tape and political resistance to shutting down money-losing routes. Maybe we should bust up the mass-transit monopolies and see what private bus companies can do.

James A. Bacon is the author of Boomergeddon" and writes at baconsrebellion.com.

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