On the Bacon’s Rebellion blog, James Bacon explains the “Megabus Disruption” in an excellent post about how the market-based model of Megabus has revolutionized and revitalized inter-city bus transportation in the US, without a single dollar of
government taxpayer subsidies, here’s an excerpt:
In 2006 the Megabus inter-city bus line opened its Chicago hub serving a handful of Midwestern cities. Today the company has 300 buses operating in 100 cities across the United States and Canada. Not only does the bus line now serve millions of riders annually, the so-called “Megabus effect” has inspired numerous imitators to pile into the market for inter-city bus service. After 35 years of decline, inter-city bus service has rebounded.
Megabus can charge insanely low rates — e.g. only $7 to downtown Washington, D.C. from downtown Richmond — and yet receives no federal or state subsidies.
The Megabus business model has stripped out many of the costs associated with traditional inter-city bus carriers. Most notably, it has no terminals. It picks up customers curbside at pre-determined, city-center locations, and it books 98% of its customers online. (A few buy walk-up tickets.) Thanks to a double-decker configuration, the company also packs more customers onto a bus without sacrificing comfort. Wi-Fi and electrical outlets allow passengers to use their laptops and tablets during the trip.
Without a lot of fixed investment in terminals to tie it down, the company is extraordinarily flexible. It moves into new markets quickly — and leaves just as quickly. If business materializes — typically by word of mouth — the company stays. If it doesn’t, it packs up and leaves. Needless to say, bus travel is more energy efficient and environmentally benign than riding in automobiles or airplanes., especially when the double-decker buses are traveling fully loaded.
Bacon’s bottom line: No state or federal policy wonk foretold the revitalization of inter-city bus travel. We don’t need more government subsidies and industrial policy to solve our transportation problems — we need more innovation, more disruptive business models, more out-of-left-field thinking in a free-market economy.
MP: Maybe we can apply that thinking and business model to health care?