Megabus Bankruptcy: Decline of Affordable Intercity Travel Options

Megabus faces decline as bankruptcy looms, reflecting broader struggles in the intercity bus industry.

### The Decline of Megabus: Challenges Facing the Intercity Bus Industry
* 🚌 Megabus, once a **popular and affordable travel option** for college students and young adults, is now facing significant challenges as its parent company, Coach USA, **files for bankruptcy**.
* 💰 Launched in the UK in 2003 and introduced to the US in 2006, Megabus initially attracted customers with its **low fares**, including **$1 tickets**, and amenities like **Wi-Fi and power outlets**, making it a preferred choice over competitors like Greyhound.
* 📉 However, the intercity bus industry began to struggle in the mid-2010s due to **falling gas prices**, **increased competition from FlixBus**, and **safety concerns stemming from high-profile accidents**.
* 📊 After being sold to Variant Equity Advisors in 2019, Coach USA became **burdened with debt**, which was exacerbated by the COVID-19 pandemic that **halted travel** and left the company **unable to meet its financial obligations**.
* 🚍 The bus industry has shrunk significantly since the pandemic, with the number of licensed bus companies dropping from about **3,000 to half that amount**, partly due to a **lack of government support** compared to airlines.
* 🏢 Additionally, operational challenges such as **rising costs**, a **shortage of drivers and mechanics**, and **local resistance to bus terminals** have further complicated the situation.
* ⚖ There are calls for increased public policy advocacy to ensure that buses remain a viable transportation option, especially for **underserved and rural areas**, but the future of **affordable bus travel** remains **uncertain**.
* 🚧 As travel dynamics shift, the iconic image of Megabus with its mascot Sid the Quid may soon become a **relic of the past**, leaving travelers with **fewer and potentially more expensive options**.

Narrator: If you were in college over the last 20 years or so, you might have some memories of Megabus, the big blue double-decker bus with a giant yellow mascot painted on the sides. Maybe you went on a neat little weekend getaway with friends. Other times, you probably got stuck in traffic, or the bus broke down on the trip. For all of its flaws, Megabus was a decent and affordable way to get around for years. But now it's in trouble. The parent company, Coach USA, has filed for bankruptcy. And Megabus is handing over some of its routes to other operators and discounting others altogether. Business Insider's Emily Stewart looked into what's happened to Megabus and whether the double-decker icon can or should survive. These buses are actually pretty important to get people from point A to point B, especially people who maybe can't afford a train ticket or who can't afford a plane ticket.

Narrator: Stagecoach Group, which is based in the UK, first launched Megabus there in 2003. They offered seats for 1 pound, or a quid, which is where the mascot, Sid the Quid, gets his name. They brought Megabus to the US in 2006. Emily: Megabus was kind of hip. It had outlets that worked kind of most of the time, if not all of the time, so you could plug your phone in. It had Wi-Fi that worked kind of none of the time, but, like, you could pretend like it was going to work. You could also buy the tickets online, which was kind of novel, and so Megabus felt like kind of cooler than like a Greyhound. Narrator: And it was cheap. Megabus could lure people in with $1 tickets. Emily: Now to be clear, maybe there was like a seat on the bus that was a dollar, and that wasn't going to be your seat.

Narrator: Millennials loved it. Along with Greyhound, Megabus became one of the two main intercity bus carriers in the US. But in the mid-2010s, the tides started to turn. Gas prices fell in 2015 and 2016, which made other forms of transportation that customers might prefer, like driving and flying, cheaper. And FlixBus, an operator out of Germany, launched in the US in 2018, which meant more competition. While Megabus was ahead with the power outlets and Wi-Fi, everybody else caught up. And some high-profile accidents may have left some with safety concerns, too. Then, in 2019, Stagecoach sold Coach USA to Variant Equity Advisors in a $271.4 million deal. So basically, when this private equity firm comes in and buys Coach USA, they do what a lot of private equity firms do, which is that they load it up with a bunch of debt.

That happens in 2019, and in 2020, the pandemic hits. And the bus industry, like a lot of travel, just completely grinds to a halt. And so if they're not bringing any money in, there's no way to service those debt payments. Narrator: A lot of that debt is still outstanding, and so Coach USA filed for bankruptcy in the middle of 2024. Megabus is sort of a microcosm of what's happening in the intercity bus industry, which has been struggling. Emily: I was trying to take a bus from New York City to Atlantic City over the summer, and I was kind of shocked at how few buses there were. I could still get them, but it wasn't like, at least I felt like it was five years ago, when there were a bunch of options at all times. Narrator: According to one insider, there were about 3,000 licensed bus

and motor coach companies before the pandemic. Now it is about half the size. The industry has had a hard time recovering, in part because it didn't get the government assistance that airlines did during COVID. Policymakers tend to treat it as an afterthought. There are also problems on the operational side, like rising costs for parts and the shortage of both drivers and mechanics. Bus terminals are becoming a problem, too. Some localities are pushing back against them, because they sometimes have an unsavory reputation. I've taken a bus before, and I think, you know, sometimes it is nice to be in a terminal and not just waiting on the side of the road, wondering if this magical bus is going to appear or not. Narrator: Making the issue even worse is that 33 of Greyhound's terminals have been sold to a commercial real estate investor, and they have other plans for the space.

that can make them more money. One thing that hasn't really helped the bus industry is the involvement of finance. They don't really care if the public has a great place to pick up the local bus. Narrator: In other words, the intercity bus industry is facing a lot of headwinds. Of course, if you want to hop on a bus from Boston to New York for the weekend, you still can. It just might not be a Megabus. It'll probably be a Peter Pan or Greyhound or Flix, or something else, but your options might be more limited than they were before, and more expensive. I think it is tough to think about a solution. I did find that there was kind of mention of trying to lobby a little bit more in public policy spaces to try and kind of get across to policymakers, to lawmakers, that buses do matter, whether it be providing more funding so that they can get to rural areas,

or that they can get to underserved areas. You want a bus terminal in your city, and you don't want it to be 20 miles out of town where nobody can get to it. Narrator: Still, travel in America may never be what it once was, and the days of dollar seats and Sid the Quid rolling down the highway could soon be gone for good.

Why Cheap Bus Travel Is Disappearing In America | Business Insider Explains | Business Insider

What you want to know about business. 

Visit our homepage for the top stories of the day: https://www.businessinsider.com 
Business Insider on Facebook: https://www.facebook.com/businessinsider
Business Insider on Instagram: https://www.instagram.com/insiderbusiness
Business Insider on Twitter: https://www.twitter.com/businessinsider
Business Insider on Snapchat: https://www.snapchat.com/discover/Business_Insider/5319643143
Business Insider on TikTok: https://www.tiktok.com/@businessinsider

If you have a permissions or licensing request, please connect with our partners at PARS International who will be able to provide you with an accurate quote for the overall usage rights that you’re interested in. A representative from PARS will contact you shortly after filling out this request form: https://www.parsintl.com/publications/insider/


Business Insider

Megabus, known for its affordable travel and iconic double-decker buses, is now in trouble as its parent company, Coach USA, has filed for bankruptcy.

The company is cutting back on routes and offering discounts in a bid to survive.

Megabus was launched in the UK in 2003 and expanded to the US in 2006, gaining popularity with its cheap $1 tickets and modern amenities.

The Decline of Megabus and the Intercity Bus Industry

Megabus was popular among millennials but faced challenges in the mid-2010s due to falling gas prices and increased competition from FlixBus.

High-profile accidents and a change in ownership led to a heavy debt burden for Coach USA, which ultimately filed for bankruptcy in 2024.

The intercity bus industry has been struggling, with fewer options for travelers compared to previous years.

Challenges Facing the Intercity Bus Industry

The intercity bus industry has shrunk to half its size since the pandemic, struggling to recover without government assistance.

Rising operational costs, driver and mechanic shortages, and pushback against bus terminals are compounding the industry's challenges.

The sale of Greyhound's terminals to a commercial investor is further complicating the situation, leading to limited and more expensive travel options for passengers.

Bus terminals in cities are crucial for accessing underserved areas, with a desire for them to be centrally located.

The traditional affordable travel options may be fading away.

The narrator suggests that the days of budget travel and easy access may be coming to an end.