Megabus, the largest U.S. curbside bus carrier, is trying to get a U.S. regulator to do what its $1 fares on the East Coast haven't managed: to put its top competitor out of business.
Megabus, owned by Stagecoach Group PLC of Scotland, has filed at least three challenges with the U.S. Surface Transportation Board since May 2010 contending that BoltBus, operated jointly by Peter Pan Bus Lines and Greyhound Lines, the largest U.S. 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, CEO of Coach USA, Megabus' U.S. parent, said in an interview. If they want to compete with Megabus on U.S. routes in the Northeast, 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 U.S. transportation. Daily U.S. intercity curbside bus departures, led by Megabus and BoltBus, increased by 32 percent, to 778, from 589, a year ago, according to a DePaul University study.
Competition has led to increased bus ridership and has been good for consumers, Timothy Stokes, a U.S. spokesman for Aberdeen, Scotland-based FirstGroup PLC, Greyhound's parent company, said in an email. "This is purely an attempt by Megabus to minimize competition within the industry," he said.
Scheduled departures for the total bus industry increased by 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 Buffalo-to-New York Megabus fares range from $40 to $48, booked several days in advance, according to its website. BoltBus does not serve Buffalo.
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 anti-competitive practices, though it's rarely done so with buses.
In May 2010, Megabus petitioned the STB, saying that it should not 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.
This past March, Megabus petitioned the board to end BoltBus' service between Newark, N.J., and Washington, D.C., saying that it wasn't authorized by the 1997 agreement. BoltBus set up a hub in Newark last year, with 40 daily buses to Baltimore, Boston, Philadelphia and Washington.
The STB, in an April 20 decision, ruled against Megabus' initial appeal. The emergence of extensive competition on the East Coast suggests that "many other new and expanded companies providing curbside service in these corridors appear to be able to compete successfully," the agency said in its decision.
"The purpose of the antitrust laws is the protection of competition, not competitors," it wrote.
That didn't stop Megabus, backed by Perth, Scotland-based Stagecoach Group PLC, from pressing on. In June, it filed a request for expedited action on its March petition, prompting Timothy Wiseman, a Greyhound attorney, to reply that Megabus had "simply ignored the very existence' of the April decision.
The board has yet to rule on the March petition.