As Congress considers additional infrastructure spending, Americans are increasingly choosing buses for intercity travel. Since 2008, the number of passenger miles spent on express intercity buses, such as Megabus and Boltbus, has increased by about 2 billion miles. Additionally, the number of trips grew about 22 percent from 2010 to 2015.
During the same decade that we have seen expansive growth in express intercity bus services, Amtrak services have grown more slowly, only increasing passenger miles by less than 1 billion.
Occasionally, growth in bus miles will slow, but this has been short-term. This occurs in part because of falling gas prices. As fuel prices drop, people switch to less fuel-efficient, but more time-efficient modes of transportation, such as driving and flying.
From 2006 to 2012, Amtrak added ten new services. With optimism high, the Obama administration awarded about $12 billion to states to be matched to help support the growth of high speed rail. However, since 2013, the number of passenger miles traveled on Amtrak has decreased. Amtrak, despite slower growth than intercity buses, has seen few cuts in heavily traveled routes that are no longer serviced by either mode of transportation.
This has happened because Amtrak does not have to react to market forces in the same way that do intercity bus companies. Since the 1970s, Amtrak has received over $200 billion in federal government subsidies. Intercity buses are not given this same funding. When market forces of demand and ground forces of gas prices change, they must adapt, and they have.
For Amtrak, growth is dependent on existing railway infrastructure to allow for trains. Railway infrastructure requires a lot of time and money to build and establish.
Rail services are often subject to delays and cancelations due to factors outside their control. Freight derailments can lead to weeks of canceled services because few, if any, alternative routes exist. All of this makes rail companies, such as Amtrak, less adaptable and less able to cater to new demands.
However, intercity bus carriers do not face the same constraints. They are able to experiment with routes that will increase profitability and can more easily adapt to market pressures of demand, giving them an advantage during the past decade. Buses are also able to alter their routes, so if a large accident occurs on one road, another route can be found to get the bus to the same destination.
Intercity buses have been able to increase demand by adding features. Bus carriers, unlike Amtrak, have a greater ability to tailor their amenities to their clientele: free Wi-Fi and bus attendants for business-oriented routes, bottled water for trips to the beach, and family pricing for less expensive routes.
The Northeast Corridor, which is densely populated and runs from Boston to Washington, D.C., supports eight intercity bus operators.
In addition, companies can test out new tech platforms, such as crowdsourced bus services, that can schedule routes and stops based on demand, offering more options and greater flexibility to travelers.
Bus carriers are in a unique position where they can be flexible to market changes to best boost their profits. As the data indicate, this privately funded industry has grown faster in the long term than rail services. Senators and representatives note: No subsidies required.
Emily Top is a research associate at Economics21. Follow her on Twitter @EmilyKTop.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning Ebrief.