Megabus presses its case against BoltBus

Stagecoach Group P.L.C.'s Megabus, the largest curbside bus carrier in the United States, is trying to get a federal regulator to do what its $1 fares on the East Coast haven't managed: Put its top competitor out of business.

Megabus 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 Inc. and Greyhound Lines Inc., 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, chief executive officer of Coach USA Inc., Megabus' U.S. parent, said in an interview.

If they want to compete with Megabus on Northeast U.S. routes, they should do it separately, he said. "When the decision to pool was agreed upon, it was totally different times," he said. "The whole business environment with intercity buses has changed. It isn't the 1990s anymore."

The legal dispute has heated up as buses have become the fastest-growing mode of transportation nationwide. Daily U.S. intercity curbside bus departures, led by Megabus and BoltBus, increased to 778 from 589 a year ago, a rise of 32 percent, according to a DePaul University study published Dec. 21.

Scheduled departures for the total bus industry increased 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, the study said.

Competition has led to increased bus ridership and has been good for consumers, Timothy Stokes, a U.S. spokesman for Aberdeen, Scotland-based FirstGroup P.L.C., Greyhound's parent company, said in an e-mail.

"This is purely an attempt by Megabus to minimize competition within the industry," Stokes said.

Dennis Watson, a Surface Transportation Board spokesman, said he could not comment on pending matters.

Megabus and BoltBus offer a limited number of seats for as little as $1 with advanced booking. Typical one-way New York-to-Washington Megabus fares range from $17 to $26, according to its website. BoltBus tickets range from $15 to $27.

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 anticompetitive practices, though it has rarely done so with buses.

In May 2010, Megabus petitioned the board, saying 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 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.

Megabus is trying to "maneuver the board into eliminating one of the company's main rivals on Northeast Corridor bus routes," Daniel Barney, a lawyer for Greyhound, wrote in a rebuttal, calling the challenge "an astonishing misuse of the regulatory process."

Greyhound's decision to go against Megabus on routes in the Midwest with its Greyhound Express unit proved the company can compete without a pooling agreement, Megabus wrote to the board in December.

In March, Megabus petitioned the board to end BoltBus' service between Newark, N.J., and Washington, saying 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.

In April, the board ruled against Megabus' initial appeal. The emergence of extensive competition on the East Coast suggests "many other new and expanded companies providing curbside service in these corridors appear to be able to compete successfully," it said. "The purpose of the antitrust laws is the protection of competition, not competitors."

The board has yet to rule on the March petition.