Megabus.com muscles into Greyhound's turf

Andy Henion | / The Detroit News

Hungry for a cheap ride to Chicago, many Metro Detroiters are turning to an upstart bus company that offers fares as low as $1. Megabus.com, which launched a year ago in April, has steadily built ridership and forced well-established competitors such as Greyhound to drop fares and speed up trips, experts said.

And Detroit -- infamous for lacking effective mass transit -- has become one of low-cost carrier's top three cities.

"Megabus is breaking new ground here in the Midwest," said Joseph Schwieterman, a professor who specializes in public transportation for DePaul University in Chicago. "The $1 fare is resonating with riders."

But the $1 fare is hard to get; only a handful are offered for each trip on a first-come basis. Moreover, reservations are made only online or by telephone, and passengers are picked up and dropped off on street corners because megabus.com has no terminals.

That's fine with Arjaunjubri Johnson, 19, of Detroit, who paid $25 for a roundtrip ticket to come home for the weekend from Columbia College in Chicago. The maximum roundtrip fare is $50 -- the same price Greyhound charges through its recently unveiled "hot seats" promotion.

"It's better than Amtrak or Greyhound," Johnson said. "It's cheaper and it's quicker."

The company, which operates in nine Midwestern cities, had 275,000 passengers in the first 10 months, said megabus.com President Dale Moser. Minneapolis has the most riders, with Detroit and Cleveland battling for second place, said Moser, who wouldn't release more specific ridership statistics.

By comparison, Greyhound had 480,000 passengers last year at its downtown Detroit terminal alone -- down from 510,000 in 2005, said spokeswoman Anna Folmsbee.

Amtrak, on the other hand, has seen its Metro Detroit and Michigan ridership increase each year for the past four.

On April 2, megabus.com will begin serving five new cities, including Ann Arbor, which will add about 20 minutes to the 5 1/2 -hour Detroit-to-Chicago trip. Some critics have said the stop is needed to fill buses that still run half-empty; Moser argued it's a chance to tap into Ann Arbor's massive college crowd.

Greyhound has "responded to the challenge" by eliminating service to many rural stops and speeding up its trips -- which can be bad or good depending on where you live, Schwieterman said.

In the past few years the Dallas-based carrier has eliminated service to Howell, Lincoln Park and Ypsilanti, and in January stopped traveling to most of the Upper Peninsula, said Folmsbee.

Greyhound announced March 1 that it would drop prices in some cities, including Detroit. The move knocks about $2.50 off the trip to St. Louis, as an example, Folmsbee said.

The 93-year-old company also is spending millions to update its bus fleet and terminals -- an initiative launched this month in megabus.com's home turf in the Midwest.

The Detroit terminal, on Howard Street at the Lodge, already has two new plasma TVs and fresh tile, paint and signs, with more improvements planned this spring, Folmsbee said. The companywide upgrades, she said, were planned before megabus.com started operating.

"We're the biggest bus company in the country -- we're like the Kleenex of bus companies," she said.

"We're used to competition and a lot of times we welcome it. "

But Greyhound still has to overcome a long-standing perception of grungy, outdated terminals and poor service, Schwieterman said.

"Megabus doesn't carry the baggage of Greyhound," he said. "For young people it's cool to ride the Megabus. It shows they're sort of urban and hip."