German discount bus firm FlixBus is making a move to expand to the United States. It will start operations in 2018 from a base in Los Angeles.
On November 8, FlixBus told CNBC that it had sent a team to LA to start setting up a base for its U.S. business. It’s not yet clear when and on which routes it plans to start its service.
“There is a significant shift in the American transport market at the moment. Public transportation and sustainable travel is becoming more important,” FlixBus Founder and Manager Andre Schwaemmlein said in a statement.
Taking on giants
The company is taking on some giants, including Greyhound, Megabus, and Amtrak, not to mention airlines and Americans’ penchant for using their own personal vehicles to get where they need to go.
Greyhound is far and away the oldest bus service in America, having been founded in 1914. The bus line transports around 18 million passengers a year.
Megabus launched in the U.S. in 2006 and offers city-to-city service to more than 100 different cities and university campuses. The most recent ridership figure I can find is from 2015, and in that year the company had approximately 40 million riders.
Amtrak reports that the train system’s ridership was 31.3 million passengers in the 2016 fiscal year, an increase from 30.9 million in FY 2015.
Can FlixBus compete with these established companies, along with other smaller low-price carriers like Boltbus? Most likely. The company is already at its fighting weight, so to speak, after it survived a fierce price war in its native Germany and boosted its market share in that country to more than 90 percent.
The FlixBus difference
FlixBus is unique among bus services in that it doesn’t own any of the buses it operates. It works with local and regional partners who paint their buses with the company’s livery. While the local carriers do the actual transporting, FlixBus focuses on network and capacity planning, quality management, and sales and marketing.
The company has also earned investors’ confidence. In 2016, private equity firm General Atlantic, which had originally invested in the company in 2014, increased its investment—although the amount of that increase was undisclosed. Tech investment firm Silver Lake also funded the company.
So, it looks like we’ll soon be seeing a fleet of bright-green buses on American highways. It remains to be seen how successful FlixBus will be in the U.S.
Photo: A FlixBus coach on the road in Dusseldorf, Germany. Credit: Ewais / Shutterstock.com