{"id":486,"date":"2015-11-30T20:30:57","date_gmt":"2015-12-01T01:30:57","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/bolt-bus-bolt-for-a-buck\/"},"modified":"2015-11-30T20:36:27","modified_gmt":"2015-12-01T01:36:27","slug":"bolt-bus-disrupting-the-urban-transit-market","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/bolt-bus-disrupting-the-urban-transit-market\/","title":{"rendered":"Bolt Bus \u2013 Disrupting the Urban Transit Market"},"content":{"rendered":"

\"bolt<\/a><\/p>\n

Bolt for a Buck.<\/strong>\u00a0 This simple concept has created value\u2014an estimated $85MM* in annual revenues for Peter Pan and Greyhound who partnered to create BoltBus<\/strong> in 2007\u2014in a formerly stagnant bus transportation industry.1<\/sup><\/p>\n

BoltBus\u2019 business model is simple: to transport customers across major metropolitan cities at a low cost.\u00a0 Yet, through its unique operating model, BoltBus has managed to disrupt the urban transit market, growing the market size for bus-goers and even stealing share from premium formats. \u00a0According to the Chaddick Institute for Metropolitan Development, in 2014, \u201cwhile bus service grew, Amtrak train-miles held constant, and the number of airline flights diminished by 3.5%.\u201d\u00a0 <\/sup>Conversely, \u201cthe number of daily trips [by city-to-city express carriers] was up 3.9% in 2014 vs. 2013, with BoltBus and Megabus accounting for nearly 80% of these operations.\u201d2<\/sup><\/p>\n

The company\u2019s success can be attributed to its distinct value proposition.\u00a0 Offering a marked difference from other providers, BoltBus guarantees passengers a seat on the bus, removing the headache of uncertainty and the frustration of excessive wait times for passengers. \u00a0Given this, the company is still able to maximize revenue and seat utilization via two methods: 1) Non-refundable tickets secure revenue and reduce the threat of \u2018no-shows\u2019 by implementing a \u201cuse it or lose it\u201d policy and 2) Walk-up tickets are sold 10 minutes prior to departure with customers lining up on \u201cstandby\u201d to fill up any open seats. \u00a0This approach serves to maximize seat utilization but also, with prices for walk-up tickets costing ~30% higher than the highest advance purchased fare [and only in cash eliminating credit card fees], it also serves as an additional revenue stream.3<\/sup><\/p>\n

Furthermore, its distinct operating features at each point in the value chain enable BoltBus to create and sustain a competitive advantage:<\/p>\n

\"Bolt<\/a>1. Ticket purchase<\/strong><\/p>\n

BoltBus reduces overhead costs by eliminating traditional ticketing agents.\u00a0 The company primarily sells tickets online, offering customers who prefer more traditional formats the option to purchase tickets over the phone, albeit, for an additional $3 fee, passing on the additional service cost to the consumer.3<\/sup><\/p>\n

Furthermore, dynamic pricing enables the company to maximize revenue based on demand.\u00a0 Though its slogan, \u201cBolt for a Buck,\u201d derives from a minimum of one ticket for each trip being priced at a dollar, BoltBus\u2019 pricing strategy is much more than a marketing gimmick.\u00a0 Dynamic pricing encourages price sensitive passengers to buy early, securing a lower price and confirming minimum utilization for each ride as early as four to six weeks in advance.\u00a0 As the bus reaches breakeven, pricing can steadily increase, up-charging last-minute customers who have a high willingness to pay.<\/p>\n

2. Passenger pick-up<\/strong><\/p>\n

While competitors such as Greyhound incur the expense of maintaining bus terminals in major metro areas, BoltBus eliminates this cost by doing curbside pickups.\u00a0 This practice enables BoltBus to provide additional convenience to its customers, with pick-up locations often located in central and accessible locations.<\/p>\n

3. Bus boarding<\/strong><\/p>\n

Defined processes for boarding based on pre-defined \u201cGroups\u201d (A-C) create an orderly process akin to airline boarding.\u00a0 Whereas traditional competitors use a \u201cfirst come- first serve\u201d policy to seating, BoltBus\u2019 process allows travelers to be more efficient, guaranteeing not only a seat, but also a place in line.\u00a0 However, unlike airlines, BoltBus give priority seating (A) to all loyalty program members, encouraging frequent passengers to join and providing BoltBus even greater access to customer data.<\/p>\n

4. Travel<\/strong><\/p>\n

Despite its low-cost offering, Bolt Bus provides premium amenities such as Wi-Fi access and power plug-ins, all on a new, luxurious fleet of buses.\u00a0 Doing so has allowed it to attract a new, younger segment of consumers while also converting more premium customers.<\/p>\n

BoltBus\u2019 unique operating model creates value in an antiquated industry.\u00a0 Doing so has enabled it to revive bus transportation in cities, delivering passenger satisfaction ratings of over 90% over the past three years (as compared to Greyhound\u2019s 67% satisfaction score).3<\/sup>\u00a0 However, as competitors replicate this model (e.g., MegaBus, Yo! Bus, BestBus, Go Bus, etc.), BoltBus will need to continue to evolve its operating model to sustain its competitive advantage as it expands nationally.4<\/sup><\/p>\n

Note: <\/em><\/p>\n

*Estimated based on 200 daily departures, operating 365 days a year at an average ticket price of $30 and 40 passengers per trip segment.2<\/sup><\/p>\n

Source:<\/em><\/p>\n

    \n
  1. Peter Pan Company History. Retrieved from: http:\/\/peterpanbus.com\/about-peter-pan\/company-history\/<\/a><\/li>\n
  2. Chaddick Institute for Metropolitan Development. \u201cAdding on Amenities, Broadening the Base 2014 Year-in-Review of Intercity Bus Service in the United States.\u201d Retrieved from: http:\/\/las.depaul.edu\/centers-and-institutes\/chaddick-institute-for-metropolitan-development\/research-and-publications\/Documents\/MotoringIntoTheMainstream.pdf<\/a><\/li>\n
  3. Bolt Bus FAQ. Retrieved from: https:\/\/www.boltbus.com\/faqnw.aspx<\/a><\/li>\n
  4. FirstGroup 2015 Annual Report. http:\/\/www.firstgroupplc.com\/~\/media\/Files\/F\/Firstgroup-Plc\/indexed-pdfs\/2015\/firstgroup-annual-report-2015.pdf<\/a><\/li>\n<\/ol>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

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