Working Paper and Data : Intercity buses in Canada

In the last few months, I have been spending a whole lot of time on intercity buses between Montreal, Sherbrooke and Ottawa since I don’t possess a driver’s licence yet. Every time I had to go to the central bus station, I never had the chance of selecting which bus company I wanted to carry me to where I wanted to go. For example, between Sherbrooke and Montréal, I always have to use Transdev Limocar and there is no chance to choose Megabus, Greyhound or Orléans. Between Ottawa and Montréal, I always have to use Greyhound, I have never been offered to take a Orléans or Megabus.

This got me thinking about my time in England and in the United States. In both countries, I travelled between large urban centers and had the chance to select between a whole score of carriers. Case of point, when I was living in D.C., I deliberated between buying a bus ticket to New York with Greyhound where I would have had free wifi and more legspace at a higher price than a Chinatown-based company-whose-name-I-cannot-remember where I knew I would not be as confortable as with Greyhound.

Why do we have so few choices in Canada (at least in Quebec)? It seems that regulatory schemes in most provinces intends us to have few choices. Indeed, in many provinces a licence to operate a profitable route will be granted by the regulatory authorities to a given carrier in exchange that he provides services on less profitable lines.

A 2002 report by the Canadian Senate noted that this system of cross-subsidization had quite detrimental effects on consumers because it imposed higher prices to the vast majority of Canadians while also shielding bus operators from market pressures to become more efficient and more innovative.

This is why I have collected price for 27 lines in Canada in all provinces by 8 providers (Megabus, Acadian, Orléans, Greyhound, Intercar, Transdev Limocar, Malaspina Bus Lines and the Saskatchewan Transportation Company). I have collected the data online on the websites of these various companies during the month of July according to the scenario of a one-way trip on July 29th. I have taken the lowest price and the highest price available to compare price ranges. All of the tickets are for an adult passenger, no discounts for students, military or aboriginals have been taken into consideration. Moreover, I have elected not to take refundable fares since Greyhound Canada did offer that service while other firms do not. Every website mentions the estimated travel time, so I have divided both the lowest price and the highest by the lowest estimated time. This gave me a price per minute of travel which I could then compare with other countries. I have also collected data for 19 lines in the United Kingdom from 3 different providers and for 26 lines in the United States from 6 different providers. In these two countries, the intercity bus industry has been deregulated (and privatized in the case of the UK) since the eighties. This is why I chose to compare Canada with those two countries.

All the hypothetical transactions were evaluated on July 4th 2011 for the UK and the US and the exchange rate used is the one provided by XE Currency Converter. It is likely that that several companies were not counted since they do not make their prices known online. Below is the result of the data, however I will not publish the entire dataset yet since I intend to make a working paper at the very least and if possible, get it published in a academic journal. So please, be patient until I try and publish the paper.

2 thoughts on “Working Paper and Data : Intercity buses in Canada

  1. You have to take into consideration the density of the population. Surely, more people are riding a bus between New York and Boston than there are between Jonquière and Montreal. When it is easier to fill a bus, then the cost per customer goes down. At first glance, there is a strong correlation between population density and the prices shown in your post. (UK: 255/km², United States 32/km², Canada 3,4/km²)

    How do you intend to isolate the price increase that is induced by the regulation in Canada from the variation of costs related to the concentration of population?

    Interesting topic though, I’m curious to see the results.

  2. Actually, population density might be playing against the United Kingdom. Population density is associated with lower average driving speeds for cars and longer and more frequent gridlocks. Considering the amount of energy needed for a bus to start-and-stop its engines frequently, gasoline must be consumed at a greater pace, hence cancelling the “benefits” of larger customers pools. Roads are also smaller in the United Kingdom than in Canada, which may also contribute to the aforementionned. I cannot tell to which extent this affect costs and prices, but I am not wholly convinced of the density argument.

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