In the eighth year of market liberalisation, the long-distance bus market has become quieter. But what is the current market situation? Who likes taking the bus to the nearest city? What does the branch leader Flixbus do? And what new competitors are appearing on the scene?
Friday afternoon at the central bus station in Berlin’s Charlottenburg district: it’s rush hour for the long-distance bus services. Every minute, coaches depart for their destinations in the other German states and neighboring European countries such as Poland, Austria and Denmark. Until 2013, a law from 1934 protected the railways against competition from long-distance bus services on the roads. But since the market was deregulated, they have become an alternative to using the car, railways and airplanes for more and more people. Around 250 providers now operate in Germany, carrying a total of 23 million passengers every year. The overall number of passengers has thus almost trebled since liberalization. They travel an average of 299 kilometers. Last year the sector turned over 1.1 billion euros. The market leader, Flixbus, alone serves 2,500 towns in 30 European countries and in 2017 it carried around 40 million passengers.
It used to be mostly older people who used coach services. And today? The young target group has different needs, above all when it comes to infotainment. In a social study on the long-distance bus market, the IGES institute examined the customer structure more closely. Over half of passengers are below the age of 35. The study identified a particularly large proportion aged 25 to 29, accounting for 22 percent of the total. More than half of the respondents use long-distance bus services only once or twice a year. One third use them three to six times per year. One third of users have their own car. Most often the fare is the criterion that tips the balance in favor of traveling by coach. For comparison, IGES investigated some routes and connections without taking BahnCards, discounts and booking preferences into consideration. It found that the standardized average prices from Flixbus were around 20 Euro (gross). This was about 68 percent below the average price from the Deutsche Bahn of 62.81 euros (gross).
The second criterion is the extras: customers want XL seats, electric sockets for charging smartphones and notebooks, free internet access (WLAN), tablets for reading magazines and watching films, plus drinks and snack machines. The customers attach less importance to punctuality. But how punctual is a provider like Flixbus? The broadcaster SWR found out that every passenger on Flixbus has to expect an average delay of 30 minutes. In the period from December 2018 to November 2019, 80 percent of Flixbus buses arrived late at their destination. For comparison, roughly one in ten long-distance trains is delayed by more than a quarter of an hour. And the actual average journey time with Flixbus is one and a half times to twice as long as the journey made on similar railway routes.
Today’s market has already been through a phase of consolidation. The huge pressure of competition resulted in take-overs, closures and insolvencies, and caused the market to shrink during the period from 2016 until now. The number of providers reached 355 at its peak. Yet during recent years, a de facto monopoly has emerged. The undisputed market leader in Germany, with a market share of 95 percent in terms of the total length of routes offered, is Flixbus. Eurolines, the number 2, follows a long way behind, with a share of only 1.4 percent, whereby Flixbus bought the firm last year although it continues to operate as a separate brand. Third place goes to the IC Bus from Deutsche Bahn on 1.2 percent, and fourth is the Czech provider RegioJet on 0.9 percent. Flixbus was founded in 2013 and neither has its own fleet nor employs its own drivers. Instead, it cooperates with private bus companies that employ their own staff.
Right from the beginning, the founders pursued a path of expansion. The plan was to build a nationwide network connecting major towns and cities first of all, and later on also smaller towns. The concept was a complete success. Today Flixbus operates a fleet that provides more than 400,000 connections every day. Another USP is that Flixbus offers its services electronically, and alongside a modern app it offers various payment methods to suit the different countries where it operates. Flixbus was the first long-distance bus provider to introduce a language assistant. Customers can use a smartphone, Google Assistant or Google Home to call up information about connections, departure times and current prices in German, English and French. Then they can book their tickets directly using voice control.
With predatory ticket prices of less than one euro, the new provider BlaBlaBus is planning to take market share away from the monopolist Flixbus here in Germany. BlaBlaBus belongs to the French company Comuto S.A., which operates Europe’s largest carpooling service BlaBlaCar. It currently serves 31 destinations in Germany, and 300 across Europe. The ride-sharing platform could turn out to be an advantage for the newcomer. BlaBlaBus has a community of 6.5 million registered BlaBlaCar.de customers and wants to advance as a flexible supplement to the group’s existing portfolio. For example, its platform already shows all the bus connections. Flixbus is also forcing seamless mobility and to this end has been cooperating with Uber since 2019. This enables Flixbus users to cover the “first and last mile” to or from the bus terminal simply and conveniently with an Uber driver – a strategic fit with added value for the customers. Flixbus’ hold on the market will be difficult to break. After all, the Munich-based bus giant has swallowed one competitor after another, including MeinFernbus, Postbus and Megabus and, as mentioned above, more recently Eurolines too. However, Flixbus is currently battling against the reduced rate of VAT on railway tickets. Some routes have already been lost. The duel between the number 1 in ridesharing and the number 1 in the long-distance coach business is set to remain exciting.
Flixbus is not only the largest provider, but also one of the most innovative. It was the first company to test the deployment of electric buses in scheduled long-distance services. It started with a route from Paris to Amiens in France served by two buses from the Chinese maker Yutong. This was followed in October 2018 by the premiere of the first fully electric long-distance bus service on German roads between Frankfurt and Mannheim. With a range of around 250 kilometers on one charge taking four hours, the e-bus from the Chinese manufacturer BYD could comfortably manage the distance of roughly 115 kilometers in each direction – in theory, at least. However, technical problems with the lithium-iron phosphate battery repeatedly stopped the bus from operating. Last December Flixbus reacted by taking the electric bus out of service altogether. The company expects to reintroduce the electric service if alternative manufacturers can be found. At present it is planning trials with buses powered by biogas and hydrogen. Such models should come into operation in 2021. Flixbus is planning to be climate-neutral by 2030. And many people don’t know that today coach travel beats the railways in the climate statistics. The ifeu institute in Heidelberg has calculated that a long-distance bus emits 23 grams of CO2 per person kilometer, whereas for the railways the figure is 35 grams.