Canada is home to the largest bus company in the world
FlixBus, a German company that says it’s the world’s largest-reaching bus provider, launched its Canadian operation this week in Toronto.
“It’s a dream bus market for us,” said Pierre Gourdain, managing director of FlixBus North America, about rolling into Toronto with three flashy green coaches to start routes in Ontario.
This may sound like encouraging words to those who were left behind by Greyhound’s withdrawal from Canada in May 2021.
The silver-colored dog, a sleek and elegant specimen of Greyhound, had been limping along for many years.
Experts say the arrival of FlixBus, which operates in 37 countries serving more than 2,500 destinations, is good news for bus customers, but it’s not clear if it will help underserved communities and whether private bus operators can create a national bus network without government support.
“Given the catastrophic situation of the industry and the poor level of service we have in the country, that’s a really complex question,” said Jean-Baptiste Litrico, an associate professor of strategy at the Queen’s University Smith School of Business in Kingston, Ont.
Small business in big markets Ontario
In essence, FlixBus is a tech company that partners with local bus companies who own the coaches and hire the drivers.
It has a ticket app, website, pricing structure, route planning, marketing, and a commission of 25-30% on all sales.
The FlixBus plan is to establish profitable high volume routes between Ottawa and Toronto, Niagara Falls and Toronto and Waterloo and Toronto before developing routes with less demand.
Canada is the next destination for FlixBus, as Canada’s largest provincial opened its intercity bus sector to competition last summer. FlixBus, along with other carriers, now have access to Greyhound’s routes.
Flix also does research on customer demand and demographics and according to Gourdain, several key factors make Ontario and Quebec a “dream bus market”The company.
Gourdain stated that the provinces have their own a “crazy high student population” and a lot of foreign students, who are frequent bus customers.
Gourdain says the company is also looking for potential customers in Toronto’s roughly 30% of households that don’t have cars. Gourdain thinks their ticket app will appeal a large number of Canadians who shop online.
Where can I go next? It’s not small towns
FlixBus will start crossing-border routes to the U.S. this summer from Ontario and B.C. Next up will be obtaining a licence to operate routes through Quebec. There is still regulation that hinders access to the market.
Although the company is not rushing to establish a network across the country or reach underserved communities at large, some smaller destinations might be in the future.
Gourdain said all bus carriers are struggling to recover from the pandemic, and FlixBus is no different.
“We are still at 50 to 70 per cent, in terms of demand, compared to pre-COVID,”He stated.
The American Bus Association tracks the industry in the U.S. as well as Canada. It found that almost 24% of bus carriers went bankrupt in 2020. In 2021, revenues were still 62% below 2019.
Gourdain also said the company would likely develop several American markets, like Nashville, Tenn., and St. Louis, Mo., before looking west to Canada’s Prairie cities.
“First you start the Tier 1 routes, so be a bit patient with us,”Gourdain.
Who is going cross-country
Many regional carriers have tried to extend service in different areas of the country over the years.
Rider Express from Saskatchewan is trying to connect a lot of the country.
“We are trying our best to provide national service,” said company owner Firat Uray.
Rider Express began in 2017 with two vans large enough to transport passengers from Regina to Saskatoon. Now, there are 20 buses and plans to add five more.
Rider Express and Ontario Northland are partners that allow customers to travel all the way to Toronto via Rider Express. You can also take it on routes to the west.
He said that it’s not easy work.
“Some routes we make money, some routes we don’t make money and those two routes cover each other,” said Uray.
“So that’s how we operate.”
Uray said he doesn’t imagine FlixBus will pursue much Prairie business.
“I don’t think they’re going to run those small cities,”He stated.
But they will be competing on the Toronto to Niagara route, which Rider Express is also starting.
Can this new player in Canada’s bus business make a difference? 1:55
Reaching areas that are underserved
FlixBus also does interline with other bus companies, selling their tickets on its platform. However, collaboration is not enough to solve the problem in such a large country of service provisioning for areas that are sparsely populated.
In Canada, said Litrico, “it’s a problem that we see over and over again, in a number of essential public services, not just transportation.”
FlixBus, which is valued at more that $3 billion and Greyhound USA operations bought last year, doesn’t ask for government support. Gourdain said help should go to small operators, to create more jobs.
Uray said the government could help with fuel costs for operators in small centres or “by purchasing small vans for the local bus companies”Rural areas with low services.
Not matter what the approach, Litrico said governments have to address “how to protect and maintain the level of service that’s equitable.”
Source: CBC
