Passenger Buses FlixBus Drives Megabus Out of Continent

Germany’s long-distance bus service FlixBus, partially owned by U.S. private equity firm General Atlantic, acquires Scotland-based Megabus’ retail business in continental Europe, underlining the bus company's international expansion.
Flixbus passengers. Soon to be mega?

Megabus, the aggressive Scotland-based intercity bus company, has given up on continental Europe. Germany’s largest long-distance bus service, FlixBus, is taking over Megabus’ retail business on the mainland. The integration is planned to be completed in July, FlixBus announced Thursday. The purchase price of Megabus’ European retail operations wasn’t disclosed.

Megabus is part of the Scotland-based Stagecoach Group, a leading international public transport company active primarily in Britain and North America and listed on the London Stock Exchange. The group is currently valued at the equivalent of  €1.5 billion ($1.67 billion). Stagecoach operates both bus and rail lines.

Until now, Megabus had routes in several European countries including Germany, Italy and France. The company hadn’t entered the German market until about a year ago and made a splash primarily by offering trips for €1. In contrast to other long-distance bus services, Megabus owns its buses. They provide about 20 percent more seats than those of competitors.

According to the latest forecasts by the Iges marketing research institute, 25 million long-distance bus passengers are expected this year. Last year, the figure was 20 million.

The Scottish company said in a separate statement it will continue to operate a number of European intercity bus services as a contractor to FlixBus, which is Germany’s market leader. Thanks to the takeover, FlixBus will increase the number of rides between London and Continental Europe to six.

FlixBus, which had merged with German low-cost bus service MeinFernBus last year, has a tight-lipped policy about the release of information. For example, FlixBus didn’t mention until this week that Torben Greve and Panya Putsathit, the founders of MeinFernBus, had stepped-down from day-to-day management at the beginning of 2016. That’s evidence the so-called fusion of the two start-ups at the beginning of 2015 was actually a takeover of MeinFernBus by FlixBus.

FlixBus, founded in 2011, has a market share in Germany of about 70 percent, placing it far ahead of the competition: Postbus and the two Deutsche Bahn brands, IC Bus and Berlin Linien Bus.

According to the latest forecasts by the Iges marketing research institute, 25 million long-distance bus passengers are expected this year. Last year, the figure was 20 million. Germany’s long-distance bus market was deregulated in 2012.

A group of financial investors is behind FlixBus, among them the U.S.-based capital-providing equity firm, General Atlantic. For about two years, FlixBus has been attempting to expand into other European countries after Germany, especially since the long-distance bus market has just been deregulated in France.

FlixBus doesn’t operate any buses of its own but rather is a booking and marketing platform. The routes are usually driven under contract by small and medium-sized bus companies. And now by the Scottish company Megabus, as well.

 

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Dieter Fockenbrock is Handelsblatt's chief correspondent for the companies and markets desk, focusing on corporate governance, opinion and rail transport. To contact the author: [email protected]