Tightwad Travelers Fuel Wi-Fi Bus Wars

CHICAGO (TheStreet) -- If travelers settled for anything less than double-digit fares and steady wi-fi when choosing their ride of choice during the last two years, they missed the bus.

As air and train travel falls, amenities and aggressive competition are driving a resurgence in intercity bus routes. The American Bus Association, a coach industry representing 1,000 bus companies in North America, says buses account for 770 million passengers a year, with CEO Peter Pantuso saying buses "move more people in two weeks than Amtrak moves all year."

After a near-collapse from 2002 to 2006, DePaul University's Chaddick Institute for Metropolitan Development says bus ridership grew 8.1% from 2006 to 2007 and 9.8% during the same period last year. Chaddick Institute professor Joseph Schwieterman predicts similar growth this year. Competition between Megabus, which imported its concept from the U.K. in 2006, and First Group's rejuvenated Greyhound, which upgraded its amenities and added its tech-heavy BoltBus, are stoking growth.

According to early findings from a Chaddick Study being released next week, about 30% of bus riders are using wireless technology at any time, with nearly two-thirds of all bus passengers using such technology during their trip and fueling wi-fi demand.

"Even Greyhound's starting to feel what I call the 'Megabus Effect,' where there's no stigma and people aren't afraid to say they take the bus anymore," Schwieterman says. "Wi-fi gave people reassurance that they were riding on something for the upper middle class."

The class distinction wasn't so clear in the late 1990s, when the roots for Megabus' and Bolt's business models were laid by curbside bus services running between Chinatown districts in cities along the Northeast corridor. Though those buses lack the spatial and electronic amenities of their corporate kin -- and their safety routinely was called into question -- their $10 fares, online booking options and convenient pickup spots set the standard for the lines that followed. Megabus and Boltbus now offer one-way fares ranging from $1 to $15 (Greyhound's average fare is now $43) and use Chinatown-like volume to cover overhead that's been reduced to a computer program, buses and drivers.