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Freed to Enter Market, Discount Bus Operators Clog Germany's Highways

  • Why it matters

    Why it matters

    The German market for long-distance bus travel is fragmented and prices are extremely low, which is great news for travelers but bad rail and bus operators trying to make a profit.

  • Facts

    Facts

    • Germany’s bus market was deregulated in 2012, leading to a proliferation of bus companies and price dumping.
    • A consequence of the price war and rapid growth is that there are not enough drivers to drive all of the buses on the roads.
    • Market observers expect the market of more than 4,000 operators to eventually cooperate.
  • Audio

    Audio

  • Pdf

Bus ad for Berlin Linien Bus, one of the many express companies now competing with Deutsche Bahn. Source Berlinlinienbus.de

 

Up and down the highways of Germany, there have never before been so many buses: orange ones, yellow ones, green ones, in all, some 200 lines connect the country’s main cities.

Germans have long been enthusiastic users of public transport services to travel around the country. But until deregulation of the bus market in 2012, travelers in Germany who weren’t driving cars tended to go places by train.

When market restrictions were lifted, bus travel suddenly became popular and cheap. Travelers can go by bus from Hamburg to Berlin for €8 ($10) or across the country from Freiburg to Munich for €7.

But the market has become fragmented with an unsustainable number of providers.

In all, 4,500 firms offer intercity services. Many are family businesses which own fewer than a dozen buses. But bigger investors have also discovered people’s new interest in bus travel and 42 firms now have 60 percent of the market.

The larger providers have often calculated their budgets so tightly that they do not own their own fleet but instead pay regional providers to run the service and repaint their buses.

“Competition on the market is so intense that not all of the providers can survive, also because of dumping prices,” said Wolfgang Steinbrück, president of the association of bus companies. Prices should be three times higher than the lowest available to cover providers’ costs and make a small profit, according to Mr. Steinbrück’s calculations.

For now, travelers enjoy the benefit of competition. The low prices are combined with free wireless services, access for the handicapped and plug sockets at each seat. The services are attracting older people, students heading home at the weekend and anyone who has a bit of extra time and is keen to save some money.

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