A giant German bus company hits the highway in Canada

FlixBus, a German company that claims to be the world’s largest bus supplier, launched its Canadian operation this week in Toronto.

“This is a dream bus market for us,” said Pierre Gourdain, general manager of FlixBus North America, of arriving in Toronto with three bright green coaches to begin routes in Ontario.

These may sound like encouraging words to bus riders and transportation advocates who felt left behind when Greyhound pulled out of Canada in May 2021.

The sleek silver dog had been limping for years, saying many of the roads he had operating licenses for were unsustainable before the pandemic destroyed the market left behind by Greyhound to the bone.

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 unclear whether it will help underserved communities and whether operators private bus operators can create a national bus network without government support.

“Given the dire state of the industry and the low level of service we have in the country, it’s a really complex question,” said Jean-Baptiste Litrico, associate professor of strategy at the Smith School of Business. from Queen’s University in Kingston, Ontario. .

Start small in the big Ontario market

FlixBus is essentially a technology company that partners with local bus companies who own the coaches and hire the drivers.

It provides ticketing app and website, pricing structure, route planning and marketing, charging 25-30% commission on sales.

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.

The company is moving into Canada after the country’s largest province opened its intercity bus industry to competition last summer. Deregulation in Ontario gives FlixBus and other carriers access to routes that Greyhound couldn’t take when it was here.

Pierre Gourdain, general manager of FlixBus North America, says Canada is a “dream” market for the company. Here, he stands in front of passengers boarding the company’s first bus in Toronto. (James Dunne/CBC)

Flix also researches customer demand and demographics and, according to Gourdain, several key factors make Ontario and Quebec a “dream bus market” for the company.

Gourdain said the provinces both have a “crazy student population” and lots of foreign students, who are frequent bus customers.

The company also sees potential customers in the roughly 30% of Toronto households that don’t own a car, and Gourdain believes its ticketing app will appeal to the large number of Canadians shopping online.

What is the next step ? No small towns

This summer, FlixBus plans to launch cross-border routes to the United States from Ontario and British Columbia. The next priority will be to license routes in Quebec, where regulations remain a barrier to market access.

The company isn’t rushing to build a nationwide network or reach underserved communities, though some smaller destinations may come later.

Gourdain said all bus carriers are struggling to recover from the pandemic, and FlixBus is no different.

“We’re still 50-70%, demand-wise, from pre-COVID,” he said.

According to the American Bus Association, which tracks the industry in the United States and Canada, nearly 24% of bus carriers went bankrupt in 2020 and 2021, revenues were still 62% below 2019 levels.

Gourdain also said the company will likely expand into several U.S. markets, like Nashville, Tennessee, and St. Louis, Missouri, before turning to cities on the Canadian Prairies.

“First you start the Tier 1 routes, so be a little patient with us,” Gourdain said.

Who does cross country?

Several regional carriers have maintained and even attempted to expand their service over the past few years in different parts of the country.

Rider Express, based in Saskatchewan, tries to cover a large part of the country.

“We are doing our best to provide nationwide service,” said company owner Firat Uray.

After starting with two large vans for a route from Regina to Saskatoon in 2017, Rider Express has grown to 20 buses, with plans to add five more as soon as possible.

Saskatchewan-based Rider Express is trying to provide national service, says company owner Firat Uray. Its customers can travel from Vancouver to Toronto. (James Dunne/CBC)

Using Rider Express and its partner Ontario Northland, customers can travel from Vancouver to Toronto. It also has a number of routes in the western provinces.

It’s not an easy business, he says.

“Some roads make us money, some roads we don’t make money and those two roads overlap,” Uray said. “So that’s how we work.”

Uray said he doesn’t imagine FlixBus will pursue much business on the Prairies. “I don’t think they’re going to run these small towns,” he said.

However, they will be rivals on the Toronto-Niagara route, which Rider Express is also starting.

The German Flix Bus hits the highway in Canada

Can this new player in the Canadian bus industry help the industry improve? 1:55

Reach underserved areas

FlixBus also interlines with other bus companies, selling their tickets on its platform. But collaboration alone will not solve the problem of serving the sparsely populated areas of such a large country.

In Canada, Litrico said, “this is a problem we see again and again, in a number of essential public services, not just transportation.”

Jean-Baptiste Litrico, associate professor of strategy at the Smith School of Business at Queen’s University in Kingston, Ont., says Canada needs to find a way to provide an equitable level of intercity bus travel. (submitted by Jean-Baptiste Litrico)

With FlixBus being valued at over $3 billionand having purchased Greyhound’s US operations last year, he does not ask for government support. Gourdain said aid should go to small operators, to create more jobs.

Uray said the government could help defray fuel costs for operators in smaller centers or “by buying small vans for local bus companies” in underserved rural areas.

Whatever the approach, Litrico said governments need to ask themselves “how to protect and maintain a fair level of service”.