The Long-Run: 2014 in the German Long-Distance Bus Transport Market

Germany might be ahead in a lot of things, but long-distance bus travel is definitely not one of them. Here Germany is a developing country and many other countries, from Romania to Chile, are far ahead. The German development* began (very slowly) in 2009, with the founding of DeinBus.de, the pioneers in this market. After a somewhat long court battle with Deutsche Bahn which DeinBus won, the government decided to change laws to set the ground rules for the new market, effective from January 1st, 2013. This political backing created a sufficiently reliable regulatory environment for a number of players to enter the market, some small, some with serious backing.

Initially, this let to a very fragmented market. Fragmentation, the enthusiasm of early-adopters, growth of passenger numbers and routes offered, was what arguably defined most of 2013. Growth continued in 2014: 247 lines were offered in early 2014, compared to 109 lines, in early 2013 (BMVI), passenger numbers increased by over 100%, year over year (Fernbusse.de). Just by looking at these numbers, 2014 was more of the same (of what happened in 2013), and for same players in the market, this might essentially be true, but qualitatively, there was some major events that signal upcoming changes. Changes towards consolidation and more difficult, competitive market. In this article, we will take a look at some of the major events of the long-distance bus market in Germany in 2014.

* Technically, this development is actually rather a revival of long-distance bus travel, but the focus of this article should not be ancient history.

Deutsche Bahn starts IRE Berlin – Hamburg

Rail-monopolist Deutsche Bahn has already in the long-distance bus market for a while, but in April, they started a defensive move against the growing competition by busses with the mode of transport they know best. The IRE train, offered on the popular line Berlin to Hamburg, is a cheap train that gets you to the destination in three hours, four times per day. One downside, compared to the bus competition, is that there’s no Wi-Fi available. The line seems to be a success, the extent of cannibalization with the expensive ICE trains is unknown, as well as if this experiment will be expanded to offer other lines soon. In any case, this makes it clear that Deutsche Bahn has several options in competing with the bus companies.

City2City leaving the market

In the middle of September, City2City, number 5 in the market, announced that they will leave the market. Although City2City was operated by the British National Express, a 2 billion dollars-revenue, publicly-listed company, the market conditions were seen as too difficult. This showed that, apparently, it is not lucrative to be in the market as a non-niché player and too difficult, even for a major corporate like National Express, to take on the market leaders MeinFernbus, Flixbus and ADAC Postbus. (Or City2City simply did not want double-down on their bet.)

ADAC “Exit”

Yet another company leaving the market? One of the top 3?!? Not quite. Instead, a joint-venture buy-out by one (Deutsche Post), or exit by the other partner (ADAC), announced in October. “ADAC Postbus” soon will be known as “Postbus” only and owned by (former mail monopolist) Deutsche Post alone. In this case, market conditions were, if at all, only a minor motivation for ADAC leaving the joint-venture. The main reason were internal problems at ADAC, a whole scandal (covered fairly extensively in Dutch at Duitslandnieuws, for example), and subsequent reorientation of the (non-profit) organization. For some time the partnership continues, in a more limited scope than a co-branded JV, but eventually Postbus might be weakened in some aspects (branding, marketing) and strenghtened in others (faster decision-making) through this decision.

DeinBus Insolvency

In the beginning of November, the market pioneer DeinBus had to declare insolvency. From the beginning of the liberalization of the market in 2013, DeinBus was relageted to be a minor player. Unfortunately for DeinBus, the company never attracted major investments and the backing from big corporates. At this point, it looked like the startup that paved the way for the others would just quietly disappear…

DeinBus with a New Investor

… but there is a happy end, or rather “continuation”, to this story (at least for now). DeinBus itself calls it a “Christmas miracle” in a press release from December 23rd, an investor from Southern Germany bought up the company and the original founders Alexander Kuhr and Christian Janisch will stay on board as managers. Who this investor is and how deep his pockets are, is still unclear. The company wants to announce their future plans in January. Maybe DeinBus will be able to show how to succesfully operate a “small” long-distance bus company.

 

Outlook for 2015

Mergers, or further shutdowns of minor market players seem likely for the coming year. The market leaders could also start to feel more pressure, if Deutsche Bahn decides to expand the IRE to other lines, or use special promotional offers to win back customers. For the entire market, a new challenge could come from politics, as the CSU party in the current government is keen on turning all major German roads into toll-roads. This would weaken the competitive position of bus travel, when compared to budget airlines and Deutsche Bahn trains.