By Ian Simpson
WASHINGTON (Reuters) - Forget the grimy terminals and uncomfortable buses of the past. Discount U.S. carriers are luring a new generation of riders from young tourists to business travelers with amenities such as free Internet and leather seats.
By offering low prices and picking up passengers curbside in hip neighborhoods, discount bus companies have reversed a long decline in ridership and are gaining ground on trains and planes.
The low-cost niche started with companies offering cut-rate fares between the Chinatown sections of New York and Boston. It took off eight years ago when major carriers such as megabus.com, a unit of Britain's Stagecoach Group Plc, arrived, offering online bookings and tickets as a low as $1.
"It's really a whole new mode of transportation. There's been nothing quite like it, and it has been made possible by the Internet," said Joseph Schwieterman, director of the Chaddick Institute for Metropolitan Development at Chicago's Depaul University.
The number of daily curbside departures in the United States has doubled since 2010 to more than 1,000, a Chaddick Institute study found. Intercity bus ridership overall has been on the rise since 2006, after having declined since 1960, according to the National Transportation Safety Board.
The newfound popularity is spreading to business class, with upscale services offering non-stop intercity travel to a variety of areas across the United States.
Portsmouth, New Hampshire's C&J bus company launched a once-a-day service to New York three years ago for business travelers. It now runs twice daily, with more than 2,000 passengers a month, owner Jim Jalbert said.
Megabus.com and its rival BoltBus "have created huge new markets and they've also created a competing mode to passenger rail," he said. "You can move a lot of people in a big manner."
Switching to discount bus travel from planes, trains or private cars saved U.S. consumers an estimated $1.1 billion last year, the Chaddick study found.
The appeal was clear among a group of passengers who boarded a New York-bound discount BestBus on a Washington street last week. A last-minute ticket cost from $30 to $40, well below the price of train and air travel.
"It's considerably less expensive than Amtrak and since I'm not in a rush ... I can take the risk of there being traffic," Jane Dolkart, 66, of Washington, said as she waited to board.
Last year the number of discount intercity bus departures rose 4 percent, outpacing 1.6 percent rises both for airlines and for Amtrak and a 0.6 percent upturn for car driving.
The rise followed geographic expansion for buses from their core on the Boston-to-Washington corridor and Chicago region into California and Nevada, Texas and the South, with Greyhound Express, BoltBus and Yo!, all part of Britain's Firstgroup Plc looking to expand.
The rapid growth has raised concerns about safety, especially after eight crashes in 2011 in which 28 people died.
An NTSB study after the accidents found that bus mishaps overall were infrequent. But it said that based on 2005-11 data,
curbside carriers were still seven times more likely to have fatal accidents than conventional carriers, who generally operate out of fixed terminals.
Oversight of discount buses had lagged because of a lack of inspectors, low requirements for operating licenses, inconsistent enforcement and language barriers with company employees, it said.
The Federal Motor Carrier Safety Administration shut down 110 passenger carriers last year, including the Boston-to-New York discount companies Fung Wah and Lucky Star. Lucky Star has since been reinstated.
To continue their growth, discount carriers must persuade more people that traveling by bus is not only inexpensive but as convenient and comfortable as trains and planes.
Or as Mike Alvich, a vice president at megabus.com, put it: "The challenge for us at megabus.com was to get people to take a bus as a first choice."
(Editing by Scott Malone and Chizu Nomiyama)