Bus Deregulation in Germany

In order to protect the railroads, inter-city bus service has been basically illegal in Germany since the 1930s.

NYTimes: “It’s an anachronism,” said Roderick Donker van Heel, general manager of Deutsche Touring, which offers bus service from Frankfurt and other cities to foreign destinations, but is usually not even allowed to drop off passengers within Germany.

The anti-bus law is also a reminder that, despite steady changes over the last decade, barriers to free enterprise remain in Europe. Germany and other countries still shield certain professions and industries from new competitors with thickets of regulation.

“Deutsche Bahn can do whatever it wants,” Mr. Donker van Heel said, referring to the state-owned railroad. “The airlines can do what they want.” But when a bus company wants to offer intercity service, “the answer is no. And we’re in the year 2010.”

A court-case and now a new law, however, mean that buses are to be allowed.

The U.S. also protected its railroads for some forty years by regulating airlines and trucking. There are some efficiency reasons why one might want to protect a network industry, although a straightforward subsidy is preferable to regulation of competitors, but the capture theory seems to fits the facts better, especially for railroads.

We still subsidize railroads in the U.S. and talk about subsidizing high-speed railroads even more, meanwhile bus travel is expanding and modernizing. Randal O’Toole covers some issues:

Intercity buses carry at least 50 percent more passenger miles than Amtrak in Amtrak’s showcase Northeast Corridor. They do so with almost no subsidies and at fares that are about a third of Amtrak’s regular train fares and little more than 10 percent of Amtrak’s high-speed Acela fares. Intercity buses are safe and environmentally friendly, suffering almost 80 percent fewer fatalities per billion passenger miles than Amtrak and using 60 percent less energy per passenger mile than Amtrak.

Today, in fact, I am blogging from a bus. I appreciate the on-board wireless and the fact that on entering the bus I was neither searched, groped nor scanned.

Hat tip: Greg Roscetti.