Revitalising the Transportation Market in North America

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REVITALISING THE TRANSPORTATION MARKET IN NORTH AMERICA

January 2015 Contents 2 At a glance 3 Stagecoach Group in North America 3 Safer, greener and smarter travel 3 Motorcoach travel in North America 4 Refocusing the business 4 Revitalising inter-city bus travel 6 megabus.com: making connections across North America 7 Businesses factfiles

1 Stagecoach Group At a glance

Our business in North America $ Buses and Annual Turnover Employees coaches mileage

United States $601m 4,370 2,140 125.4m Canada $85m 500 290 20.6m Total $686m 4,870 2,430 146m

Refocusing the business

Revenue Revenue by sector by sector 2005-2006 2013-2014

Charter/tour/casino 42% Scheduled services/transit 35% Scheduled services/transit 39% megabus.com 26% Contracts 12% Charter/tour/casino 24% School bus 7% Contracts 14% megabus.com <1% School bus 1%

Motorcoach market in United States and Canada

Passenger Passenger Carriers Vehicles Employees journeys miles

United States 3,623 35,354 – – – Canada 331 4,253 – – – Total 3,954 39,607 132,900 637.4m 75.7b

2 Overview

Stagecoach Group in North America Training is at the heart of our approach. Our driving team is one of the best trained in the industry. We have a dedicated Stagecoach Group is one of the world’s largest bus, coach, centralised driver training school in Elizabeth, New Jersey, and tram and rail groups, with major operations in the United new drivers undergo a minimum of 150 hours of classroom Kingdom, mainland Europe and North America. and behind-the-wheel training before they start in service. We have had a major presence in North America for around Even those with an existing commercial driver’s license are 15 years, providing critical local and inter-city transport required to complete more than 90 hours of theory and services for communities throughout the US and Canada. practical training. Our business owns more than 25 bus carriers in North All drivers passing through the training school undergo the America that operate scheduled bus routes, motorcoach same training regardless of the vehicle they will ultimately tours, charters, and/or city sightseeing tours. drive and we use state-of-the-art in-vehicle technology These local carriers are each independently managed and across our fleet. Even after drivers have qualified, we have have a deep knowledge of their communities and customers dedicated retraining programmes to ensure our high built up over many decades, with some having been standards are maintained. operating for more than 75 years. Across our operations, we are promoting the environmental Our three key brands – Coach USA, Coach Canada and advantages of public transportation and aiming to make megabus.com – collectively operate across more than our business more sustainable. We have reduced the carbon intensity of our business (CO compared with turnover) by 40 states in the US and two provinces in Canada. 2 37% in the United States and by 26% in Canada over the past We are one of the largest transportation operators in four years. North America, operating more than 2,400 buses and coaches and employing close to 5,000 people. This has been achieved through programmes focused on improving energy efficiency at our facilities; reducing carbon megabus.com – our express bus service – provides safe, emissions from our fleet and helping our customers achieve affordable and environmentally friendly intercity travel, greener transportation services. Our megabus.com inter-city connecting around 130 cities across North America. bus service has been recognised as the greenest operator in the bus industry by the United Motorcoach Association. Safer, greener and smarter travel Safety is our absolute No.1 priority. We have invested Motorcoach travel in North America millions of dollars in new state-of-the-art motorcoaches, The motorcoach market in North America is highly fragmented. which include seat belts for all passengers, automatic traction There are more than 3,600 motorcoach carriers in the United control, electronic stability control, lane-changing warning States operating 35,000 vehicles. In Canada, more than 300 devices for buses, and GPS systems. Our team of experts can carriers run more than 4,000 motorcoaches. monitor safety critical features from our 24/7 control facility. The industry in North America employs around 133,000 Each of our operating companies holds the U.S. Department people and is a significant sector of the economy in its own of Transportation’s highest safety rating and each has right. In addition, the motorcoach industry supports supply stringent driver training and preventative maintenance chain jobs, helps connect people with work, education, programmes to ensure full operational and legal compliance. healthcare and leisure, as well as bringing vital tourism Our employees are subject to random drug and alcohol income to regions across North America. testing consistent with federal requirements as well as Passengers made 637 million trips by motorcoach in 2012, periodic safety refresher classes. We have stricter driver an increase of more than 10 million journeys on the previous hours of service rules than those required by federal year. Motorcoaches are used by a mix of people, with regulation and have also invested in a hi-tech driver students and senior citizens each accounting for around safety alert system known as Nap Zapper. 25% of customers.

3 Stagecoach Group Refocusing the business Revitalising inter-city bus travel Stagecoach Group’s initial significant entry into the public Inter-city bus use in North America has been transformed transport market in North America was with the £1.2 billion in recent years. Decades of decline have been replaced by acquisition of Coach USA in 1999. The business was involved consistent annual growth. The catalyst for this transformation in multiple market sectors, with a significant proportion in public transportation has been Stagecoach Group’s of the operations involving leisure-based tour and charter megabus.com travel brand. It has literally changed the services, as well as a major taxi business, contract operations way people travel – from booking to departure to on and school bus services. The business also had a wide board to arrival. geographic base, with diverse operations across most states across the United States. Trends in inter-city bus use The North America business was restructured in 2003 with a number of divestments which reduced the size of the Percentage change in annual passenger volumes business and its market segments. This allowed the business to focus more closely on the Group’s key strengths in running 9.8% point to point commuter and inter-city services, with a core 10% presence in the North-East and Mid-West of the United 6.9% 7.1% States. Millions of customers use our commuter coach 6.0% services, which include those operating from New York State 5.1% and the State of New Jersey to and from New York City. 5% Many routes serve park and ride locations. 1960 - 1980 - 2002 - In 2006, we brought our inter-city express brand megabus.com 1980 2002 2006 0% 2006 2008 2009 2010 2011 to North America. The acquisition of a number of former -2007 -1.4% Coach America operations in 2012 provided a base to further -1.8% grow the brand and expand to the West Coast and southern regions of the United States. At the same time, we continue -5% to undertake contract work on behalf of public/private sector clients, including city and state transit authorities, and shuttles -8.0% for company employees and college/university students. -10%

Source: De Paul University’s Chaddick Institute for Metropolitan Development, 2012.

4 We launched the brand in North America in 2006 after huge success in the UK in establishing a new market for Average fare by transport mode* budget, high quality inter-city coach travel. Booking is via an easy-to-use website, with flexible yield managed fares from just $1. Prices vary according to time of booking and $160 $145.23 travel and our product uses higher capacity vehicles than $140 traditional coaches to keep costs per passenger and fares low. $120 Detailed research by De Paul University’s Chaddick Institute $100 $80 for Metropolitan Development in Chicago has identified the $64.19 “megabus effect”, highlighting how the brand has kick- $60 $49.44 started a new era and growing market for bus travel. It has $40 $30.53 grown the overall market for inter-city bus travel, resulting $20 in lower travel costs for consumers, the emergence of new $0 low-cost bus operators, hundreds of new jobs, as well as Intercity Bus Intercity Train boosting tourism and the wider economy. Driving Airline City to city bus transportation is the fastest-growing and most affordable transportation mode, with the number *Based on analysis of 54 city to city routes which included representation of operations nearly doubling between 2010 and 2013. from each of the 50 largest metropolitan areas on the US mainland. Consumers have benefitted from this innovation, with lower Source: De Paul University’s Chaddick Institute for prices and more customer-focused services. An independent Metropolitan Development, 2014. De Paul University study in 2014 found that city to city bus services cumulatively saves American consumers $1.1 billion a year compared to travelling by other modes, including rail and airlines. The research also found that, in all regions of Total daily discount city-to-city bus operations the United States, motorcoach travel is substantially less expensive than single-occupant driving, even for motorists who consider only the cost of fuel and tolls and ignore 1200 1,014 depreciation on the value of their car. 975 1000 There has also been a significant growth in daily low-cost 800 748 inter-city bus services in recent years, nearly doubling from 589 around 590 a day in 2010 to more than 1,000 in 2013. 600

400

200

0 2010 2011 2012 2013

Source: De Paul University’s Chaddick Institute for Metropolitan Development, 2014.

5 Stagecoach Group MN M4A WI M4 MI M1A M4-VG Madison Milwaukee M4A Grand Rapids East Lansing M1A

M4A M1A

VG M1-M1A-M3-M4-M4A M1-M46 Ann Arbor M4 M5-M6A-M6B-M7-M7A DETROIT M1-M1A-M46 M8-M9-VG

M1A M1 CHICAGO M3 IA M8 M3-M46 NETWORK MAP : UPDATED MAY 2014 M8 Iowa City M8 Toledo M3 CLEVELAND M8 M5 M3-M46

Des Moines M8 M3 M46 NE M7 OMAHA M8

PACIFIC TIME (-3) M9 M6A M6B PITTSBURGH megabus.com: making connectionsIL OH M28-M29-M36-M46 M6B CENTRAL TIME (-1) EASTERN TIME (0) Columbus L3-M6B

M13 Reno INDIANAPOLIS M6A M36 Morgantown Sparks M13 M6A-M6B-M9 KANSAS CITY M5 across North America M5 M9 CAN Kirkland Cincinnati L3-L4-M6A CANADAM5 MONTREAL CAN M13 Columbia M5 CAN M5 M7 L4 M4-M4A MINNEAPOLIS M4A Brockville

M4 SACRAMENTO M13 M5 -M7A ST. LOUISCAN IN St. Paul M4-M4A CAN Whitby NV Burlington M35-M53-M54M9-M92 Louisville M13 KS M7 CAN KINGSTON VT Lexington L4 WV Oakland M11 SAN FRANCISCO CAN ME

NY M54 M11-M13 M11 CAN Scarborough M53 M54 Saragota MN MO M35 M11 M4A CON TORONTO CAN-M24-M44 Springs Portland M11 M4 San Jose M44

M24 M38 WI CAN Rochester M24 M4A Milwaukee MI L4 CAN Niagara M4-VG Grand Rapids M1 Syracuse M24 KY Madison BOSTON NH CON Buﬀalo Airport Albany M27 CON-M51-M53-M22-M32

M1 CAN-L3-M24-M44 M24 M9 East Lansing Buﬀalo M35 CA M4A M24-CAN M53 L3 M35 VG M1 Ann Arbor M44 M9-M92 Nashville M11 M1 Amherst M10 M4 DETROIT LAS VEGAS SL17 Binghamton M51 Providence M20 M24 MA M1A M27 M35-M35A-M51 M32 Knoxville L4-M38 L3 M22 M1 Erie M3 L3

M8 Hartford M51 M54

IA M7 M8 Iowa City M8 M3 L4 M20

M10 Toledo Fairhaven

SL17 CTM51 M8 M5 M9 M3 ARM3 M20 CLEVELAND RI M8 M35 Des Moines M3 OK M7-M76-M93-M98 Memphis M32-M22 M1-M1A-M3-M4-M4A M44 M7 TN NE M5-M6A-M6B-M7-M7A M3 M20 PA M9-L4 Chattanooga M51 M95 OMAHA M8 M8-M9-VG M3-M28-M30 State College New Haven M7-M76 M3 Little Rock M9 M11 M10 L3 M38 CHICAGO M76 M28 M28 Ridgewood M27 M28 New Brunswick M93 M29 100 Burbank M11 M9 M6A M6B Princeton M98 L4 M97 OxfordM44 PITTSBURGH 100-M3-M20-M21-M22-M23-M24-M25 M95 Columbia M97 M32 OH M28-M29-M36 M7 M10 IL M29 M29 M6B Harrisburg NEW YORK M26-M27-M28-M35-M35A-M54-SL17 M10-M11 LOS ANGELES M23 M25 M97

M31 Athens M97

M36 M93 M10 Columbus L3-M6B M31 AL Riverside Newark M32 L4-M38-M93-M94-M95-M96-M97 M31 Secaucus Junction INDIANAPOLIS M44 ATLANTA M6A M32 M6A-M6B-M9 M21 M94 M36 M76 M36 M21 megabus.com CA Morgantown M31 M21 M96 Sparks M13 KANSAS CITY M5 MD NJ Birmingham M93

M98

M44 M21 M9 M5 M32 PHILADELPHIA M76 M7 M31 SC M5 CINCINNATI L3-L4-M6A DE M23-M29-M31-M32-M44 M7-M71-M72-M76 L4 M38 Columbia M5 M5 M7 DALLAS M31 GA SACRAMENTO M13 ST. LOUIS M5-M7 IN M71 MS Atlantic City M25 M94 M96 NV M9-M92 Montgomery M96 Louisville KS M7 M31 L4 M98 LexingtonM72 WV Jackson M37 BALTIMORE MO Richmond M31-M37 M21-M31-M32-M44 M38 Christiansburg M31 M94 VA M98 TXM38 LAM37 M31 Hampton KY L4 M94 MobileWASHINGTON D.C. M21-M31-M32-M36-M37-M38-M44 CA M9 M72 M71 M74 BATON ROUGE M9-M92 LAS VEGAS M10 NASHVILLE M77 Jacksonville M96 M72-M77 AUSTIN M37 Durham M31-M97 Knoxville L4-M38 M74 M97

M7 M74 L4 M74 M10 M74-M94 M72 NEW ORLEANS AR M9 M37-M95 CHARLOTTE M7-M76-M93-M98 M71-M74-M77 M96 Gainesville OK MEMPHIS HOUSTON M96

TN M73 NC M96 M95 M9-L4 M97 Fayetteville M97 M7-M76 Little Rock Chattanooga M72-M73 SAN ANTONIOM9 M11 M10 M38 M76 Burbank M11 M93

L4 M97 M98 Oxford M95 Columbia M97 M10 M7 M10-M11 M97 LOS ANGELES Athens M97 AL M93 ORLANDO M96 Riverside M10 ATLANTA L4-M38-M93-M94-M95-M96-M97 M76 M94 Birmingham M93 M96

M98

M76 M7 SC M7-M71-M72-M76 DALLAS M94 Montgomery GA M71 MS FL M96 megabus.com now serves more than 130 destinations M96 We are also supporting a cleaner environment. In 2014, M98 acrossM72 North America, carrying overJackson 10 million customers we received the American Bus Association’s (ABA) Green

M94 a year. It hasTX major hubsLA in Atlanta,M98 Cleveland, Chicago, Operator Award. megabus.com was selected by motorcoach M84-M94 Mobile M74 M72 M71 Baton Rouge M94 M84 Tallahassee M77 Jacksonville M96 M72-M77 AUSTINLos Angeles, New York, Orlando, Philadelphia,M84 Pittsburgh, industry peers after an extensive review of operations, M84 M74 M84 M74 M74 M72 NEW ORLEANS M74-M84-M94 M71-M74-M77 M84-M96 Gainesville San Francisco, HOUSTON Texas Triangle (Dallas/Fort Worth, Houston includingM96 megabus.com’s commitment to environmentally M73 M96

M72-M73 SAN ANTONIO and San Antonio), Toronto and Washington, D.C. friendlyM84 ways to drive, the use of anti-idling techniques when

ORLANDO M84-M8-M86-M96

M86 Total daily discount city-to-city bus operations theM85 bus is not in use, the safest and greenest ways to recycle College students and other young professionals (aged 18-34) M85 Tampa oil and other engine fluids and overall business practices that are the largest customer segment. Families, seniors and FL

promoteM85 environmental protection and awareness. business travellers are also fast-growing segments, sharing

M86 a quest for high-value travel. megabus.comM85 has also been recognized for its environmental performanceM85-M86 Miami since 2009 through the University of Vermont’s In addition to affordable fares, megabus.com offers Green Coach Certification program (GCC). Participating customers state-of-the-art, green-certified and wheelchair- companies are provided “Green Coach Certified” ecolabels accessible double-decker buses. On board facilities include which can be placed on qualifying vehicles to highlight their free Wi-Fi, power outlets, and restrooms. environmental benefits. A focus on marketing the product through social media and a college campus ambassador programme has helped the brand grow rapidly. By 2013, the brand’s social media outlets, including Facebook and Twitter, had more than 300,000 fans/followers as the geographic footprint of the service has continued to grow from East to West Coast. Safety is at the heart of the megabus.com operation. We have equipped every bus purchased since 2006 with three- point lap/shoulder seat belts for our customers. megabus.com maintains the highest safety compliance rating with the Federal Motor Carrier Safety Administration. Transportation Safety Exchange (TSX), an independent organization that provides safety ratings of more than 300,000 passenger and freight carriers, announced in January 2014 that all megabus.com carriers are TSX-approved. megabus.com is the first carrier group to achieve TSX approval, demonstrating the most stringent safety standards in the industry.

6 Businesses factfiles

Company name: Area of operation: megabus.com 48 states in US and two Base: provinces in Canada Elizabeth, NJ Director of operations: Market: Bryony Chamberlain City-to-city express service (130 cities)