How And Why Is FlixBus So Cheap?

This is a question that has many different factors that come into play for a solid answer. FlixBus is a super cheap way of travelling around Europe, you probably already know that or you wouldn’t be on this post! But how is Flixbus so cheap? As I said there is a multitude of reasons for how and why Flixbus offer such low prices. For starters, they need to keep prices low to attract customers, but really we need to take a look further into the business model to find out how they do so!

A Breif History Of FlixBus.

In 2013 Germany de-regulated the laws surrounding transportation services and allowed private companies to operate intercity bus and train routes in the nation. Thus allowing competition with the state-owned Deutsche Bahn. This allowed Flixbus to take advantage and found their company alongside the de-regulation.

Flixbus has since become a market leader with routes across Europe connecting most cities. They are currently valuing themselves at $3bn with a recent fundraising round of $650m according to their site. So as you can probably tell they are a pretty big company. But what exactly have they done right to propel them to this success, and how do they offer such a cheap price to their customer base? Let’s take a look at their business model in a little more detail to find out.

The Flixbus Business Model.

Flixbuses success is down to two major factors. It does not have assets in terms of buses that it owns and it grew its market share rapidly by enrolling local bus companies into its business to operate the daily routes it plans out.

Flixbus is essentially a tech company. They take care of branding, marketing, route planning, customer service, bookings and basically everything on the back end. Their partner’s jobs are to take passengers from A-B on time and in line with Flixbus regulations. The idea is very simple yet very lucrative as you can see from the value of the company.

Flixbus actually only owns one bus, which seems ludicrous for a European coach giant. The bus they own is purely for licensing reasons, the rest of their fleet is owned by the local bus companies they are partnered with. This puts Flixbus in a really strong position, they do not pay wages for any bus drivers, they don’t have to pay out the initial costs for their buses and also upkeep (besides branding) is the responsibility of the local operators.

In return for operating these bus routes, Flixbus has agreed to a 25/75% – 30/70% split with these companies. So basically, Flixbus keeps 25-30% of the ticket sales and the rest is given to the operator. This model allows Flixbus to expand rapidly, whilst keeping initial investment to a minimum. This goes a long way to explaining why Flixbus is so cheap!

Flixbus Has To Stay Competitive In Price.

This is kind of obvious, but still worth mentioning. Flixbus is a budget travel operator, therefore its main target market are those looking to travel on a budget (sorry obvious again!). Therefore they have to keep prices low to attract customers and make themselves more appealing than their competitors. You can read my full guide on Flixbus alternatives here, where I go into detail about each competitor and the pros and cons.

So, back to the pricing, if Flixbus doesn’t price its routes competitively then they will lose customers. Losing customers means losing profits, which no company likes to do. They are forced to keep prices low, because of the market they are in, if they don’t people will just travel with an equally good operator with a lower price. They understand their demographic, and their business is most definitely not based on customer experience. It’s based purely on offering a great price to go a long distance. But that is just my opinion, they might say differently!

They Leave The Day To Day To Third Parties.

As I have spoken about previously in the business model section of this post, another way Flixbus keeps their prices so low is the fact that they don’t operate the routes themselves. It’s clear to see the benefits from this both financially and logistically. They aren’t required to purchase the buses and don’t have to pay the massive wage bill required to employ all of the drivers and day to day staff. Instead, they leave the third parties to take care of the daily operations (dictated by Flixbus) and take a cut of the ticket price in return for their services. It’s really a win-win for Flixbus, the third party operators and the customer.

Flixbus as I mentioned before is basically a tech company. They offer an easy to use booking platform with great prices to bring in the customers and pass on the work to their partners. Saving money on wages and upkeep of vehicles and simplifying the whole process for Flixbus shows another way in which they manage to keep their prices so low and how Flixbus manages to be so cheap.

You Get What You Pay For.

Basically, Flixbus is definitely not a luxury travel experience. Well, it can be an experience, just not one of the good ones…One of the downfalls of running your services through third parties is that you lose an element of control over the customer service at ground level. I don’t want to go into too much detail over this here. I have a full Flixbus review you can read for more information. However, what I will say is what Flixbus offers in customer service is pretty minuscule.

In order to remain so cheap, I doubt their main company focus is on providing excellent customer service. Budget and customer service just don’t go hand in hand. I’m not saying you are going to be mistreated while riding with Flixbus. But they will be more focused that the route runs smoothly than anything else, and if you have any issues the drivers probably won’t care. There are no real added extras as you would get on more expensive airlines for example. Bare bones offerings to customers (just a seat) allow Flixbus to operate cheaply thus passing on the savings to the customer.

A Summary To How And Why Flixbus Is So Cheap.

Their Business model relies on third-party partners to run the routes while Flixbus takes a cut on the ticket price. Essentially getting paid every time their partners run a route. Also, they have to keep prices low in order to attract their demographic, people looking to travel intercity cheaply. They have to offer low prices to stay competitive. Finally, they offer a barebones service, what you get is what you pay for. There are no extras, you pay for a seat on an intercity bus journey and that’s about all you get!

Basically, there are multiple factors as to why and how Flixbus is so cheap. There is no one answer to this question, and there are multiple other factors that I haven’t spoken about in this article. Flixbus is a budget coach company. If you want to get from A-B for a great price then Flixbus is definitely for you. If you are looking for great customer service and don’t mind paying a premium for it, maybe you should travel with another operator. Personally, I love Flixbus, purely for the value it offers. Flixbus knows that that’s why people use their service, so their business is run in a way that allows them to keep offering these amazing prices.