Leap Luxury Buses Is Price Discrimination Done Right

Imagine you live in a bustling city like San Francisco and after a long night at work, you hop on your bus home. Except this bus has plush leather seating, a lounge in the back and a mini-bar up front full of snacks and refreshing drinks to buy. This isn’t a dream but an actual reality. KQED recently examined this new line of luxury buses creeping into San Francisco streets and highlighted the good and bad that comes from luxury public transportation. 

“Kind of think of it like a lounge on wheels,” Leap CEO Kyle Kirchhoff says.

For almost three times the price of a regular bus ticket ( $6 versus $2.25) you can choose a mode of transportation that takes the exact same route as a city bus (From downtown San Francisco to the Marina District) but has all the trappings of first class luxury that you would normally only find on an airplane.

On one hand, you have all these new buses on city streets causing more traffic. People may not take kindly to people who in one way or another, seem to be to good for city transportation. But on the other hand, you have people who would’ve usually taken a car but now are suddenly keen to the idea of taking a bus.

Leap Luxury buses aren’t for everyone. For one, you need to download an App to use the service or at least have internet access. Secondly, it’s not entirely affordable day to day for the average commuter.

Any first year middle school student in economics will realize the simple lesson behind Leap Luxury buses in its exploitation of price discrimination. Public transportation is great, but ultimately cities have a monopoly on that system.

There are some people, given the right incentive, who will pay more to take the exact same bus. What Leap offers isn’t just luxury, but the absence of, for the lack of a better term, “regular bus riders.”

You can take this same idea of price discrimination and apply it to a bus line cheaper than regular buses. Say San Francisco charges $2.25 for that same route down to the Marina District but for $1.25, you can take a bus that’s standing room only and runs during peak hours. Again, you’d find people willing to take that ride.

Leap Luxury buses isn’t about being a snob about regular buses. It’s about reducing traffic by opening up public transportation to a group of people who never really considered not driving themselves for once.