How do you take on a virtual monopoly in the marketplace and succeed? NZ Business Editor Glenn Baker went on the road with nakedbus.com’s Hamish Nuttall to see how it was done.

The city to city bus market in New Zealand is worth around $50 million a year, and until 2006 was virtually monopolised by an incumbent which had around 90 percent of the market.

Then along came Hamish Nuttall, a man with 20 years experience in the bus business, who had rather different ideas about putting hums on bus seats and a burning ambition tosecure a significant share of that $50 million market.

“I had long recognized that there was a place for a low cost operator in this country,” says Nuttall. “Then a visit to the UK two years ago convinced me that the way to deliver this was over the internet, as this (business model) absolutely crunched administration costs.”

Based on hugely successful British online transport models such as EasyJet, nakedbus.com cuts the overheads from the ticketing process by providing internet-only ticketing, which eliminates the need for call centres.

Today nakedbus.com is New Zealand’s fastest growing bus company, and yet it’s technically not a bus operator. It works with established bus operators, who allocate a certain number of seats for marketing via the nakedbus.com website. The nakedbus.com branding, carried over onto the buses, is so strong that customers are under the impression that they are dealing with just the one company.

Nakedbus.com is famous for its $1 fares; there is one guaranteed on every service, and Nuttall says around ten percent of nakebus seats are currently sold for $1. He says there average fare is equal to 50 percent of the prevailing market fares and all their fares beat standard market adult prices by at least 25 percent.

Established last year on North Island routes, business has been growing at 20 percent.

As of February this year, the south Island has been enjoying the same nakedbus benefits, effectively making nakedbus.com the country’s second national bus carrier.

Article reprinted from NZ Business magazine.