When I have the time I always take the bus between Melbourne and Sydney, but some people say I'm crazy.
Usually, if you book in advance, and especially if you only have carry-on luggage, it will be cheaper to fly with one of the low-cost airlines, but when you include getting to and from the airport at each end it will always be more expensive and buses and trains allow a lot more luggage at no extra cost too.
Note about prices below: some are specials from the front page, others I picked random dates until I got a hit. All are one-way for one person in Australian dollars (AUD).
I really hate airports and I hate getting to and from airports and I hate paying for taxis to and from airports.
Both Melbourne and Sydney aiports have shuttle buses to the city centre but only Sydney airport is connected to the city train infrastructure. The main airport of Melbourne, Tullamarine, is very far out of the city to the north. Not bad if you're staying in North Melbourne. Horrible if you're heading out to the suburbs in the east or to the Mornington Peninsula. But the other airport, Avalon, is not even in Melbourne at all, but Geelong.
As a rough estimate, 1¼ - 1½ hours flight time + about 1 - 2 hours to/from airport by shuttle + ½ - 1 hour waiting = 3 to 4½ hours total
(These are surely without checked-in luggage. For Melbourne I always chose Tullamarine airport.)
- JetStar: $69 - $149 (chose best price around a random day)
- Virgin: $85 - $95 (special)
- Tiger: $49.95 (special)
For train or shuttlebus to/from the airports expect to pay about $15 - $20. For taxis to/from the airports expect to pay $50 or more!
On one of my recent trips I was in the bus station in Melbourne checking prices and times and since I had a couple of hours anyway I decided to go check the train prices and times which are usually more expensive then bus or plane. There was a special offer on which made it the cheapest so I took it.
10h 55m (night), 11h 14m (day), according to CountryLink website
For more details about train options, see Gagravarr's answer!
On the bus you will get a couple of meal stops in small rural cities. Usually just out of town at some cafe that has a deal with the bus company, bad food, and high prices. I like to run into the real town and find a fish and chip shop or bakery and run back to the bus!
There are more likely to be interesting people on the bus, at least for people watching if not always conversation. Plus a higher chance of unexpected things happening. Recently my bus had a flat tyre. First I annoyed the bus driver by taking photos, then I helped him change the tyre. That's much more fun than waiting in an airport, if you are crazy like me (-:
There are three bus companies I know that cover this route in Australia. Comfort level is about the same:
- Greyhound - They cover the whole country so are the most well-known and the most expensive. They usually have the most buses per day though.
- Premier - They cover only the east coast and are cheaper but have fewer buses per day.
- Firefly - They cover only the southeast and are less well known so usually cheapest. Some buses are codeshare with Greyhound anyway.
For Greyhound, according to their website: 12h (night) / 14h (day) for direct buses. Probably something similar for the other companies.
- Greyhound: "from" $65 (special on front page)
- Premier: $85 (standard price on a random day)
- Firefly: $60 (special on front page)
All buses and trains depart from and arrive at easy to get to parts of the downtown areas in both cities.
(Thanks to Jonik for the travel time/duration information)