This paper appraises the current situation of passenger road transport in Addis Ababa, Ethiopia, by a case study of long distance bus transport. Emphasis is given on the probability, area and service coverage of informality, and the effect of informal operators on the formal transport industry. The study shows that the manifestation of informality on the long distance bus market is relatively insignificant (about 13%) compared with small and mid-scale buses. The sector also serves about 15 major towns such as Mekele, Dire Dawa, Shashemene, Wolita Soddo, Jimma, Bahir Dar and Gonder Towns. The most relevant effects of informal operators on formal industry and long distance bus in particular are the accelerated increase in the rate of accidents, lack of tax payments and driving over the distance limit. Informality also leads the legal operators into illegality. Thus, one can infer that the accelerating rate of informality becomes a threat for the formal sector operators in general and the long distance bus market in particular, in the nation and developing countries.