A Wall Street Journal report last week that New York City’s wildly popular bike share system has been operating in the red has, understandably, rattled the Portland transportation world as we wait for a similar system here.
I’ll start by rounding up the burst of media coverage, then offer some quick analysis.
The Journal report last Thursday, which we linked to in this week’s Monday Roundup, kicked things off. An Oregonian news roundup followed focused the blame on Alta, the Portland-based company that manages Citi Bike and has the contract for Portland’s future system. A follow-up editorial from the Oregonian called on the city to scrap its plan and put the money to other bike projects, seemingly misreading a recent bike sharing study to draw the conclusion that a Portland system is “almost certain to require a hefty annual operating subsidy from Portland taxpayers.”
On Monday, Alta followed up with a statement of its own adding that it is “talking to investors about expanding our own operations,” which might or might not mean it’s still trying to purchase the bankrupt Montreal-based equipment and software supplier whose problems have been entangled with Alta’s.
On Thursday, Oregon Public Broadcasting did a segment focusing on the subject, and scored a call-in interview with Alta executive Mia Birk, who’d been publicly silent until then. (She avoided saying anything new.) I was a guest, too, and talked about two keys to profitability for bike share systems: dirt-cheap operating costs and lots of tourists.
Readers may be hoping for signal in all this noise. I’ll give it a shot.
1) It is really bad for Alta that Citi Bike is losing money.
Some of the NYC system’s huge popularity depends, presumably, on the fact that Alta has been willing to operate the system in the red in order to maintain quality — sending battery-replacement crews around to each bike share station, for example, to make sure they’re fully charged. That’s the sort of thing Alta’s software should be doing, if it worked. This is an example of the ways that it doesn’t.
Read the WSJ piece closely and you’ll see Alta’s software problems elsewhere: in tourists’ struggle to buy the 24-hour passes that are so lucrative to a bike share system; in the failure of the system to expand as anticipated. This is probably why Alta pushed its software supplier toward bankruptcy and later signed a new deal with the maker of the software behind Alta’s real crown jewel: Capital Bikeshare in Washington DC. If Alta can’t get a working prototype out of that deal very soon, it’s likely to start losing bike share contracts — not just Portland’s but the renewals from its existing cities, like Boston.
The New York Times reported yesterday that Alta is in a dispute with the city over whether it has the right to raise annual Citi Bike memberships from $95 to $140. Raising the price of a popular product would be nothing new, but you don’t see 47 percent price hikes every day.
2) Portland Bike Share will sometimes need public money, but probably not much from local budgets.
The Oregonian editorial board either misreads or misrepresents a recent study of bike share costs. It quotes the report: “while subscription and user fees provide a stable revenue source, rarely do they provide enough revenue to ensure that the system is financially self-sustaining.”
True. But this doesn’t mean, as the editorial suggests, that Portland’s system will require a “hefty annual operating subsidy from Portland taxpayers.” It means bike share will require private commercial sponsors, which Portland, like so many other cities, has already lined up.
Portland bike share probably won’t have money to add new stations without bursts of public money (federal, state or local). And it’s also possible that Portland’s system will for some reason turn out to operate in the red, unlike the two systems most like ours (Minneapolis and Denver). If that happened, the city could then decide whether to keep the system afloat for a few hundred thousand dollars a year.
It’s 100 percent fair to argue that this money should be spent on other things. But even if Portland bike share someday has a public operating subsidy of $300,000, a new public transit system that provides fast, clean, cheap, healthy circulation for half a million trips a year looks just fine compared to (for example) Portland Streetcar’s operating subsidy of about $6 million a year for about 6 million trips.
Efficiency (not peer pressure, as Oregonian editors like to impishly suggest) is the reason U.S. cities are rapidly adding bike sharing systems.
3) No, Portland is not too bike-friendly for bike sharing to be useful.
Yes, most Portlanders already own a bike. And 52 percent of New York taxi passengers already own cars.
There are lots of reasons to have doubts about the particulars of Portland’s bike share plans, but uselessness isn’t one of them.
Correction: An earlier version of this post overstated the size of the Portland Streetcar’s operating subsidy.
Michael Andersen was news editor of BikePortland.org from 2013 to 2016 and still pops up occasionally.
Alta (and Bixi) are the problem, not Bike Share. Bike Share is a wonderful system, which has silenced the skeptics in every single city its opened in. Even Mexico City, where I admit I was skeptical about.
Sadly, Alta has never made one promise theyve been able to keep, and even though these promises are legal contracts, no city has brought down the hammer on their incompetence. They became insanely greedy by bidding on every system, winning by cooking the books, and then when they coudlnt deliver they just shrugged their shoulders. Not one system launched when promised. Not one system met their expansion goals. Not one system has met relocation mandates.
They have an American competitor which runs the most profitable system in the country. I havent heard of problems with them.
One thing hasnt been talked about: Do you know why the tourist revenue in NYC is lower than expected? Because the tourist system is extremely user unfriendly.
Heres a typical tourist experience: Three friends arrive at station with 55 bikes available. Friend A begins the process, and takes 6 minutes to go through the thousands of confirmation screens (ok, maybe 30, but compare to the 4 or so steps in Paris its a nightmare). While A gets his bike, B goes through the process. Then C. By the time C is ready, A has had the bike for 15 minutes out of the allotted 30. Whoops. Got to return the bike and exchange for a new one so the friends can actually ride anywhere…
Worse, even though the stations have 50+ bikes in many instances, they all have one kiosk, meaning if you arrive as a tourist to get a bike and just need a new code, but a family of 4 is going through the process, you might as well walk. Youll be waiting 20 minutes to get your code.
Its a nightmare.
Mind you, annual members never have to go through the kiosk so its not so bad.
Interesting thoughts, though I’d want to see documentation for the claims in the second paragraph. Do you have any documents about this competitor (I assume you’re referring to B-Cycle?) that operates the “most profitable” system? Which system is that?
The description of the tourist experience seems like a problem faced by other North American systems, too, not just Alta’s.
I am referring to their Miami Beach system, which is profitable and is indeed done by Bcycle. The flip side is that it is profitable due to (in my opinion) some outrageous rates. Its aimed at casual tourists not local residents.
In my opinion, Paris has the best model. Dirt cheap rates for residents and tourists. Bike Share must be seen as an extremely cheap method of public transit.
Yes, the other US systems face similar problems, because most of them are Bixi/Alta. Problem with NYC is the station sizes. In Boston, most stations are 6-18 bikes big. In DC its like 10-25.
In NYC, 50 bikes is the norm, with some going over 100. Having a single kiosk for that size station is insane. If you expect 5x as many people, you need 2 or 3 kiosks AND a streamlined system. Ive used the system as a tourist twice with the same credit card. Why did I have to go through the entire process, including entering email and phone number, again?
Portland stations will be more in line with Boston sizes, so one kiosk wont be an issue.
In Paris (and some other French cities) you can do the sign-up online. Checking out the bike still requires going to the kiosk, but it’s very fast.
Actually, in NYC, the norm is more like 25-35 with a few stations nearing 50 and many smaller stations of 15-25. Click around this map for a minute to confirm that:
Except that even with pass buying troubles tourist revenue for Citi bike isn’t really lower than what should have been expected. It suffered a steep drop off when snow and cold weather came to NYC and the winter has been unusually harsh and long so it hasn’t recovered very fast. As spring comes tourist revenue will spike upward again though.
Mind you I don’t know how well Alta actually planned for that, there’s a lot of things that I don’t think they anticipated very well for Citibike. So the fair weather tourist revenue may not be enough to keep the system afloat. Long term though they are almost certainly not hurting as bad as the WSJ article made them out to be.
Yep, not a good idea to depend on tourist revenue. I and the fam used the Alta/Bixi system in Washington D.C. and found it geared (pun!) very heavily toward commuters; we were fish out of water — always worried about getting our bikes turned in to halt the charges while we were at our sightseeing destination, finding it hard to turn in our bikes because the early commuters had already occupied all the slots, etc. Definitely more of a Car2Go analog, rather than, say, Zipcar.
Bike share may not be a problem now because it’s still new. Give it a few more years, the skeptics will have their day eventually. Then, we can look back at all the supporters of bike share and thank them for their part in helping waste resources that could have been used for more worthy projects. You know, projects that actually make our streets safer instead of providing convenience to those ALREADY making our streets safe.
The city is subsidizing the playing field for the Timbers for hundreds of thousands of dollars. It’s sold out, you can’t even get a ticket. At least with bike-share everyone has an opportunity to participate. I think it’s upside, tourism and getting newbie bike riders, are positives. Though I’m not a huge supporter, bike -share has some merit worth considering. Bike share was in nearly every big city in europe I visited this summer.
Why go through the expense of getting a bike share system here in Portland? Why not help the local bike rental companies and bike shops instead? Are we not into the “buy / support local small business” here in the PNW? That’s what I cannot get over – seems like everyone’s up in arms over getting a bike share system here in town that may or may not be financially self sufficient, when we *already have* bike rental places in conjunction with local shops that are doing well. Seems to me that it’s a repetition of services already offered.
Well, it’s a different service for the same reason carsharing is different than car rental: if you’re making a quick trip across the central city, it doesn’t make sense to walk to one of the city’s four or five bike rental stores, wait in line, sign some papers, pay an hourly rate and return it to the same location.
Bike sharing is way easier in this situation, and the cost per trip is way lower.
According to reports, renting from a bike share seems less easy than going to a bike shop. If systems are basing their revenue on tourists, how is it that renting from bikeshare systems are better than a bike shop??
You’re conflating two different issues.
Renting a bike from a bike shop is like renting a car. Great if you want it for, say, a week’s vacation.
Bikeshare is like a taxi. Great to get from point A to point B without any responsibilities once you get to point B (i.e. no need to lock up the bike, or return it to Point A sometime later).
Citibike definitely has major problems with the implementation of how non-members go about renting a bike, but those problems have nothing to do with whether renting from a shop is a better option.
If you wanted to set up a bike share program run by local bike shops, you might be able to do so, but to make it functional, you’d need *all* bike shops to participate (just to get enough locations). Even then it might not work well if there doesn’t happen to be a bike shop near a major destination. (E.g. Providence Park? Moda Center?)
The reports by the above poster? I’ve used Nice Bike in Minneapolis and the initial transaction took all of 2-3 minutes max. Each time I had to change bikes, the transaction took maybe 30 seconds (granted the kiosks were pretty empty and I didn’t have to wait in line). The first comment has a great point about not having enough kiosks and the importance of a streamlined purchase sequence.
The ease of “renting” a bike from bike share and it’s multitude of kiosks is so much simpler then renting from a store.
Do you actually see anyone renting bikes in Portland (besides the crazy bikes along the river in the summer time)?
1) have never rented a bike under either model
2) don’t rent bikes
The national interstate system is struggling to break even too. Maybe we should think about shutting that whole thing down or not putting any more public money into it until it can prove that it can operate without a subsidy.
It has received billions of dollars in general tax fund subsidies in the past few decades. Yet the Oregonian editorial board fails to mention this when they advocate for the CRC and other highway projects that rely on the Highway Trust Fund.
So true. Michael, I’d like to see a subsidy comparison to auto travel. Numbers are probably more difficult to come by, but very interesting.
Portland doesn’t build and maintain the interstate highway system, so there’s no way the city is going to shut it down because it can’t pay for itself without taxpayer subsidy.
Even so, if bike share was able to even remotely provide the service to individuals and the nation that the interstate highway system, does, taxpayers probably would be, at worst case, resigned to subsidizing it.
What’s been said that this system can do for the city, has been vague at best. Nobody really seems to know, so I suppose Portland and bike share’s hoped for commercial sponsor just has to spend the money and see what happens.
I think Alta has struggled a lot, but I don’t think BCycle has figured it out, either. The Alta cities share a lot more data than the BCycle sites, which I like.
You used the caption, “Working just fine in Minneapolis” for the Minneapolis picture. But what is “working just fine?” Minneapolis has much lower usage rates than NY or Montreal.
See page 41 here https://go.itdp.org/display/live/The+Bike-Share+Planning+Guide for more detailed analysis. Minneapolis has fewer than 2 uses per bike per day (NY has over 8, Montreal over 6).
Alta needs to work on their kinks, but their cities seem to have better coverage and more use than the BCycle cities, making me think they plan better.
Fair points. Working just fine in the sense that it’s working (so far, at least) without having to change course and ask the local governments for an operating subsidy.
Also, note that Minneapolis isn’t a B-Cycle system; it’s the same software and hardware that Alta uses in Boston and DC, just not operated by Alta.
For the record: Montreal is also not operated by Alta.
Minneapolis is also not a major tourist destination and an order of magnitude smaller in population than NYC, Montreal, Boston, Chicago, Paris or most major cities with bike share; even DC is twice as large as Minneapolis, so…apples and oranges.
If I were to guess now, I’d figure Portland’s use rates to be closer to those in Minneapolis than to use rates in those larger cities.
Could you please identify the mystery sponsor? Because the bike share sponsor is kinda like Big Foot at this point. People claim to have seen the sponsor, but no one has produced actual proof. Thanks!
I’ve got no inside info – so I could be wrong. But I believe the main sponsor in the rumor mill is Kaiser Permanente.
Gutter Bunny, I have heard about Kaiser- and bikes sure would fit with Kaiser’s “Thrive” campaign. At the same time, I am calling everyone’s bluff. If Kaiser had inked a deal, we would know. I deduce that Kaiser has cold feet, and that the following is an accurate statement:
“No big sponsors have committed money to Portland bike share. Kaiser is not obligated to give bike share a penny. No ink on any legal documents.”
Hey- I am all about facts, and I don’t want to spread false info. Please, someone, disprove my thesis.
From where did you draw the quote about Kaiser’s obligation?
Okay…re-reading it, I see you put in in quotes, but offered it as a ‘statement’, meaning, ‘your’ statement.
If a high profile corporation wants to take a whirl with something like bike share…fine. That’s not quite as bad as using taxpayer money for an iffy venture like bike share, though health care customers will wind up paying the bills. Potentially offsetting those bills is that in theory, people actually riding these public bikes, could result in their being healthier, with a resulting reduction in medical expense. In theory.
I can’t wait to see whether some of the overweight, inactive, bad diet people that really could benefit from riding these bikes, will actually take the initiative their availability offers, and ride them for a half hour or more a day to become a little healthier.
Definitely fair, Mamacita, and yes, I think those sentences are true. I used “lined up” here and on OPB, because I think that’s the best description of where things stand.
Everything I’ve heard from all sources suggests that there’s been a verbal commitment and at least one highly engaged sponsor, coordinating directly with both the city and Alta since at least early winter. This is a pretty big change from last year, when a sponsorship shortage was the cause of delay. That’s why we’ve reported that the sponsorship is “secured” despite the lack of a signature.
Last month, Alta began referring to a “sponsor team,” suggesting to me that we may have multiple “presenting sponsors.” That’s something Alta has been floating from the get-go as the likeliest option:
We haven’t confirmed who the sponsors is/are, though we’ve made some efforts, and honestly I don’t think it’d add a lot of value to the debate if we were successful. I’ve also read the unsourced reports that it’s Kaiser, which I think appeared first in Willamette Week’s piece last summer. (Kudos to Aaron Mesh if it turns out to be right.) I’ve also heard from multiple sources that Kaiser and Alta have for certain had conversations about the possibility through last summer, but at the time it wasn’t clear that the talks were successful.
The fact that two other big health companies (Moda and Regence) just shelled out for the city’s two main sports arenas strongly suggests that Kaiser would be in the market for something like this. It’s worth noting that Moda and Regence made their announcements in the middle of the federal health insurance signup period, so if Kaiser is involved, the fate of the health care act might be tied up with local bike share. But this is mostly speculation.
Thanks for confirming the facts re:sponsorship. The truth will set us free. I agree that a verbal agreement has some significance for the discussion. But a signed contract is the goal…
PBOTs statement on their state grant application continues to bother me.
Perhaps you could advise them on accuracy ….
If they did have something signed though I would have to imagine they would wait to announce it until the opening date for Bike Share was written in stone. It would make little sense to make an announcement and then just continually have these delays. (although don’t people attribute the delays to lack of a sponsor?)
Michael, do you mean Providence, and not Regence?
Michael Anderson –
To sidetrack, how do you get that the Streetcar has an $8 million operating subsidy when the total operations budget for FY2014 is $9.7 million?
The $4.1m from Trimet roughly equals the number of riders who are using a trimet pass or ticket to ride streetcar, so that’s not really a subsidy except for the part where Trimet itself is heavily subsidized. The 1.2 from PSI includes sponsorship deals that include advertising and organizational pass deals where employers or students ride with just their organizational ids so that is also not really a subsidy. The only part that is a subsidy is the piece from PBOT which comes mostly from parking revenue iirc. So that’s $4.4 million which admittedly still seems like a lot, but it’s not $8 million.
I’m not sure whether ticket sales are counted in the PSI number or the PBOT number either, if it is PBOT that would drop the subsidy part even more.
Of course that’s not counting capital costs, which are pretty much 100% from other sources.
BTW I don’t disagree at all with the actual point of that paragraph, which is that even subsidizing bike share it is still very cheap for what you get from it.
Daniel, you’re right. Good catch. I’ve corrected the story to “about $6 million,” with links to two sources: the $9.7 million budget and Streetcar’s estimated farebox recovery, as of this January, of 35%.
On the TriMet payment issue: some folks buy Streetcar passes and ride TriMet with them, while others do the opposite. The city and TriMet’s working assumption has been that this stuff all comes out in the wash, which is why I initially categorized TriMet’s payments to Streetcar as essentially coming out of transit’s payroll tax-funded subsidy.
Reading the Oregonian is like watching FOX News. You have to take it with a mouth full of salt.
Listening to the program, I feel that your point about the software is a really good one, but you fail to draw out the larger context, which applies to all businesses: cost control is important.
It’s unclear how much it actually costs to operate NYC bike share, either on a per-bike, or per-member, or per-station, or per-day basis. Contractor could probably have moved more aggressively to cut costs during periods of low ridership like the past winter.
It’s definitely Alta Bike Share leadership, and should call for Mia Birk to step down and allow for someone more capable to run a system. OR Alta should get out of the business of providing full-service bike share, and just act as a consulting role.
Here’s a fishy timeline of recent poor running.:
June 2013, Feds investigate Alta over pay dispute & poor working conditions at Capitol Bike Share (Washington, DC).
January 2014, Alta Management team quits to form NEW bike consultancy group (4 members)
January 2014, PBSC goes bankrupt. This isn’t Alta’s fault, but not figuring out a backup plan is.
March 2014, GM of Citibike steps down,
And let’s not forget an old timeline, back in 2012 where Alta paid off Gabe Klein in Chicago – $10,000, and magically ‘won’ the RFP. Alta as it is, is probably not going to last very long. Poor leadership is really showing. Mia Birk should go back to city gov’t.
It would be good to know how much money Alta made from the upfront planning of Citibike. Maybe some of that money can be returned to help bail out program.
Another problem with the tourist access is that about 20-30% of the time, I got invalid “codes” printed. Codes that simply didn’t work. Travelling with my husband (only 2 of us) we ended up in the same scenario you describe – the person who did successfully uncheck a bike, checking it back in and doing it again because the 2nd person wasn’t able to get a bike out and the clock was ticking on bike 1.
Part of Citibikes’ problem is that the annual members use the bikes so heavily. On average each Citibike is used 7 or so times per day, more than any other city I think. That is only a problem because a large part of the usage is for New Yorkers’ morning and afternoon commute. In the morning, the bikes are ridden from the train stations and the residential neighborhoods, where the docks empty out, to midtown and downtown, where the docks fill up. For the next commuters to not find empty or full docks, Citibikes has to do a lot of rebalancing – moving bikes from full docks to empty docks by truck. I’ve read that rebalancing is the single biggest cost of running Citibike and other bikeshare systems.
That is itself isn’t a problem – it is good that Citibikes is so popular – the problem is that the annual membership is too cheap at $95. For a local who rides a Citibike twice a day for his commute, that is $0.20 per ride. The alternative is a $12 cab or a $2.50 subway ride. This is New York City we’re talking about, everything costs more to operate and buy. The annual membership should cost $150 or $200.
Software problems, and the decision to keep the system operating during what turned out to be the harshest winter in several years have surely been a factor as well.
Citibikes should raise the annual membership cost, fix the software, and line up funding for the expansion. It is a terrific system. Absolutely worth ironing out the problems.
Well they’ve eliminated that problem here, considering that short of Downtown than Rose Quarter, their will be no stations at Trimet max or park and ride locations. This will be it’s fatal flaw here in Portland.
Too bad Trimet couldn’t come up with a system. After all if you could just swipe your monthly/Daily/Weekly pass and get a bike at a Max station or Park and Ride seems like the easiest and best way to do this, since they have services in every part of the Metro area where everyone already wants to go.
Here’s a thought. TriMet could close two inner Eastside MAX stations and put in bikeshare kiosks and subsidized pedicab service. Takes forever to get through there on the train.
“…The annual membership should cost $150 or $200. …” John Liu
Will that amount of increase in membership cost, cover the expense of re-balancing the bike docks as needed?
“…For the next commuters to not find empty or full docks,…”
Sounds like a daunting task, regardless of how much money is available to truck bikes around to whatever docks are short. In theory, day shift workers could ride the bikes back out to the docks in time for the bikes to be available for swing shift workers to ride back in.
Swing shift? Huh? We don’t have a 24-hour three-shift manufacturing industry any more in New York.
Feels like Mia often gets a free pass. Has she done great work? For sure. Is she now? Hard to tell given the coverage. The true story seems to be missing…
NO TO BIKE SHARING! Yes to people who ride their own bikes!
Said bike thieves everywhere.
And there he/she is! I’m disappointed it took you a day and a half this time!
Well, it’s because I’m beyond confident that I’m going to have the last laugh. Though, I still feel the need to put in some sort of effort.
So I take it you would never see yourself using bike share when you travel to another city?
I absolutely would NEVER use bike share. And, I would pay extra to ship my bike, if required, where ever I go. On a side note, notice how grocery stores, et al. have sanitation wipes near their shopping carts? Why doesn’t bike share have something like this? In terms of sanitation, the bikes are no different than shopping carts. Just to give you a heads up, this is another angle I’m going to use to attack bike share. hehe
You sound kind of phobic. Some people seem to crave for the lack of a hermetically sealed, sterile environment to live in. Scared to touch or come into contact with anything another human being has or may come into contact with. Being anywhere in public, must be tough for them.
The grocery store sanitation wipes that recently have begun to be located at store entrances, don’t seem like a very good idea to me. They’re o.k., I suppose, if people don’t start obsessively using them in great quantities for no particularly good reason.
How does someone that’s going to worry about coming into contact with other people’s germs when riding a bike share bike, go about preparing to sit on a seat on public transportation, or elsewhere? Are they carrying with them, a pack of those sanitation wipes, so they can wipe the seat down before sitting? For them, I suppose the same level of vigilance may oblige preparation for contact with door handles and nobs other than those for public bathrooms.
Pfffft. Not phobic, just more conscientious. I guarantee you that there is fecal matter on all the handlebar grips of bike sharing bikes. I can’t tell you how many times I’ve seen people walking out of a restroom without washing their hands. When people take transit they’re primarily sitting not touching. The only time they’re touching is to signal that they want to get off and that happens in a spit second. How long do people have their whole hand firmly gripped on the handlebar grips of a bike share bike? Yeah.
I’d bet Interstate 5 looses money and requires public money also!
It took Velib a few years to work out the load balancing. They still have some trucks moving bikes around, but they’ve done a pretty good job of encouraging people to move bikes to where they need to be with incentives like extra free ride time. Of course, the sheer number of stations in Paris makes the problem a bit less severe–you an always go another 250m to get a bike (if your departure station is empty) or park a bike (if your destination station is full).
How is this at all analogous to taxis? Taxis let you use public transportation, save on parking, and have someone else drive. With a bike in portland you can already use public transit (or pedal roughly as fast) and park anywhere for free. Also, we already have bike pedicabs if thats what you want.
If we had an organized system of secure, hassle free, low cost bike parking? Now THAT I would use.
Good points. The main similarity is simply that you don’t always have all your vehicles with you.
Its not really analogous to car2go either. Car2go works great if you know you’ll occasionally need a car, but dont want the hassle and expense of owningba car the rest of the time. But bikes are cheap, and they dont cost anything when youre not using them. You buy youre own for the cost of an annual subscription to this thing.
An annual subscription in Portland is unlikely to cost more than $85. Three annual subscriptions, maybe.