Citi Bike: Feeling the Blues?

Citi Bike Dock

Storm clouds have appeared on the mostly glowing horizon of Citi Bike. The Wall Street Journal’s report that the program is $10 million in debt and that the operator Portland-based Alta Bicycle Share is seeking additional financing for the system sparked widespread speculation. Even where I’m traveling this week — in Northern Spain — it was a topic of conversation.

I admit that, the morning after reading the Journal article, I felt a pang as I passed a Citi Bike station in the West Village. All but two of the bikes had been checked out. The remaining pair, standing alone in the gray light seemed, well, vulnerable.

Still, it’s hard to imagine that the setbacks represent more than bumps, albeit some substantial ones, in the longer road for a system that has proven wildly popular among New Yorkers. Citibike reported crossing the 100,000-annual- member threshold this week, with 6 million miles clocked by riders.

The key questions now:  What’s gone wrong? And, how can it be fixed so that the system can thrive and expand to enable even more New Yorkers to enjoy the advantages of what has proven to be an successful and safe new public transportation option.

An excellent overview of the back story – a confluence of “wishful projections and political considerations, forces of nature and misadventures in paperwork” — and of where things stand now, can be found in Matt Flegenheimer’s report for The New York Times.

In a nutshell, though, a combination of factors that reaches back to the origins of the system can be linked to the current woes. Deployment, first delayed in 2012 by software problems, and then again by Hurricane Sandy, caused millions in damages to equipment and resulted in lost revenue, as the Journal reported.

And when it comes to finances, here’s something that you need to know upfront:  New York City’s is the only bike share system among the spreading contingent in major U.S. cities that does not receive public funding. CitiGroup paid $41 million for a 5-year sponsorship, with additional funding coming from MasterCard. The combination of annual memberships at $95 per year and daily and weekly passes at $9.95 and $24.95 respectively, chiefly aimed at tourists, was expected to cover operating costs. While annual membership spiked off the charts, tourist ridership was hobbled by a one-two punch of software glitches with processing credit card payments and an unusually harsh winter.

In addition, operational challenges associates with adjusting supplies of bikes based on the ebb and flow of demand in different neighborhoods, as well as of maintaining the stations, and staffing a call center to deal with user issues, may have been underestimated.

So, now what? Mayor Bill de Blasio has said that tax dollars are “not on the table,” for now, but that he is open to helping in other ways. New York City Department of Transportation Commissioner Polly Trottenberg told the New York Daily News, “We remain committed to working with the system’s operator to address its financial and operational issues to ensure it meets the needs of its riders going forward.”

The possibility of a rate increase for annual memberships has been discussed as likely, with some media reports floating a figure of up to $140.

In the blame game, some fingers point at Alta. The Daily News reported that the company had failed to meet several key performance targets.

The latest development is the departure of Citi Bike General Manager Justin Ginsburgh, who saw the system through launch of what has become the largest bike share system in North America, with 6,000 bike at 332 docking stations. He resigned to take a job advising a firm that manages major construction projects. Citi Bike reported on its blog that Eddie Inlow, former general manager of Divvy Bikes in Chicago and current COO of Alta Bicycle Share, will oversee general operations while a national search gets underway.

Attracting additional funding, fixing operational and software problems, and perhaps promoting Citi Bike riding more assertively to tourists, are all potential steps toward a smoother road ahead. In the mean time, let’s hope for plenty of spring sunshine – figuratively, to bring greater transparency to the workings of the system, and literally, to get more daily and weekly users out on the bikes and bringing in the green, as Citi Bike’s first anniversary approaches in May.

If you’re a Citi Bike user (of course you are!) what are your thoughts about potential ways to improve the system?

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1 Comment

  • If public funding is not an option, the last thing CitiBike should do is raise the membership rate. CitiBike membership is an elastic product…meaning, as price goes up, revenue goes down. Likewise, if price goes down, revenue goes up. I would have become a CitiBike member when it debuted, but at $104 (after fees), I knew there was NO way I would use it enough to recoup the cost. However, lower that fee to $50 and I’m on board…even if I use it a whopping 2 times per year. I’d still renew at that price. For example, I’m a Zipcar member even though i only use it maybe 1 time per year. My employer offers me membership of only $25 (as a benefit). There’s no reason to say no. Which brings me to my next point: more employers should offer their employees the benefit of yearly membership at discounted rates. An infusion of corportate cash (marketed as a wellness program or transit benefit), should help CitiBike’s coffers. I don’t know why CitiBike thought they would be able to peddle to tourists (no pun intended). Tourists think NYC is big, busy and crazy. They aren’t going to plop themselves on a bike for 10 bucks a day to ride those big, busy and crazy streets. They are going to hail a yellow cab. CitiBike should maximize their benefit to New Yorkers/city-dwellers. I bet if they lower their prices, they will see more memberships. I also bet if they expand their stalls above 59th street (all the way up to Morningside even), they will see more memebership. I bet if they kept the stall off the West 4th Street stop repleat with cycles, people would trust it’s value more. I love CitiBike, but they have to make it more cost effective. Heck, even make first time uses like 2 dollars. It’s called a loss leader. Get people on the bikes at a loss to keep them coming back as permanent members.

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