The Citi Bike Deal Is Great News for Other Cities Too

Bay Area Bike Share, shown here in San Jose, is one of several systems that should be able to fulfill expansion plans quicker after REQX Ventures acquires a controlling stake in Alta Bicycle Share. Photo: Richard Masoner/Flickr

Andrew Tangel at the Wall Street Journal had an encouraging update this week on the Citi Bike buyout plan first reported by Dana Rubinstein in Capital New York. It looks like the city is days away from announcing a deal in which REQX Ventures, an affiliate of the Related Companies and its Equinox unit, will buy out Alta Bicycle Share, the company that operates Citi Bike. The implications are big — not just for bike-share in New York, but for several other major American cities as well.

REQX would acquire a majority stake in Alta Bicycle Share, bringing new management and a much deeper reservoir of financial resources to the company. Vexing problems with Citi Bike’s operations, software, and bike supply chain are expected to be addressed, though it’s not clear yet where the next round of bikes will come from.

For New York, the terms of the deal mean the price of Citi Bike annual memberships will rise from $95 to the $140 range, while the service area will expand substantially. A source familiar with the situation said the plan is to get new stations operating by next spring. The larger service area could reach as far north as 145th Street, according to the source, while extending into western Queens as well as a ring of Brooklyn neighborhoods around the current boundaries.

One aspect of the news that hasn’t been getting much notice is that several other bike-share systems will also be affected. As Payton Chung noted last week, Alta-operated systems in Chicago, DC, Boston, and San Francisco have all been hamstrung by bike supply problems the company had been unable to solve. The buyout should break the logjam holding back expansion plans in those cities and allow system launches in Baltimore, Portland, and Vancouver to progress.

The last two years have been simultaneously thrilling and frustrating for American bike-share, with rapid adoption in major cities accompanied by performance glitches and long waits for system expansions. The outlook for 2015 seems a lot sunnier.

  • Eric McClure

    This is great news. Can’t wait to be able to ride a Citi Bike to and from the heart of Park Slope.

  • Eddie

    It’s been often said recently that Citi Bike makes money on daily or weekly rentals by tourists, while it actually lose money on annual memberships. So expanding bike share to Sunnyside and Greenpoint may be a good thing for commuters, but from the point of view of a for-profit corporation, it doesn’t make sense. Very few tourists go to those neighborhoods. I’d expect an expansion in Manhattan north of 59th St much sooner than in Brooklyn or Queens.

  • Seth Rosenblum

    That’s the reason their increasing the annual membership rate. I doubt they’ll have more luck with tourists north of 59th street than they do downtown.

  • Mr Magic

    There’s one giant, glaring, missing piece in the equation. What bikes and technology will be used for expansion? REQX missed out on buying PBSC: http://goo.gl/CpMOzM

  • Shemp

    And maybe REQX can find some planning resources to address the low station density that keeps bike share usage low in too many U.S. cities other than NYC

  • BBnet3000

    Yeah, id kind of expect the outer borough expansions to be dependent on some public money.

    Manhattan north of 59th is a no brainer, especially in or around Central Park (the upper east side avenues all suck for biking though). Its time to close the Park to cars (other than the transverses) for good.

  • Larry Littlefield

    I see this as a very smart move for a health club/real estate company.

    While I certainly hope Related would not be allowed to require bikeshare users to purchase unrelated services such as a health club membership, it could use its position as the bikeshare operator to have stations located in front of its health clubs, its office buildings, its apartment buildings.

    That little bit of added convenience — being able to offer a combined bikeshare/health club membership with bikes at the door, for example — might give its health clubs and properties an edge.

  • Larry Littlefield

    Right, everything is pointing to an increase. The cost would still be low. The bike shops are less likely to feel there is subsidized competition.

    Hopefully as part of the deal, they’ll go from 45 minutes to 60 or 75 for annual memberships. To go with the bigger distances covered.

  • Adam Herstein

    This will likely result in Alta prioritizing New York and neglecting all other cities, including plans for a bike share in Alta’s home town.

    This is not good news.

  • James Bonsall

    Why aren’t more cities using B-cycle for their bike share systems?

  • Larry Littlefield

    Economies of scale.

    If they get the software right, they can use in everywhere without having to recreate it. The more bicycles they buy, the lower the cost for each.

  • With all the demand for Bixi bikes and Alta’s services, I’d’ve thought they’d be prime targets for takeover, at the very least from some investment firms.

  • rohmen

    You could be right and you could be wrong. The focus on the articles so far is on what this will mean for the NY system, though that’s not surprising considering (1) the NY system has been the system with seemingly the most problems in management and interaction with the city itself; and (2) the main article regarding the merger is from the WSJ, which is going to have a NY-focus on what the merger means.

    Expansion plans were already on the table in other cities and were placed on the back-burner because of equipment supply problems. If this take-over helps with the supply problems, it think it’s fair to say this is a positive for everywhere, unless Alta/REQX alters course on previously-announced expansion plans outside of NY (which they haven’t said they intend to do).

  • Albert

    I’d think that increasing the length of the initial period would change the equation for always having “enough” available bikes and slots at stations. Already anybody can restart their clock just by switching bikes at any station before their initial period runs out, so it doesn’t immediately seem clear why bigger distances would necessarily imply a need for longer initial periods.

  • Kevin Love

    Better to ask “why aren’t more cities using Social Bicycle?”

    SoBike has the next generation of technology. All the bikeshare electronics is on the bike itself, meaning they can be locked up anywhere.

    See:

    http://socialbicycles.com/

  • Andres Dee

    I expect a big drop in renewals if the price goes to $140 prior to system expansion.

  • Hard to see why a business would sink tens of millions of dollars into a venture and then neglect most of the growth opportunities.

  • EgresBSds

    A 66% increase for an annual pass is insane.

  • Ari_FS

    Perhaps the initial price was too low.

  • NYFM

    If there is an economy of scale then they wouldn’t have to increase the fee to the “$140 range” (cute wording from story).

  • NYFM

    The bike share fee is too damn high!

  • NYFM

    DC’s is $75.00. $95 cannot be too low.

  • I am certainly willing to pay more. I save more a month in cab fares as I pay for the whole year.

  • It may need to be that high in NY given the lack of tourist use.

  • Presumably the PBSC buyer wants to start selling bikes again soon.

  • qrt145

    It can be too low, if there’s enough demand to congest the system.

    It can be too low if people are willing to pay more because even at $140 it is a great deal for frequent users who manage to replace MTA rides (nearly 10 times more expensive) or taxi rides (nearly 100 times more expensive?)

    It can be too low if DC’s system is subsidized more than NYC’s system.

    The only way to know for sure is to raise the price and see if the increased revenue from the subscribers that remain more than makes up for those that choose not to subscribe because the price is too high for them.

  • Reader

    Boston annual fee is $85 for a system with a fraction of the bikes that isn’t even open year-round. (Although Cambridge did a pilot this winter and stayed open.)

    $95 was too low from the get-go. After the intial shock of jumping to $140 or so, it won’t be long before most people forget how much Citi Bike used to cost. It will still feel like a bargain.

  • Eddie

    Either an annual pass is far too cheap, or the weekly and daily passes are far too expensive. An annual pass is $0.26 a day, which entitles one to unlimited 45-minute rides. A weekly pass is $3.57 a day, and a daily pass is $9.95 a day (38 times the cost of an annual pass) — and both only entitle one to 30-minute rides.

    I don’t believe we should keep the price artificially low in order to subsidize wealthy suburban commuters who save lots of money by taking Citi Bike rather than the subway from GCT or Penn to their offices.

  • NF

    I’m intrigued by the SoBike tech, but it seems to lack the inherent imagability, identity, placemaking and sponsorship opportunities that the dock-based models have.

  • Oregon Mamacita

    Let us be very clear about bike share in Alta’s hometown of Portland: It is not going to happen. We have a crisis with delayed maintenance of streets, and putting public money into bike share would cause a firestorm in Portland. Plus, there was a scandal whereby the city falsely claimed to have secured a sponsor
    for bike share, and that has the potential to make a sponsor even harder to come by. Some citizens are still waiting for Alta to return a progress payment
    of 40,000.00 that was conditioned on securing a sponsor. Acceptance and retention of the progress payment are illegal.

    But- Portland planners have an ends justifies the means” approach to active transportation.

  • AnoNYC

    “I don’t believe we should keep the price artificially low in order to subsidize wealthy suburban commuters who save lots of money by taking Citi Bike rather than the subway from GCT or Penn to their offices.”

    Isn’t this a good thing? Frees up room on the subway.

  • Eddie

    No, overall public transportation is losing out if suburban commuters are giving up their Metrocards at $112 per month in favor of a Citi Bike membership at $7.92 per month.

  • Kevin Love

    You are assuming that MTA makes a profit on Metrocard holders. Hint: It does not.

  • Eddie

    Huh? Do you mean that each additional monthly Metrocard that is purchased brings no additional money into the MTA?

  • Kevin Love

    What I mean is that the cost of providing service to each Metrocard holder is greater than the money that person pays into the system.

    This is particularly true on over crowded parts of the system, where MTA is looking at capital expansion. If we can offload enough demand onto bicycles to be able to defer major capital projects, we’ve just saved a pile of money.

    And, I point out, even the slightest bit of subway expansion would cost more money than Citibikes throughout all of NYC at a much greater bike station density than at present.

  • Kevin Love

    In other words, having a docking station that is large and intrusive with a big footprint is a good thing? Because an advertising agency can slap advertisement on it?

  • The original software is from 8D. For whatever reason, PBSC dropped them and found a consultancy to write something for Chattanooga and NYC, but 8D is still around and last I read, Alta was talking to them.

    8D’s technology still works. In my experience, their Spotcycle app is superior to the “official” PBSC app.

  • andrelot

    An issue with lack of some central racks is that re-balancing bike stock is much more expensive to be done under that model. Most big bike share systems have to do stock re-balancing on a daily basis.

  • AnoNYC

    I’ve read that the existing software does not accept international credit cards? If that’s the case, than a huge segment of the market is being left out. When the software gets replaced this problem should be corrected.

  • RunningWriting

    It doesn’t really have anything to do with economies of scale. The original software used with Alta systems in DC and other earlier systems was written by 8D, a former partner of Bixi. That software has performed much better than the software used in Chicago and NYC.

    The problem is that Bixi wanted to buy 8D outright. 8D refused and the two split apart. Bixi had to find a new software solution for future systems, such as Chicago and NYC. They came up with an inferior product, which resulted in many of the delays and problems in those two systems. Then those cities withheld large payments, which led to the cash crunch and eventually the bankruptcy of Bixi.

    Alta and 8D had already announced a new partnership for new and existing bikeshare systems. 8D bikeshare software works. No need to come up with a new software setup from scratch, unless there’s some reason why Citi Bike can’t be converted to 8D software.

  • RunningWriting

    Bikeshare usage is low in DC? That’s news to me and to the people who have used the system millions of times over the past 5 years.

  • RunningWriting

    Bixi tried to buy out the entire 8D company. 8D refused the proposal, which led to Bixi and 8D splitting apart. The replacement software that Bixi found for Chicago and NYC was a disaster. It led to many of the problems with those systems. Those cities then withheld a substantial amount of money. Bixi ran into a cash crunch situation and filed for bankruptcy.

    8D and Alta had already announced a new partnership at the beginning of this year. Their new bike stations and systems are being installed in Seattle’s new bikeshare system, called Pronto! (They added the exclamation point, not me.)

    I agree that 8D technology works. No need for Alta or REQX to write software from scratch. Alta is a partner with 8D and 8D has a better software product than the one being used with Citi Bike.

  • NF

    If advertising is what helps bring this service to more cities and larger areas, then yes, absolutely.

    But I’m mostly talking about how the large physical presence makes the system *more* usable by establishing expectations about where bicycles will be.

    The large docks also make a bold statement about the utility of bicycles in our cities. Even when mostly empty, the sites are difficult to ignore.

    I’m intrigued by the increased flexibility and lower costs of SoBike, but I also see benefits in the current dock-based systems.

  • Uptown’s main tourist attractions (Museum Mile, Central Park, AMNH, maybe Columbia) seem like better candidates for bike-share trips than Midtown’s or Downtown’s. However, I agree that adding them into the Citi Bike footprint won’t change the program’s financials overnight.

  • CaBi docks were how most casual users in a DC intercept survey found out about bike-share; seeing the bicycles around was a distant second. And to confirm the point, Deutsche Bahn runs its Call-A-Bike system either dockless (“flex”) or docked (“fix”), and the docked systems generate more rides per bike per day.

  • rickbynight

    Hangzhou, China is ~ $30/year, $0.15/hour after 1
    Paris, France is ~ $25/year, $2/hour after 0.5
    Lyon, France is ~ $30/year, $2/hour after 0.5
    Barcelona, Spain is ~ $50/year, $2/hour after 0.5
    Brussels, Belgium is ~ $40/year, $1/hour after 0.5

    So what’s the deal with North American bike share being so expensive?

    NYC is $95+tax/year, $2.50/0.5 + $9/next 0.5
    Montreal is $82/year, $5/hour over
    Boston is $85/year, $6/hour over
    DC is $75/year, $6/hour over
    SF is $88/year, $11/hour over

    All of these north american cities use the same bikes… Is our model/infrastructure that much more expensive than the international ones?

  • qrt145

    I guess the main difference is how much each city is willing to subsidize the service, but I’d be interested in learning more about it. Maybe the “City Cycling” book has some data.

  • stairbob

    Another good thing about docking stations is that they create new bike parking, instead of taking it away from private bikes (for which parking is already in short supply).

  • rickbynight

    That would be my guess too. It seems like US cities are looking for sponsorship/rider costs to pay for the majority of the system, whereas many international cities view it as just another form of public transit, which should get subsidized at a (somewhat) similar rate for its positive impact on the urban environment.

  • Daberg

    The fact that there are no hikes North of 59th street on the UES or its defeats the purpose of it being used as a commuting vehicles meanwhile Brooklyn and wall Street has bikes. How difficult is it really to get bikes up town?

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