Bike-share schemes: what price a healthier city?

Bike-share schemes across the world are promoted by cities as valuable mechanisms for reducing congestion, improving people’s health and cutting air pollution, however they are costly systems to run and require significant investment from both the public and private sector. With New York seeking a further US$14 million in funding for their Citi Bike scheme and London about to start their search for a new sponsor to replace Barclays’ £5 million a year support, Nick Michell asks whether bike-share schemes are worth the investment

Bike-share schemes have seen explosive, global growth over recent years. Between 2008 and 2013 the number of bike-share systems more then doubled from 213 operating in 14 countries using 73,500 bicycles to 535 schemes, in 49 countries with a total fleet of 517,000 bicycles. In particular, adoption of these systems outside of Europe soared over that period, up from one system in Washington DC to around 143, with more than 50 percent of the world fleet in the Asia Pacific region especially in China.

Bike-share schemes are services by which bicycles are made available for shared use to individuals on a very short- term basis. The main purpose is providing a form of transport that allows people to depart from point A and arrive at point B free from the worries of ownership and at a low cost. Each system works on the simple principle that a user can borrow a bike at a docking station and then return it to another with many offering subscriptions that make the first 30 to 45 minutes of use free of charge.

“As more and more cities begin to shift away from car-centric city planning, the need for effective and environmentally healthy transportation options rises,” says Brian Conger, Director of Operations for B-cycle, a bike-sharing programme that has implemented bike share systems in 30 cities across North and South America. “Bike-sharing is the perfect complement to a multi-modal approach to transportation – i.e., take a bus/train into downtown and hop on a B-cycle bike for the last leg of the trip. Not only does bike share replace a significant amount of car trips, it helps foster the ‘liveable streets’ movement for a healthier and more active infrastructure for all types of transport. By enabling more people to take trips by bike, bike share is an important part of the recipe when aiming to create vibrant, sustainable, and economically prosperous cities.”

China’s bike-share fleets are increasing at a significant pace and the Wuhan and Hangzhou bike-share programmes are the largest in the world, with around 90,000 and 60,000 bicycles respectively. In Hangzhou there are over 2,400 stations. The Vélib’ scheme in Paris, which comprises around 20,000 bicycles and 1,450 bicycle stations, is the largest outside of China. The countries with the most systems are Spain (132), Italy (104), and China (79).

While the number of cities implementing bike-sharing systems is increasing, the schemes themselves continue to evolve at speed. Bike-share use is made more predictable with smartphone mapping apps, which show where nearby stations are located and how many bikes are available at each station. This is also important for riders looking to return a bike, as they need to know if there is a dock open at a certain station, since stations can fill up with bicycles. So using bike-share to get around a city is made far easier with real-time, GPS-based smartphone apps with bike-share station information overlaid on a city map.

Bike sharing opens up parts of cities that were previously more difficult to access by public transport, especially late at night when bus and train services get thinner. Property developers are also now beginning to recognise potential benefits of bike share schemes; just as houses near metro stations tend to command higher prices, research now suggests that access to cycle paths and proximity to docking points is linked to higher rents and property prices.

“The Melbourne Bike Share supports the State Government’s goals for social sustainability within an integrated public transport system and a viable transport alternative,” explains Patricia Liew, Regional Director Metro North West for VicRoads, the state of Victoria’s highway department. “There are also environmental benefits, as the bike share scheme assists the state and local governments in reducing their greenhouse gas emissions.”

In Melbourne, the scheme is increasing in popularity with locals and tourists, with new casual hires doubling in the past year since the introduction of courtesy helmets. “This summer, there was a 17 percent increase in total bike usage compared to last year,” says Liew.

The need for government support

While the potential health and environmental benefits, and popularity of bike share schemes like the one in Melbourne, are hard to deny, the financial outlay that is required to run these systems has been a source of controversy. Since it launched in 2010, the Barclays Cycle Hire in London, has been criticised because of the significant cost to taxpayers to run the system on a yearly basis. While Barclays Bank signed a five-year sponsorship deal worth £5 million a year in 2005, Transport for London, which is funded in part by the government and in part by fare providers, has still had to subsidise the scheme to the tune of around £10 million a year.

Although the Barclays Cycle Hire has proved a big success, providing 8 to
10 million additional cycle trips per year through the system, and with the boost of the Olympics in 2012, seeing an average of around 30,000 bicycle hires a day, there has still been criticism about the amount of taxpayers’ money that is required to maintain and run the scheme.

“The thing with cycle hire is it is not just the journey numbers, although the journey numbers have been pretty impressive, it is also the behaviour change that it brings and the signal of intent that it sends,” says Nick Aldworth, General Manager of Barclays Cycle Hire. “However it is my personal view that it is not possible to run a high volume bike-share scheme that isn’t subsidised, in the same way that all public transport is subsidised, because a lot of money needs to be put into the operation and redistribution and into making sure that the bikes are always available and serviced, and that there are spare bikes stocked in the background so we can always have our 10,000 bikes on the street.”

Barclays Cycle Hire currently has a workshop in Clapham in south London and one in Islington to the north that have hundreds of bikes passing through them each day to be repaired or recycled. Every morning at Waterloo Station, up to 500 bikes are given out to commuters between 7:00am and 9:30am, with the vast majority of those people cycling from Waterloo into the city. Most of these commuters are on annual access periods (they are members of the scheme) and are therefore paying around ₤0.25 day for that service.

“It is fairly obvious that we are not going to be able to facilitate a storage facility at Waterloo, a storage facility at Stone Cutter Street in the city and recycle those bikes during the day for ₤0.25,” says Aldworth. “It is not a business that would attract the private sector. So to run that operation at a profit we need to provide fewer bikes or increase the price considerably and we don’t want to do either.”

According to Aldworth, there is no way to do it cheaper without compromising the service you provide the customer. “Now someone could take the decision to lesson that service and cheapen the operation but in my opinion after three years of operating this scheme, in this city or any other similarly sized city, there’s probably not a way to run a good customer service at a profit,” adds Aldworth.

Almost all bike-sharing systems in cities around the world depend on government support, particularly for the capital expenditure required to build out networks of stations and bikes, however, when launched in May 2013, Citi Bike in New York, was marketed as one of the only schemes to be completely privately funded, with no cost to the taxpayer. Citigroup and Mastercard committed nearly US$50 million in sponsorship over six years to fund the cost of purchasing the initial stations and bikes, and other start-up costs.

New York’s bike-share programme may be hugely popular and widely successful with just over 100,000 annual members, nearly 7 million trips taken, and over 20.5 million kilometres ridden on the bikes since the launch, but after operating for just under a year, it is already searching for a further US$14 million investment. While in good weather, the Citi Bike scheme can see an average of 36,000 trips a day, officials have admitted, even before the first anniversary of the system, that new investment is required to help fund an expansion up to 10,000 bikes.

Although Citi Bike is yet to ask the New York state government for any financial help, Dani Simmons, Director of Marketing and External Affairs for NYC Bicycle Share, believes it is completely rational for bike share systems to be subsidised by the government.

“I think it’s entirely reasonable that some bike share systems might be subsidised by government funding, the same as mass transit or roads,” says Simmons. “Not every city has so many successful and large companies that call
it home and are looking for sponsorship opportunities. And depending on the goals of the government, an operating subsidy might make sense too. For instance, if social-equity is an important goal and keeping user-fees low and having stations in low-income neighbourhoods is important, a government subsidy might be in order, since these are social goals, and not always in sync with the business needs of making sure a system makes enough money to run sustainably.”

One of the newest schemes in Latin America, in Santiago, Chile, which began operating a pilot plan on 25 October 2013, in Vitacura, a commune within the city, with 30 stations and 300 bicycles, has now grown to possess more than 2,000 users and over 50,000 kilometres made in trips.

Bikesantiago has received invitations from other cities and even other countries, to showcase the system and the scheme is already planning to expand. To the 300 existing bikes in Vitacura, Bikesantiago will add 150 in Lo Barnechea and then a further 200 in Ñuñoa. Plans are in place to add other communities such as Las Condes, Providencia and Santiago Centro, to finish this first year with 1,000 bikes on the streets.

Although the current system is completely funded by Banco Itaú, Alejandro Powell, CEO of Bcycle LATAM, the operators of the scheme, warns that the expansion of the programme to larger municipalities is likely to require the financial support of the state government.

“Bikesantiago does not receive any state funding or from municipalities,” says Powell. “Our business plan involves no profits from fiscal resources. It’s a gift that we give thanks to the sponsorship of Banco Itaú through its policy of corporate social responsibility. Membership income is wholly for the maintenance of the system. However, we believe that the expansion of the service to larger municipalities will need support from the state, and we have found a strong interest from the new government.”

The health benefits of bike-share

Bike-sharing advocates believe the systems shouldn’t be expected to pay
for themselves, as they are no different to other forms of transit such as buses
or roads yet, bike-sharing generates a number of other shared benefits. Since 2010, B-cycle claims that its systems have helped cities burn more than 98.7 million calories and 12,700 kilogrammes.

Bike-share provides cities with a transport option that not only helps the environment, but also the health of the community. As obesity, diabetes and healthcare costs continue to rise, cities need to begin to take a holistic approach to encourage active living. Public bike sharing provides a simple solution that simultaneously addresses environmental, economic and health challenges. Just as important for the long term, the popularity of bike-sharing schemes creates political support for cycling infrastructure, through dedicated lanes and bike parking, which enables safer cycling for everyone.

Mia Birk, Vice-President at Alta Bicycle Share, a company that focuses
on bicycle share management and operations working in US cities such as Chicago and Boston, and Melbourne in Australia, was one of the very first advocates for bike-sharing schemes when she became Portland’s bicycling coordinator in 1992. She believes that the health and lifestyle benefits that come with bike-sharing schemes are completely worth the financial outlay.

“The health benefits of these systems for users are tremendous, as with any form of physical activity, impacting overall fitness and reducing risks of heart disease, asthma, strokes, diabetes and other symptoms associated with sedentary lifestyles,” says Birk. “Since our launch of Divvy Bikes
in Chicago, in June last year, we’ve offset an estimated 1.3 million pounds [590 tonnes] of carbon and Alta-wide that number is 16.5 million pounds of carbon offset across eight systems.”

It is clear that the financial outlay required to implement, run and maintain bike sharing schemes is substantial, but at the same time this needs to be considered alongside the significant environmental, health and lifestyle benefits that these systems can bring.

“For me there are three benefits for setting up a cycle scheme in any large and dynamic city: as a behaviour changer, so it changes the way people travel around the city; signal of intent, demonstrating the importance of cycling; and thirdly it makes people cycle that otherwise would not normally cycle,” says Nick Aldworth. “Cycle schemes break down a lot of the barriers [not owning a bike for example] for people who wouldn’t otherwise cycle. So for me cycle-hire schemes meet a lot of the goals for new and growing cites but also for cities that are evolving.”