A Greater Good: Citi Bike and Profits

Citi Bike should be gearing up for a spectacular second summer. Instead, the bike-share program is in trouble. The problem has little to do with bicycles. The problem is confusion over Citi Bike’s public social goals versus its private profit-making goals. Mayor Bill de Blasio should make clear that the former trump the latter. 

The point of the bikes is to encourage New Yorkers to ride to work, to the supermarket or to visit friends without having to worry about having a bike stolen or bringing a bike into a high-rise building. New Yorkers can sign up for $95 a year to rent a bike at any “dock”—below 60th Street and in parts of Brooklyn—and return it to any dock within 45 minutes. 

The Bloomberg administration heavily encouraged the program, but it is a private, for-profit venture. Citi Bike is supposed to pay for itself from user fees as well as sponsorships by Citibank and MasterCard. 

Citi Bike is a success. Bike share has attracted 100,000 annual members— multiples of what its managers initially projected. On a good day, 40,000 people use the blue bikes. 

Citi Bike’s warm-weather usage— each bike gets to go on six or seven “rides” a day—rivals the similarly heavy usage that Paris’ stellar Vélib’ system sees. Even on a bad day, 5,000 to 15,000 New Yorkers who don’t mind braving the cold, wind and snow use the bikes. 

Most important, New Yorkers have stayed safe on Citi Bikes, incurring only minor injuries. Riders can’t grow complacent, of course. But the Bloomberg administration was smart in introducing bike share to areas of the city where protected bike lanes and naturally congested traffic help riders. 

The problem with the program is that the company that runs Citi Bike— Alta Bicycle Share—is a small five-year-old company with the challenges that come with being a small five-year-old company. Alta runs other American bike-share systems, including Boston and Washington. But Alta has never run a system of New York’s scale and demand. There is no such system in America. Chicago, which comes closest, does less than a tenth of New York’s annual rides with the same number of bikes and more docks. Alta has found itself overwhelmed—having to spend more than it expected in “redistributing” bikes to meet time-of-day demand. 

Alta has also made mistakes. Everyone has noticed that bad software makes it hard for tourists to rent bicycles by the day. But that’s not the biggest problem. Tourists may be foregoing the bikes because there are no bikes at popular stations, and because the bike docks don’t extend to Museum Mile and other popular destinations. The bigger problem is that bad software has increased labor costs. People cannot dock bikes properly, so they call customer service. 

Alta is losing single digits of millions of dollars a year on Citi Bike. Can the company turn itself around, writing off these start-up costs, hiking its membership price and convincing new investors that it’s learned from its mistakes sufficiently to run a bigger program? If so, great. The problem is what happens if it can’t. Citi Bike is not Candy Crush. 

Bike share has social benefits. It keeps people off overcrowded trains and buses, making life better for people who ride trains and buses. It protects pedestrians by slowing motor traffic. A bigger program—in Queens the Bronx and Staten Island—could give poorer New Yorkers a new, healthier way to get to work and school. 

Mayor de Blasio should make it clear that a better, bigger bike-share program is a city priority. He should establish goals and deadlines for program expansion. He should commit to bringing bike share to the Upper West Side, Upper East Side and Harlem this year, giving his DOT another reason to improve street safety at the same time. And he should explore offering city-paid bike-share vouchers for people who make under a certain income. 

If a bigger, better program makes a profit, fine. If not, that’s fine too. Almost no urban transportation makes a profit. The purpose of the MTA is not to make money but to bring workers into and around New York so that they and their employers make money. Bike share is no different. 

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.