Thursday, October 31, 2013

New Pricing Structure Needed

A major barrier to the financial sustainability and growth of bike-share services is how we price it. The predominant method of on-going funding of bike-share services in North America is through membership and usage fees. As the program manager for Arlington, Virginia's portion of Capital Bikeshare I see in the monthly financial reports which show that membership fees are the bulk of this revenue with usage fees being a minor amount. The warmer months can pay for themselves, but the colder months do not, which ensures this 62-station portion of the service has covered about 60% of its operating costs during the most recent fiscal year. While good for a transit service, why can't we do better for the long-run?

Pricing structures of bike-sharing services in North America and much of the world tend to provide the first 30 minutes of every trip for free with increasing fees for additional 30-minute periods. Many bike-share services allow for redocking of one's bike and a resetting of the clock for the same trip, but on a new 30-minute period. This is the equivalent of someone touching their toe onto the platform from the subway car while stopped at a station and not having to pay for the remainder of their trip. For bike-share this is great for increasing the number of trips, albeit by double-counting some trips, but it's bad for the bike-share transit agency which is trying to cover its operating costs like any other transit service and not getting enough help from the local, state, or Federal government.

The common bike-share pricing structure is odd as it's so different from other established modes of transit. Other modes tend to have either a fee per trip or a week/month pass with unlimited ridership. Annual transit passes are rare and from a quick unscientific Google search, seem to be offered mainly by universities and by transit agencies, however, directed to employers for their employees.

What we need to try out is a new model that would allow people to use the service without needing to "join" by paying a decent sum at the on-set. There may need to be a minor fee to obtain a fob or smartcard fare media to use the system, however, beyond that we should have in place a fee per trip for the first 30 - 60 minutes and charge a fee that is lower than, but relative to other modes of transit within the respective region. This fee, say $1.00 - $1.50, would be instead of the initial 30-minute free period. Extended rentals beyond the initial period still would be required to pay increasing fees based on trip duration. Changing pricing models after the public has become familiar with the existing model is risky, however, it could be introduced as a pilot and concurrently to our existing model to gain data on its uptake before any decision were to be made to either keep or scrap it.

The point of this change is to bring more people into the fold as bike-share customers by taking down the barriers to do so. I likely wouldn't take a bus at all if I had to pay a one time fee of $100 for an unlimited service that I presently only infrequently use. We need infrequent customers on bike-share, not just the daily commuters. There are about 2 million residents in the four jurisdictions that offer Capital Bikeshare, but only 23,000 of them are annual members. There's a lot of room to grow.

Other benefits of a fee per trip pricing structure are that low-income individuals and the unbanked could pay as they go in smaller amounts, rather than an initial lump sum which is less affordable. Bike-share agencies could retain individuals as customers who for change of home or work or other reasons, don't find themselves using bike-share as often and would otherwise drop their membership. Also, the customers who use the service the most would pay more under the fee per trip model, which is not a bad thing as they're putting the most wear and tear on the system.

The IRS recently determined in the U.S. that bike-share isn't transit and therefore won't extend a tax-free commuter benefit to employers who wish to give this benefit to their employees, as they can for other transit services. I've also heard rumors that the United States Dept. of Transportation (USDOT) also doesn't consider bike-share as transit partially because of this fee structure that we have in place. Getting dedicated USDOT funding to help with operating bike-share services -- as other transit modes have in the U.S. -- is not being offered by the Feds because of bike-share's perceived "un-transitness" that is a large part due to the existing pricing structure that is more similar to car-sharing, which indeed isn't transit. The pricing structure needs to be changed to improve the financial health of bike-share services, so we can grow the size and number of services and ensure funding exists to operate them now and well into the future.

Bike-share has provided a great boost in bike mode share to most likely all jurisdictions which have implemented it. A short-term boost is great, but to ensure bike-share is a permanent and viable infrastructure improvement to our cities, counties, and regions, we need to make sure that it's here to stay and not simply a blip in creativity from the roaring 2010s.

Tuesday, October 29, 2013

The Bike-sharing World - The last week of October 2013


Slick advisement for Bikesantiago, where the tire isn't a slick

Last Friday Santiago, Chile launched its 2nd bike-sharing program with Bikesantiago. The program with 300 bikes in 25 stations, around the Vitacura section of the city, uses B-cycle equipment. The program is sponsored by one of South America's largest Banks, Itaú. This bank also sponsors many bike-share programs in Brazil and a seasonal one in Uruguay. Bikesantiago currently only offers monthly memberships at 4,999 pesos ($9.85 US), half year memberships at 24,950 pesos ($49.20 US) and yearly memberships at 49,999 ($98.50 US). As with most bike-share programs there is a 30 minute initial period at no extra charge, then 500 peso (about $1.00 US) for the next 30 minutes and 1000 pesos for the next 30 minutes. Santiago hopes to eventually have 3,000 bikes in 300 stations. This is the first deployment of a large North American system in South America and the first B-cycle system outside the USA.

Mexico City

Also last week Ecobici bike-share announced not only was it expanding its service area south into the Benito Juárez section of the City, but there is Bigger News! It has become the first North American bike-share program to be part of a city's multi-modal transit card for the bus, the metro, the trolleybus and parking meters according to Current Ecobici card holders just need add the service to their plastic RFID card. New customers can add the Ecobici subscription to a new multi-modal card. Mexico City has caught the wave of the "single media fare card" future!

Philadelphia, Pennsylvania:

Yes, now that the issuance of a Request for Proposals (RFP) for a bike-share program is so frequent, it no longer qualifies as news. But even before this blog reported on January 21, 2008 that the Bike Share Philadelphia Forum an Astounding Success, this blogger has been working non stop to make bike-share happen in the city of Philadelphia. The Philadelphia Bike Share RFP is just the beginning of a journey started almost seven years ago!

Fullerton, California:

BikeLink is about to begin a bike-share program in Fullerton, California. This is part of a pilot for the Orange County Transportation Authority for 165 bikes in 15 stations. It is a really good re-use of some of the Anaheim, California pilot program from Bike Nation. According to information from Bike Nation, it plans on co-investing in the program in Fullerton by adding 350 bikes in 35 stations. It is great to finally see bike-sharing about to start rolling in the Los Angeles basin.

Washington, DC:

The Internal Revenue Service (IRS) of the US Government has made the determination that the cost of bike-sharing memberships does not qualify for the Transportation (Commuting) Benefits Program under Fringe Benefit Rules for transit, according to Even though the rules allow a $20 a month reimbursement for bicycle commuting to work, from an employer, the IRS determined that bike-sharing was not mass transit or a transit pass, nor was it a purchase or maintenance cost to get to work. So no reduced rate ride! There is never a free ride!

United Kingdom:

Since Transport for London (TfL) Barclays Cycle Hire  sparked a new way to get around London almost three and a half years ago, there is now shocking news that there will be electric cycle hire bikes! As part of London Mayor Boris Johnson's next bicycle plan, according to the Evening Standard, the hillier parts of the City will get several hundred electric or electric assist bike-share bikes. They are not to be part of the current system, but a complement in places where a regular Barclays Cycle Hire could not be running up the hill!


The Bike-sharing World Map is the premiere resource for information on cities with bike-sharing. Here is the new easy web address for viewing the map:

Follow the Map on Twitter@BikesharingMap

See the O'Brien Global Bike Share Map which shows real time bike usage in over 100 cities!

images: MovitBikeLink, IRS, Lewis Whyld/PA-the Gaurdian London

Russell Meddin