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Citi Bike Needs 'Tens Of Millions' To Stay Afloat
By
Lauren Evans
Published Mar 21, 2014
Modified Mar 21, 2014
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By
Lauren Evans
Published Mar 21, 2014
Modified Mar 21, 2014
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Despite its popularity (even in the snow-sodden throes of winter) Citi Bike is mired in financial trouble. The Wall Street Journal reports that the broke bike share program is going to have to pony up "tens of millions of dollars" in order to remain afloat, though the source of that money remains unclear. If only it was sponsored by a financial institution raking in billions in annual profits...
Citi Bike was launched last May, though it was slated for unveiling long before that—Hurricane Sandy and a spate of other snags stalled its debut for close to a year. Less reported at the time were the difficulties unfolding behind the scenes: Bixi, the Canadian company that developed much of Citi Bike's technology, filed for bankruptcy protection in January, after several cities (including New York) refused to hand over millions of dollars, having found that the software behind the docking stations was unreliable.
The fervor over Citi Bike's problems eventually tempered, but it seems that those initial, nascent complications left behind a bill that Citi Group wasn't prepared to foot. Sources tell the Journal that while the bikes are more popular than expected among annual members, short-term-users, who generate the bulk of the program's revenue, are relatively scarce, deterred in part by the notorious technology problems that often accompany buying passes at the kiosks.
Citi Bike also didn't properly anticipate the amount of manpower necessary to prevent the stations from getting "dockblocked," a phenomenon caused by commuters who might ride in one direction but possibly not the other, as well as the effort required to routinely swap out batteries at each of the system's 330 docking stations, which involves the use of a subcontractor.
The cost of maintaining each of these moving parts has prompted Citi Bike to lay off some workers, meaning the system will run just a little less smoothly than before. The largest bike share program in the country, it's also the only one that receives no public funding, despite the belief among most of its users that the program qualifies as a form of public transportation and should therefore be privy to federal revenue streams.
Citi Bike is financed by corporate sponsorships—one in particular, to the irritation of many Delia Ephrons, though Goldman Sachs also forked over money for start-up costs. But "finding additional sponsors has proved challenging because the program has become so closely associated with its eponymous supporter," a source told the paper.
Transportation Commissioner Polly Trottenberg, who first gave voice to the program's financial woes during a city council hearing earlier this month, has asserted that it's still too soon to turn to public funding for help.
"We're not there yet," she said at the time. "We need to make sure that the current system is stable and has a good, viable operation."
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Lauren Evans
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