Auto sharing is becoming a more popular method of transportation, so why shouldn't bike sharing follow suit? Quite a few consumers and companies agree with that statement. Bicycle-sharing systems have mushroomed over the last few years in large and medium-sized US markets, from bustling New York City to the slower-paced McAllen, Texas. Motivate, B-Cycle, and Zagster are among the larger and more established companies in the field, managing bike-sharing efforts in multiple metropolitan areas.
Bike-sharing systems establish stations throughout a metro area where patrons can rent bicycles for use and return them to the station when they are finished. Typically, the rental is per day via a credit card on the unlocking station, or by membership fee where members are given a key or ride code to unlock bikes for their use. In some areas, 3-day passes and/or monthly rates are available. Some systems are experimenting with mobile payment methods.
As a potential user, these systems can be cost effective when compared to cabs or other mass transit methods. Most daily rentals are in the $7-$10 range, and annual memberships are usually in the $70-$100 range (CitiBike's is $149 and offers a series of different ride lengths).
Check for limitations on the length of any individual ride — to keep people from hogging the bicycles all day, overage fees are usually included for rides beyond a certain time (30 or 45 minutes is common). You can take as many shorter rides as you want within the day/week/year without extra cost, but each individual ride during that time needs to be under the time limit.
Can bike sharing make money in the long term? That is in serious doubt.
Tim Ericson, the founder of Zagster, puts it bluntly. "There's no bike-share in the world that's profitable on rider revenue." Almost all bike-share systems rely on some sort of grant or partial government support because there simply is not a sufficient rider base to make the service profitable. Per-ride rental costs and memberships can only be raised so far before bike services price themselves out of usefulness. Credit-card-only systems may already be limiting ridership in some economically stressed areas.
New York City's CitiBike may be the exception to Ericson's statement. It takes no public funds and has all the conditions to be successful — a high population density nearby with many popular destinations within biking distance. (All riders have to do is survive NYC traffic.) However, it also has one of the highest fee structures.
If you are considering investing in a bike-sharing company, assess the revenue streams and assumptions very closely. In how many cities does the group operate, and are they at least close to profitable in all of them? How much income is derived from riders and how much comes from grants and subsidies? Do they have maintenance or theft issues? How are their customer service ratings? Do they compete with or complement mass transportation alternatives like subways or bus routes? Do they have advertising tie-ins?
If the entry is into a new market, assess the natural ridership, taking into account typical weather, a likely customer base such as a college campus, street accessibility and bike lanes, and how the base locations of the bikes fit into the logistics of the city. The locations need to be within reasonable access of the riders, either in populated areas or near transfer hubs such as rail stations, and enough desirable destinations have to be within biking distance and have their own stations available.
These factors can help you assess the potential risk and reward of a bike-sharing investment. If you like the idea but cannot bring yourself to invest directly, invest in the concept the old-fashioned way and patronize your local service. Keep carbon emissions low, stay in shape, and help your local bike-sharing program stay in business; that is a winning proposition.