Citi Bike, Needing Millions of Dollars, Looks for Help
Leaders Seek to Rescue New York's Bike-Share Program
Eliot Brown and
March 20, 2014 10:08 p.m. ET
Leaders of Citi Bike are moving quickly to raise tens of millions of dollars to rescue the popular bike-share program as it loses money, according to people familiar with the matter.
Citi Bike's bright blue bicycles have become a seemingly indispensable part of some city neighborhoods, but its managers don't believe it can survive if it doesn't become more appealing to tourists and expand to new neighborhoods, the people familiar with the matter said. The program's leaders have approached officials in Mayor Bill de Blasio's administration about raising Citi Bike's rates, the people said.
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Citi Bike has been forced to contend with a number of costly issues, including damage to equipment during superstorm Sandy, software glitches and a difficult 2013-14 winter that discouraged ridership. But advocates said Alta Bicycle Share, the company that operates Citi Bike through a subsidiary, also hadn't done enough to improve the system and adapt to problems as they arose. "The bottom line is that New Yorkers deserve better," said Caroline Samponaro, a senior director at Transportation Alternatives, a nonprofit advocacy group. "The arc should be improving. All signs should be…that the demand, the usage, the attention is leading that arc up."
Representatives for Alta didn't respond to requests for comment.
One issue is that Citi Bike has proved more popular than expected with annual users who generate comparatively little revenue. Some 99,000 people pay $95 a year plus tax to be able to use the bikes for 45 minutes at a time. The potential for far greater revenue, however, is with short-term users. Many of those were expected to be tourists, and they haven't used the bikes nearly as much as officials had anticipated, people familiar with the matter said.
A 24-hour pass costs $9.95 plus tax and a seven-day pass costs $25 plus tax. Purchasing short-term passes has proved difficult due in part to balky kiosks that accept payment for the bikes and computer glitches.
Operational difficulties have also troubled Citi Bike. The task of moving bikes to respond to the patterns of commuters—those who grab a bike in the West Village to Midtown in the morning but may not ride it home at night—has been more cumbersome than expected in New York City traffic. That has raised costs. Also, some 50 batteries have to be changed manually at the system's 330 docking stations every night, requiring Citi Bike to hire a subcontractor just to do the job, according to people familiar with the matter.
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