Bixi’s broken spokes

Is the bike-sharing program a victim of its own success, or just a horribly thought-out business model?

Jessica Darmanin

Toronto has devised quite an ironic plan to save its cash-strapped “bike sharing” program: instead of building 11 hi-tech, self-cleaning public bathrooms—a plan originally announced in 2008—city council decided in mid-November to redirect those millions of dollars to a project that probably belongs, well, in the toilet.

The concept of bike sharing itself doesn’t necessarily stink. Municipal bike shares have exploded across the globe in recent years, with hundreds of cities—from Paris to Beijing to Mexico—unveiling shiny fleets of communal bicycles that can be borrowed with the swipe of a credit card or an annual subscription. Some bike shares are actually self-sufficient, requiring not a dime of taxpayer money. But Toronto’s program, in hindsight, was destined to fail.

The plan was approved in 2010, when sidewalks in another city—Montreal—were already filled with thousands of “Bixis,” the pride and joy of a city-owned firm known as Public Bike System Co. (PBSC). Anxious to sell their award-winning, environmentally trendy concept to other urban centres, Bixi officials pitched the idea to Toronto (which, for the record, did not yet boast a crack-smoking mayor). As long as the city agreed to guarantee a $4.8-million loan that would allow the company to deliver and install 1,000 bikes at 80 stations, Toronto’s public purse would remain closed. Sponsorships and user fees, Bixi promised, would cover operating costs and loan repayments.

Toronto eagerly signed the contract, and in May 2011 the first vending-machine-style cycles arrived downtown. Less than three years later, the city is now on the hook for nearly $4 million, trading toilets for two-wheelers in the hopes of breaking even.

For Bixi, the Toronto debacle is just the latest in a long list of well-publicized financial headaches. At home in Montreal, the bikes have become a beloved fixture, used by thousands and universally praised by urban planners and climate change activists. But as a company, Bixi’s international reputation continues to tank, plagued by embarrassing software glitches, frustrated customers and dire warnings from Montreal’s own auditor-general. In September, Jacques Bergeron went so far as to express “serious doubts about Bixi’s ability to continue operations.” His words were disturbing enough to convince Vancouver to hit the brakes on its own $20-million deal with the company.

As Bixi scrambles to stop the bleeding (the firm has hired a restructuring expert to help remedy its admitted “financial difficulties”), a much bigger debate remains. With more cities hopping on the bike-sharing bandwagon, who should pay? Are Bixi-style programs truly an extension of public transit, deserving of public subsidies? And what are the real environmental benefits, if any?

“If you say it’s helping with greenhouse gas emissions, this is bogus,” says Ahmed El-Geneidy, a transportation and planning professor at McGill University. “The type of person you’re attracting with Bixi is not leaving his car. What you’re doing is you’re relieving your congested transit system.”

In fact, a 2010 study co-authored by El-Geneidy found that only two per cent of Bixi riders would have driven a car otherwise—a negligible reduction in carbon emissions. Another one-third would have taken public transit instead, which means their shift to Bixi did nothing to offset emissions. Still, El-Geneidy says he supports a subsidized bike-share program, not because it’s green, but because it provides residents more transit options and improves personal health. “I’m not an economist, but I can tell you for sure that a bike-sharing system can be run efficiently,” he says. “Forget about the one being run by the Bixi people here, because they don’t know how to run it efficiently.”

A pet project of former mayor Gérald Tremblay (who resigned amid Quebec’s war on corruption), the Bixi share program was officially unveiled in May 2009, the first of its kind in North America. All along, the master plan was to aggressively sell the made-in-Montreal concept to other cities, turning a profit that, in theory, would fund its system. London, England, was among the first to bite, buying its own Bixi fleet in the summer of 2010.

But the founding business model was severely flawed. Just 18 months after launch, Bixi was in such financial distress that Montreal had to approve a $108-million bailout (a $37-million loan, plus $71 million in further guarantees). Despite promising taxpayers Bixi would never cost them a penny, the city is on the hook if the firm ever collapses.

In June 2011, the city’s auditor-general delivered his own scathing assessment. Citing a disturbing lack of administrative oversight, Bergeron said Bixi was essentially conceived on a whim: “No one interviewed could provide any feasibility studies, business plans, risk analysis or cost-advantage studies. Nevertheless, everyone was in favour of launching this project without any of the necessary information to make a proper decision.” By then, Toronto was already under contract. So were numerous other customers, including Minnesota and Boston.

Bixi’s troubles continued to mount in 2012, when 8D Technologies—the firm that provided the original software for the bike’s solar-powered docking stations—filed a $26-million lawsuit, claiming improper use of the technology. Bixi countersued, but in the short term the company faced a far more pressing challenge: replacing 8D’s software. Not surprisingly, the result was hardly inspiring.

In Chattanooga, Tenn., technical problems delayed its Bixi launch for months, triggering one local newspaper to dub the program a “bicycle boondoggle” financed by $2 million in U.S. federal cash. “Could someone pinpoint the precise moment when it became the responsibility of non-bicycle-riding Americans to foot the bill for others to ride?” one editorial asked. Software hiccups also forced New York to push back the Big Apple’s much-hyped Bixi debut by almost a year.

New York’s Bixi network did eventually go live in May, fully funded by corporate sponsors, including Citibank. (Which explains the catchy name: “Citi Bike.”) But for Bixi, the bad news continued. The National Capital Commission in Ottawa is trying to sell its system, citing continued losses. In Minnesota, the non-profit that runs the city’s bike share filed a “notice of material breach” in its contract with Bixi, the first step toward potential litigation. And with deals in Toronto and Vancouver on life support, Montreal officials have had to reassure the public that Bixi is not going bankrupt.

In an email to staff (and leaked to a local paper), the CEO of the Public Bike System Co. insisted Bixi is a victim of its own success. Cash-flow problems are temporary, wrote Michel Philibert, because of “large deliveries concentrated in a short period.” Despite the “rumour mill, our level of confidence in the future of the company remains steadfast.”

Vancouver does not seem so confident. It wants to see a sound business plan and proof of sponsorship contracts before handing over a cheque. Asked about those developments, a Bixi spokesman referred Maclean’s to its Portland-based partner, Alta Bicycle Share, which is supposed to oversee the Vancouver project. (By press time, Alta had yet to respond.) “As for Toronto, unfortunately the negotiations are ongoing and so for that purpose I cannot comment on what is going on,” said the spokesman, Fabrice Giguere. “What I can say is if you want to call us in the spring, when everything will be settled down, we’ll be more than happy to give you an interview.”

By then, who knows what else may be in the toilet.




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Bixi’s broken spokes

  1. There’s something kind of cool about Montreal’s reckless approach to living life and building things. It may lose money and be badly run and even if it was sold on a lie, the system is pretty damn cool. And, you know, it exists, as opposed to being bogged down in feasibility studies for 20 years, fiscal recriminations, angry lefties demanding an LRT version, the Toronto way.
    I ride the London Boris Bikes at least twice a day. Usage has dropped a bit since they doubled the initial teaser-rate annual membership, but they’re an essential urban amenity, cutting 2/3 of the overcrowded and inconvenient public-transit trips out of my life, and also keeping me a bit fitter without having to worry my bicycle will get stolen. Plus, it’s cool for tourists. There are intangible benefits to cities that have Bixi programs.

    Arguably Bixi is not good in Toronto because they didn’t go far enough to cover the downtown area. It’s pathetically small, not going much west or east of the subway loop. Bixi would work better if it was a serviceable alternative to the god-awful streetcars.

    • What is cool about all the city dwellers paying another subsidy towards transit by funding this project? The only benefit it has if one can be measured is that it takes some strain off transit.
      Another pipe dream. sad that Montreal got sucked in. Cause they were able to fish in a lot of other suckers too.
      Are the bikes made in Canada or China? No jobs for canadians.
      A great business model for the creator only.

    • It’s easy to be cool and reckless when the bulk of your tax money comes from people whose votes you don’t have to rely on. Montreal exists in this little Bizarro World whereby they have access to a supposedly bottomless pit of cash known as “the Alberta taxpayer”. Maybe if Quebec didn’t have so much access to other people’s money, there would be less of it to spread around things like Bixi, the Mafia, etc.

      • Yada, yada yada. Ever ridden a Bixi? They’re great. All I’m saying is, if a place is going to spend someone else’s money, at least spend it on something cool that works well for the user. BTW angry Alex, the bikes are made in Chicoutimi.

        • Is the “Bixi experience” twelve times as great as any other bike?
          Look, I got 20G’s tied up in a race car, but even if I was spending somebody else’s money, I’d have a hard time laying down a cool 1/4 mill for the kind of racing I do, so when a govt. body lays out $4800 PER BIKE for a decidedly unproven concept, there’s a whole bunch of stupid going on all at once.
          Methinks Rob Ford hootin’ on the crack pipe was way down the list of criminal acts committed by anyone in Toronto City Hall compared to this.

  2. Uhhh…..last I heard, Minnesota was a state, not a city.

    • Yes, they made the mistake twice. I thought maybe it was that the MN government was funding the project, and therefore the reference to MN was correct. But the second time, they say, “In Minnesota, the non-profit that runs the city’s bike share…” I’m sure they meant Minneapolis. Reminds me of the time my wife and I went to New Hampshire for the weekend. My mother-in-law asked, “New Hampshire – what state is that in?”

      • Turn off the spell checker till the article completes. And edit.

  3. So 1/3rd of Bixi riders would have taken public transit instead, thust requiring the city to use bigger or more busses to ensure all the people get moved, and yet somehow, that doesn’t translate into any GHG reduction?

    Somehow, I’m thinking El-Geneidy went into this with an agenda that prevented him from noticing the obvious.

  4. The big problem here is that Montreal is a city designed for bicycles. Of course people want to rent Bixi bikes, because it is safe to ride them!

    In Toronto, a city that actively hates bicycles, only the suicidal would ride bikes… other than super experienced cyclists of the John Forrester type who already own expensive commuter bikes.

    Bixi is just not going to succeed unless a city is bike friendly. Toronto, on the other hand, is actually bike hostile.

    • Toronto would be less bike hostile if cyclists stopped being stupid to the point that they are not only endangering themselves, but also others, particularly children. I shouldn’t have to force my children to walk in front of me to ensure they aren’t hit from behind on a crowded sidewalk beside a bike path on a road and less than a block away from a separate car-free bike path for those weary of cars. But I do. Consistently. I have been hit, my luckily muzzled dog has been hit.

      I used to be a cyclist, there used to be a large number of cyclists who used the cities bike trails, and followed the law when sharing roads. Any of the cyclists I now from that era still follow the law, and hate most cyclists. Cyclists have only themselves to blame.

      • Shrug – other cities are able to make cycling work, resulting in less traffic, congestion, and fewer side-walk riders. Rather than vilifying them, perhaps studying them is in order?

        • Which cities?
          Name one that doesn’t take away from everyone so less than 1 percent of the population can ride safely. I’ve been riding since 1966 and never ever required a special route because I know how to take care of myself.
          Far too many whiners now and no real vision of life except to snivel and whine about their pathetic selves.
          Vancouver is creating traffic congestion all over the place for cyclists. Anyone who lives and pays taxes in Kitsilano knows..

          • You are kidding, right? Modal share in Denmark and Amsterdam is ridiculously high, in the 30 percentile range. Even in Canada, Ottawa has 3% modal share, and that’s with a relatively minimal effort.

      • It’s a vicious circle. Streets are dangerous for bikes and so the cyclists who do ride tend to be less danger-conscious or more reckless. Which lead to hostility towards cyclists and less efforts to make the city bike friendly.

        The biggest problem is that the city was not planned well, which is not surprising since it used to be multiple cities. It is designed for cars. The suburbs are very large and the main employment centres are typically too far for reasonable commuting on bikes.

  5. Just to be clear here on how this all went off the rails, go back and read the third paragraph. Now, in a world where you can buy a perfectly good bicycle for $200-250, how did the City of Toronto get snookered in to paying $4800 per unit for rental bikes? That’s like paying $120,000 each for a fleet of five-year old Chevrolet Malibu’s and hoping you’ll break even renting them out at the airport.
    This, kids and kiddies, is why we need to remove the ability of legislatures at all levels to spend new money without first getting direct approval from at least two-thirds of the people who actually PAY TAXES.
    You have to be a special brand of stupid to buy into things like Bixi. Whether you need special training to get that stupid, or are merely born that way is open to debate.

    • Bill noted:
      “You have to be a special brand of stupid to buy into things like Bixi.”
      Bill…..have you seen who made it on to the Toronto Council?

  6. Just another failed enviro-scam. Millions spent and wasted. Meanwhile tax payers are on the hook. Again.

    • hm. should the military not get helicopters because the govt procurement sucked? governments manage to waste money on everything all the time, sadly.

      now, it’s a good debate as to whether bikes are a reasonable part of a subsidized transit system (which all systems are, and generally provide societal benefits worth the cost), but whether bikes are ‘mass’ enough is a good question.

      Arguing against bike program because of government and business ineptitude is at it’s logical endgame arguing for anarchy, it misses the mark on what the real conversation should be.

      Or to put it another way, I doubt it’s a scam – what looks like a crap business tried to do something that both it and the government saw real benefits in. So again, argue the benefits, not the attempt – I’m sure they didn’t set out to stare at bankruptcy, though of course, like any business, milking the taxpayer is always good policy.

      • The bicycles cost almost as much as a bus per unit. They are thousands each not hundreds at most. The bicycles are made of unobtanium in a place called China.

        • I’m not going to defend the individual bixi pricing because I have no idea, but a LAV 4 and Ford Explorer share little is cost similarity – one is built to be bombproof. The requirements for bike share bikes are quite different than your CCM, an equivalent level of bombproof. I’m also not defending the value to the community. They will of course cost less than a bus and more than a CCM because they have specific requirements.

        • It’s pretty simple to perform a search to check your facts before spewing them forth…

          “The bikes are designed by industrial designer Michel Dallaire and built in the Saguenay, Quebec region by Cycles Devinci, with aluminum provided by Rio Tinto Alcan.”

          http://en.wikipedia.org/wiki/Bixi_(company)#The_bike

          • How did taxpayers get soaked again?
            “The bikes are designed by industrial designer Michel Dallaire and built in the Saguenay, Quebec”
            Why does QUEBEC always show up when it comes to socialist programs that cost the rest of us money?

          • Um, local entrepreneurs and designers coming up with an innovative product and manufacturing it in their home province doesn’t exactly scream socialism to me.

          • I don’t mind entrepreneurs at all……in fact, I’m quite fond of them. My question is why entrepreneurs in one province seem to rely almost exclusively on public money and political connections.

          • You could just as well ask………….. Why are stupid things most often spoken by an Albertan?

    • What would you call, every million dollars the tar sands spends on trying to cut down emissions and these plans fail. So………. they try another way, and it fails also, maybe one day they will get it right. In the mean time…… we/you the gas or fuel user pays the price it takes to finance these experiments, nothing in life if free, as you right wings are so quick to point out.

  7. Why is anyone at all surprised by this?
    Seriously, did anyone actually think this program would work?
    The next time some lefty councillor thinks he has a good idea about public sharing of ANY resource….google, “Tragedy of the Commons”
    It always ends the same. The brain trust behind these ideas always benefit somehow, and those who actually pay for it…not so much.
    Idiiots.

  8. The frustrating thing about this article is that it doesn’t get me into the nitty-gritty details that I can relate to and therefore judge and sentence the program a success or not: how much for a membership (annual, monthly, whatever)? How many are being used at a time? How long do they last? How much does a Bixi bike cost if bought retail? What are repair and maintenance costs typically? How much are the maintenance people, business managers, and owners being paid and how many hours a week do they work? I determine success based on comparing these things to my own vehicle, transit, and cycle use and costs – serving judgment accordingly.

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