Comment 110417

By Haveacow (registered) | Posted March 23, 2015 at 10:25:44

I have dealt with this type of bicycle share operating model before, my guess, you are way underestimating their operational costs. Most people and companies do at first. This model is heavily dependent on municipal operating grants when it has been successful, which are illegal in Ontario. The individual municipality can't legally do it, period. What can and often does happen is that the province or a federal institution does it on behalf of the municipality or as part of a program which requires municipal operating proportional or matching funds. Considering they have already got a big provincial capital grant I think it unlikely operating grants will continue as well.

In Ottawa the biggest of the Bike Share programs (1 of 4 operating in Ottawa) had its funding delayed when a group of cab companies successfully argued in the courts that certain grants amount to an unfair subsidy to a transportation company. Also, they have to pay for a municipal company wide operating license, a provincial requirement (the municipality can't say no to it) that costs a minimum of $52,000 a year. The other major cost underestimated by these companies when starting in operations in Canada is their insurance, averaging between $65,000-150,000 a year depending on the size of the bike share company and the number of their assets (bikes) and stations.

I am actually a big supporter and not against bike shares in anyway but, like most that have operated in Canada, they found that their operating models are overly optimistic and usually based on American weather patterns. What happens usually is that, if the system still operates at the end of the second or third year, the price will be at the least, triple what the original prices were. Almost all of these bike shares (90%) have lost money their first year and are still losing money by year 3 (55%). Remember the number of rides a day is almost meaningless here. What is important is the number of individual customers paying per month and the number of customers paying that ridiculously low $85 dollar yearly fee (discounted at 47.2% of the regular monthly fee). Even if its good for the city's transportation system, subsidizing a private business for too long a time, gets other businesses angry, very angry! They will and have sued over it before in Ontario and have won at the courts. So bike shares have to be very careful in how much and what they charge for.

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