Sidewalks don't make money either

The Chicago Tribune has an article on Capital Bikeshare and its inability to make money.

Despite its wild popularity, Capital Bikeshare has altogether outspent its resources. Since its start in September 2010, Capital Bikeshare has taken in $2.47 million and spent $2.54 million on operating expenses. And that doesn't even include the expensive things, like docking stations--which can cost well over $50,000 each--plus the bikes themselves. Those capital costs, at $7 million thus far, are covered by federal funds.

The question of revenue hangs over any bike sharing program.

Really? Then why is Capital Bikeshare expanding? Not only in the jurisdictions it's already in, but other communities are clamoring for a chance to lose money on it. Why is that?

The answer is positive externalities. Things like increased transit use, less driving, increased commerce, improved public health, livability, happiness and less pollution

Expenses and revenues, therefore, aren't the right metrics.

Of course, no one ever said that bike sharing had to be lucrative. In fact, most public transit systems lose money, as Moskowitz points out.

"It's not our prerogative or priority to turn a profit. It's to get people to ride bikes," he says.

And the Tribune story mentions these, but dismisses them. 

Because it's a very young phenomenon in the U.S., in-depth analyses of bike sharing's costs and benefits in this country are hard to come by.

Ahem...

Bike sharing may promote exercise and reduce car trips to a certain extent, but it also replaces many walking trips with biking trips--making for no extra exercise, and eliminating no carbon emissions.

The author just blew past the critical part while simultaneously undermining. Bike sharing DOES promote exercise and reduce car trips. All the surveys show that. And THAT is the point. It's like saying, "While flu shots may save some lives, most people who get flu shots wouldn't die anyway, thereby providing no benefits." So bike sharing does reduce car trips and that brings social benefits. 

Comments

[Shawn]

Could be expanding to become profitable, if it is actually not profitable. But at $7 minimum, and seeing how many people use them (including visitors to D.C.), I can't imagine they're that much in the red.

[Crickey7]

Unlike cars, which totally pay their own way. Right?

[washcycle]

I suspect one thing that will come out in the future is that bike sharing CAN be profitable. The LA system will be privately funded and operated I think...and Miami and NYC are more private than DC's is. And if you include ad revenue it is even more likely to be so (though I don't necessarily think that ad revenue on stations should count).

But I don't really think that bike sharing should be profitable. Businesses try to maximize revenue less cost (or profit). No problem with that, but that's what they do. Government tries to maximize benefit less cost. Benefits include all of those things I mentioned above. So a system run by a business will look very different (and probably serve less people) than one run by government.

I just saw a listing of the Forbes 500 from 1812 (or what would have been on the list). Next to banks, the most common businesses listed were privately owned infrastructure. At some point we realized that the US was better if infrastructure was mostly public-financed and owned, so that changed (Socialism!) and I think bike sharing should be viewed more as infrastructure than as a business.

[oboe]

I'm curious: when will decorative fountains in public parks pay for themselves?

If bikeshare is supported by voters, and they feel it improves their city, the bean-counters can--pardon my french--go fuck themselves.

[Arl]

CaBi should try to be profitable (at least on an operating basis) -- for a number of reasons:
- A profitable system provides the best chance for continued growth in an environment where government expenditures increasingly compete for a constrained pool of funds.

- A profitable system increases the likelihood that CaBi continues to inspire bikesharing systems in other jurisdictions.

- For CaBi trips that replace transit use rather than walking or driving, operating subsidies to CaBi are effectively taking per-trip revenue away from WMATA, undermining many of the supposed non-monetary benefits your post assumes.

[washcycle]

- A profitable system provides the best chance for continued growth ...

Not sure. A politically popular system with significant benefits probably has just as a good a chance. Who's to say the city wouldn't just raid the profit.

A profitable system increases the likelihood that CaBi continues to inspire bikesharing systems in other jurisdictions.

It doesn't seem to be having trouble doing that now. And a profitable system will probably have fewer trips and fewer users, which are two other metrics that inspire as well.

... effectively taking per-trip revenue away from WMATA, undermining many of the supposed non-monetary benefits your post assumes

Or...freeing up seats for other users, reducing the need for 8 car trains, making transit less crowded and thus more appealing. Richard Layman once did a post showing that marginal riders increase the operation costs by more than the revenue they generate. So it may be that reducing ridership saves WMATA money.

And let's say that every 3 transit to bikeshare shifts results in 1 car to transit shift (because there is now less standing), that would probably be a total net gain.

Ignoring all the benefits of CaBi and focusing only on expenses and revenue is leaving out a lot of the critical components that government should consider in decision making. It's likes ignoring the cost of transportation when buying a house. Ignoring it doesn't make it go away...

[Jacques]

Focusing on the transit-to-bikeshare loss of revenue for WMATA also ignores the fact that Bikeshare makes transit more accessible and more attractive than it previously was, for those of us who are not within a quick walking distance of a Metro.

As a Georgetown resident, many of my CaBi trips end up adding Metro trips that I would have otherwise not used (replacing with a car, or not taking the trip).

[Don]

I think you're seeing a bias that isn't there. The assertion that it's not important for the program to break even or turn a profit is put forward several times. Positive externalities and supplementing transit is mentioned.

I think the "neither do sidewalks" point is a good one but the reporter isn't going to make the point for you; if someone queried doesn't put forward the argument you can't blame her not for making it. It's not an opinion piece.

[Jonathan Krall]

I agree with Wash. Success for the public and success for a business are very different things. For example, the American exercise industry turns in great huge piles of money while Americans turn into great huge piles of flab. I rest my case.

[Arl]

A politically popular system with significant benefits probably has just as a good a chance.

Doubtful -- we're seeing (and going to see more) cuts to politically popular programs as it is. But in any case, a politically popular *and* profitable system would surely have a *better* chance than a popular system alone, wouldn't you think? So then the question is whether the changes to the system to make it profitable would reduce its popularity -- i.e. the effects on station placement and pricing. As I think I've commented before, there's a lot of room to increase prices on the heaviest users of CaBi while still leaving it a great, great value for them.

It doesn't seem to be having trouble [inspiring other cities] now.The question is - do you want to inspire places other than liberal metropolises to think creatively about how to implement bike sharing there, too. And I don't see a lot of that yet.

[Arl]

Or...freeing up seats for other users, reducing the need for 8 car trains, making transit less crowded and thus more appealing. Richard Layman once did a post showing that marginal riders increase the operation costs by more than the revenue they generate. So it may be that reducing ridership saves WMATA money. CaBi also takes away a lot of riders at non-peak times (when WMATA is less crowded and running fewer 8-car trains already) because that's when it has the biggest convenience advantage over WMATA -- and when bikes and stations are most reliably/predictably available. For example, I used CaBi for three off-hours crosstown rides today that would have been Metrorail or Circulator rides in the past -- largely because there was no marginal cost and my transit benefits for the month are already tapped out.

Ignoring all the benefits of CaBi and focusing only on expenses and revenue is leaving out a lot of the critical components that government should consider in decision making. It's likes ignoring the cost of transportation when buying a house. Absolutely -- but I think there's a tendency to overstate the value of benefits we can't measure when they're for things we like & support. And to overstate the costs of things like cars (to the extent we don't like them). In contrast, profitability is a measure with which we can promote bikesharing to audiences with differing subjective preferences.

[washcycle]

But in any case, a politically popular *and* profitable system would surely have a *better* chance than a popular system alone, wouldn't you think?

Not really. In the last two budgets, Mayor Gray has already tried to re-appropriate the ad revenue that Capital Bikeshare would make if it could and spend in on other programs. So it's not going to be plowed back into CaBi (see Highway Trust Funds).

So then the question is whether the changes to the system to make it profitable would reduce its popularity

And the answer is yes.

do you want to inspire places other than liberal metropolises

Well, bike sharing is already in such red state areas as San Antonio, Chattanooga, Omaha, and Spartanburg, SC. The last of which is hardly a metroplises. Nor are Pottstown, PA or Kailua, HI; both of which have bikeshare.

[washcycle]

I think there's a tendency to overstate the value of benefits we can't measure when they're for things we like & support. And to overstate the costs of things like cars (to the extent we don't like them)

Perhaps. But the solution is just not to do that. Overcoming bias is difficult, so the trick is to come up with independent parties to do the analysis using rules agreed upon beforehand. Like what CBO does with the budget.

[Eric_W.]

We should also make museums, theaters, ballets and operas profitable.

And why should a public school system account for 30% of a community's budget when only 12% of households have children attending school.

*sarcasm off*

@oboe: You should watch your language! "French" should be capitalized...

[Michael H.]

FYI - The article was originally posted by U.S. News and World Report.