Do the economics of bike-sharing schemes stack up?

O Bike in Sydney. Image: Getty.

Have you ever walked past (or tripped over) a shared bike and wondered how it’s possible for the business to survive with a ride costing so little?

While bike-share schemes attract controversy in some places, the economic models behind such schemes actually have more to do with data mining, advertising and turning a profit from interest on the deposits than from the bike rental itself.

The most recent example in my own part of the world is Obikes. Launched in Australia in mid-June, there are currently over 1,250 dock-less Obikes in Melbourne and over 1,000 in Sydney. According to its marketing director, Obike’s Australian user numbers have increased rapidly since its introduction.

However, despite the promise of cheap and convenient access to bikes, Obikes have faced a number of challenges since their very first few weeks of operation. There have been complaints about Obikes clogging footpaths and becoming hazards as a result of people failing to park them within designated spaces, as well as complaints about Obikes hogging existing parking racks, leaving inadequate space for commuter cyclists to park their own bikes.

The massive potential for bike share schemes expansion

In theory, there are plenty of possible ways to make a profit from the shared-bike business. Its lucrative business models have proved attractive to entrepreneurs and investors.


The ride-and-pay model is the most straightforward profit-generating operation - but only one method of making the schemes profitable. For example, a half-hour ride of an Obike will cost the user A$1.99. If a bike is used for 10 half-hour trips per day, the total daily return will be A$19.9. A three-month operation could collect A$1,791. This will cover the initial investment made on the bikes, as well as some operational costs such as lost bikes and repairs - depending on the frequency of bike usage per day.

Bike-share schemes can also cash in on the deposits they require from users. The majority of schemes require users to register and pay a refundable security deposit to use the shared bikes (Obike asks for a deposit of A$69). Collectively, the amount of money held in the deposit pool is potentially enormous.

One Chinese bike-share company, Mobike, reportedly had over 100m registered users in June this year. The Mobike deposit account therefore held over 30bn yuan (about A$6bn) paid by the 100m users at 299 yuan per user. The interest earned from this sum alone is a huge income-generating asset, not to mention the scope to invest this money while it’s held in company coffers.

Data services present another significant potential income stream. The user database is huge – more than 100m trackable users in the case of Mobike. This can be used for marketing and the analysis of consumer behaviour if combined with other data sets.

Users’ riding behaviour data, captured by apps and GPS, complement very well the data sets collected from taxi and public transport systems by focusing on smaller areas. This data has a high commercial value to businesses in retail, restaurants and even car sales, as well as to local governments seeking more detailed information for urban planning and management applications.

Advertising is another means to generate profit by using both the physical body of the bikes to advertise as well as the app used to locate and unlock the bikes. However, the limited usable space on a bike and the short interaction time between the user and the app make it hard to generate significant income this way.

Teething problems persist but bike-share schemes likely to keep growing

In Beijing and Shanghai, where dockless shared bikes were first introduced, bikes have been thrown into rivers, garbage dumps and even into trees. Pedestrians are forced to push their way through swathes of parked dockless shared bikes, often leaving behind a trail of fallen bikes or bikes stacked on top of one another on footpaths. The Hangzhou government has seized tens of thousands of shared bikes in an attempt to reinforce bike parking laws.

Melbourne Lord Mayor Robert Doyle has complained that Obikes are the source of so much clutter that he has threatened to ban them altogether.

In spite of these ongoing problems, bike-share schemes continue to grow into new markets globally, with new schemes in Florence and Milan the latest examples. At the same time, withdrawals from the market by less competitive or poorly executed models are occurring.

Local controversies over shared-bike schemes are expressions of how resident behaviour, municipal bylaws and cycling infrastructure are all too often proving to be unprepared to embrace and support a new mode of urban transport.

The ConversationPublic and local government criticisms and complaints may delay (or in extreme cases) even ban the bikes from particular cities. But as long as the interest for capital expansion and the broad social, environmental and health benefits are recognised, these schemes will continue to grow globally.

Sun Sheng Han is professor of urban planning at the University of Melbourne.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Seville has built its entire public transport system in 10 years. How has it done?

Just another sunny day in Seville. Image: Claude Lynch.

Seville, the fourth largest urban centre in Spain, was recently voted Lonely Planet’s number one city to visit in 2018. The award made a point of mentioning Seville’s impressive network of bicycles and trams, but it neglected to mention that it’s actually their ten year anniversary. The city’s metro opened just two years later.

This makes now an excellent time to look back on Seville’s public transport network – especially because almost all of it was completed in the middle of the global financial crisis. So, is it a good model for modern public transport? Let’s find out.

Cycle Hire

Seville, like any good metropolis, features a cycle hire scheme: Sevici, which is a clever portmanteau of the words ‘Seville’ and ‘bici’, short for bicicleta, the Spanish for, you guessed it, bicycle.

The service, launched in 2007, is run as a public-private partnership. Users can pay a flat weekly fee of €13.33 (£11.81) for unlimited rentals, as long as all the journeys last 30 minutes or less. For the fanatics, there’s a year-long subscription for €33. This makes Sevici cheaper than the London equivalent (£90) but slightly more than that of Paris (€29).

However, the reason why the bike hire scheme has gained particular praise in recent years is down to Seville’s network of cycle paths, snaking around the town centre and into the suburbs. The sheer scale of the scheme, 75 miles of track in total, has prompted comparisons to Amsterdam.

But there is a meaningful distinction between the two cases. First, cycling culture is such a big deal for the Amsterdammers that it has its own Wikipedia page. In Seville, cycling culture is a growing trend, but one that faces an uphill struggle, despite the city’s flatness. Around half of the cycle paths are on a pavement shared by pedestrians; pedestrians often ignore that the space is designed specifically for cycles.

A Sevici station in the town centre. Image: Claude Lynch.

Surprisingly, cyclists will also find exactly the opposite problem: the fact that bicycles enjoy the privilege of so many segregated spaces mean that, if they dare enter the road, motorists are not obliged to show them the same level of respect – because why would they need to enter the road in the first place?

This problem is only compounded by the Mediterranean driving style, one that takes a more cavalier attitude to objects in the road than that of the northern Europeans. While none of this makes cycling in Seville a write-off – it remains the cycling capital of Spain – budding tourists should bear in mind that the cycle paths do not extend far into the old town proper, making them a utility, for the most part, for budding commuters.

Metro

The metro system in Seville consists of a single metro line that travels from Ciudad Expo in the west to Olivar de Quintos in the east. It has three zones, which create a simple and straightforward fare system, based on the number of journeys and number of “saltos” (jumps) between zones, and nothing more.

The need-to-know for tourists, however, is that only three of the metro stations realistically serve areas with attractions: Plaza de Cuba, Puerta de Jerez, and Prado de San Sebastian. Given that a walk between these is only a few minutes slower than by metro, it shows the metro service for what it is: a service for commuters coming from the west or east of town into the city centre.

Some of the behaviour on the network is worth noting, too. Manspreading is still dangerously common. There are no signs telling you to “stand on the right”, so people queue in a huff instead. Additionally, there is no etiquette when it comes to letting passengers debark before you get on, which makes things precarious in rush hour – or if you dare bring your bike on with you.

On the plus side, that’s something you can do; all trains have spaces reserved for bikes and prams (and they’re far more sophisticated than the kind you see on London buses). Trains are also now fitted with USB charging ports for your phone. This comes in addition to platform edge doors, total wheelchair access, and smart cards as standard. Snazzy, then – but still not much good for tourists.

Platform edge doors at Puerta Jerez. Image: Claude Lynch.

The original plan for Seville’s metro, launched in the 70s, would have had far more stations running through the city centre; it’s just that the ambitious plans were never launched, due in equal measure to a series of sinkholes and financial crises. The same kind of problems led to Seville’s metro network being opened far behind schedule, with expansion far down the list of priorities.

Still, the project, for which Sevillanos waited 40 years, is impressive – but it doesn’t feel like the best way to cater to an east-west slice of Seville’s comparatively small urban population of 1m. Tyne and Wear, one of the few British cities comparable in terms terms of size and ambition, used former railways lines for much of its metro network, and gets far more users as a result. Seville doesn’t have that luxury; or where it does, it refuses to use it in tandem.

You only need to look east, to Valencia, to see a much larger metro in practice; indeed, perhaps Seville’s metro wouldn’t look much different today if it had started at the same time as Valencia, like they wanted to. As a result, Seville´s metro ends up on the smaller side, outclassed on this fantastic list by the likes of Warsaw, Nizhny Novgorod, and, inexplicably, Pyongyang.

Seville: a less impressive metro than Pyongyang. Intriguing. Image: Neil Freeman.

Tramway

The tram travels from the high rise suburb-cum-transport hub of San Bernardo to the Plaza Nueva, in the south of the Seville’s old town. This route runs through a further metro station and narrowly avoids a third before snaking up past the Cathedral.

This seems like a nice idea in principle, but the problem is that it’s only really functional for tourists, as tram services are rare and slow to a crawl into the town centre, anticipating pedestrians, single tracks, and other obstacles (such as horse-drawn carriages; seriously). While it benefits from segregated lanes for most of the route, it lacks the raison d'être of the metro due to the fact that it only has a meagre 2km of track.

The tram travelling down a pedestrianised street with a bicycle path to the right. Image: Claude Lynch.

However, staring at a map long enough offers signs as to why the tram exists as it does. There’s no history of trams in Seville; the tracks were dug specifically for the new line. A little digging reveals that it’s again tied into the first plans for Seville’s metro, which aspired to run through the old town. Part of the reason the scheme was shelved was the immense cost brought about by having to dig through centuries-old foundations.

The solution, then, was to avoid digging altogether. However, because this means the tram is just doing the job the metro couldn’t be bothered to do, it makes it a far less useful service; one that could easily be replaced by a greater number of bike locks and, maybe, just maybe, additional horses.


So what has changed since Seville’s transport revolution?

For one thing, traffic from motor vehicles in Seville peaked in 2007 and has decreased every year since, at least until 2016. What is more promising is that the areas with the best public transport coverage have seen continued decreases in traffic on their roads, which implies that something is working.

Seville’s public transport network is less than 15 years old. The fact that the network was built from scratch, in a city with no heritage of cycling, tunnels, or tramways, meant that it could (or rather, had to) be built to spec. This is where comparisons to Amsterdam, Tyne and Wear, or any other city realistically fall out of favour; the case of Seville is special, because it’s all absolutely brand new.

As a result, it’s not unbecoming to claim that each mode of transport was built with a specific purpose. The metro, designed for the commuter; the tramway, for tourists; and cycling, a mix of the two. In a city with neither a cultural nor a physical precedent of any kind for such radical urban transportation, the outcome was surprisingly positive – the rarely realised “build it, and they will come”.

However, it bears mentioning that the ambitious nature of all three schemes has led to scaling back and curtailment in the wake of the economic crisis. This bodes poorly for the future, given that the Sevici bikes are already nearing the end of their lifetime, the cycle lanes are rapidly losing sheen, and upgrades to the tramway are downright necessary to spare it from obsolescence.

The conclusion we can draw from all this, then, appears to be a double-edged one. Ambition is not necessarily limited by a lack of resources, as alternatives may well present themselves. And yet, as is so often the case, when the money stops, so do the tracks.

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