Citi Bike, New York Citys new bike-sharing system, has prompted its share of criticism. But recently released data show that the nearly year-old program is providing a credible upstart alternative to the Metropolitan Transportation Authority, New Yorks transit monopoly. Bike sharing in the Big Apple is succeeding economically, then, if not yet financially (its not making a profit). Thats quite an achievement, if only a tentative one, and New York City mayor Bill de Blasio must reckon with it as he considers the programs future.
More than 100,000 people have signed up for memberships since Citi Bike launched last Memorial Day. For an annual fee of $95, they can undock a bike at any one of 332 stations in Manhattan and northern Brooklyn and take a 45-minute trip. So far, New Yorkers and visitors have taken 7 million trips. But the company that runs the program, a division of Alta Bicycle Share, has made some missteps. As the Wall Street Journal reported in March, Alta invested in glitchy software, making it hard for casual users to buy daily passes. The company also misjudged demand. Because people use the bikes to commute, docks in mostly residential areas empty out in the morning, while docks in Midtown and downtown fill up. Last October, Alta moved 1,940 bikes around every day. There simply arent enough bikes and bike docks to meet current demand.
But Citi Bike critics are missing the larger point. For the 7.7 million New Yorkers and suburban commuters who ride subways or buses each day, the bike-share program offers a new choice. Before Citi Bike, for short trips around Manhattan, it was either the MTA or walking. Now, you can take a bike—and many do. The data for last October, when more than 1 million people rode Citi Bikes, show that the busiest docks in the city were those near Grand Central Terminal. Most of these riders—nearly three-quarters—were headed downtown, on trips that previously would have involved already overburdened subway lines. In other cases, New Yorkers took the bikes to places where the subway doesnt go—such as the Far West Side of Manhattan.
Many commuters take trains from the suburbs into Manhattan before continuing on downtown. As Michael K. of New Jersey writes on Yelp, Citi [B]ike [is] life-changing. . . . It saves a ton of money and time. I can get from the Port Authority [bus terminal] to work . . . faster than the subway, and only a few minutes more than a cab. . . . The savings REALLY add up. Says Yifen J. from Manhattan: Oh, the subway money you save. Says Rob B. from Westchester: It is really helpful avoiding multi-transfer trips on the subway. . . . And given the limited numbers of [bus] lines . . . it is a great option.
For its users, Citi Bike is making New York a more attractive place to live. The average Citi Bike member makes six figures a year. These early adopters are people with education, talent, income—and options. If they want a life where they wake up, get in a car, drive in traffic for 45 minutes, sit at a desk all day, and then reverse the procedure, they can live anywhere. But New York City is one of the only places in the United States where taking public transportation—or a bicycle—to work is a realistic option.
Does the program make economic sense? The MTA gets people around for about $4.20 per ride in operating costs, including heavy subsidies. Citi Bike is doing it for about $5 per ride (Alta releases limited financial data), with no subsidies (yet). But this comparison ignores marginal supply and demand. New York cannot fit more people on Grand Centrals rush-hour platforms without massive capital investments. The cost of reasonably accommodating an extra person on the Lexington Avenue line at rush hour is substantial, bordering on prohibitive, while the cost of procuring a few more bike docks—and giving bicyclists more safe spaces on city streets—is infinitesimal by comparison.
So far, bike sharing is a niche market. But so are charter schools, another upstart challenge to a government monopoly (albeit one with government subsidies). In both cases, whats holding innovation and competition back are supply constraints, not demand limits.