January 02, 2014

How To Strengthen London’s Bike-Share Program

Source: Karl Fjellstrom, ITDP
Source Karl Fjellstrom ITDP

Like dozens of major cities around the world that have launched a bike-share system in recent years, London’s Barclays Bikes debuted with a swell of public support and high ridership. But unlike other systems, Barclays Bikes’ popularity has not continued to grow. The system ran an £11 million deficit in 2012, prompting a doubling of the cost to users and a resulting drop in usage. Recently, a string of London cyclists killed in traffic crashes has raised public concerns about safety and adequate infrastructure. And last month, the system’s sponsor, Barclays, announced it would end its sponsorship of the program in 2015. Despite a recent announcement to add 2,000 bikes and 150 stations, the continued existence of bike-share in London is being publicly questioned.

In many cities, bike-share has proven to be an economically, socially, and environmentally beneficial transit option. ITDP Director of National Policy and Project Development Colin Hughes, a co-author of the recently released The Bike-Share Planning Guide, crunched the numbers to find out why the London system is underperforming, what other bike-shares are doing right, and how London can improve its system going forward.

High Operating Costs 

Source: ITDP
Source ITDP

Using a variety of financing methods, bike-shares around the world have built systems that are economically viable and sustainable. However, first and foremost among London’s problems is that operating and using bike-share in London costs significantly more than other, higher performing systems. London’s transport authority, Transport for London (TfL), contracted the British firm Serco to plan and operate the London bike-share system’s 8,000 bikes for £23.5 million in 2012. Transport for London said revenues from sponsorship and user charges amounted to £13 million in 2012, leaving an £11.1 million deficit last year1. That means on a per bike basis, London’s Barclays Bikes system cost just over £2,900, or USD $4,800, per bike to operate in 2012. This is 40% higher than Barcelona, the next most expensive system in the world to operate, almost double the cost of Lyon’s system operation (USD $2,628 per bike), and approximately 3 times higher than Paris, Montreal, or Washington DC. If London was paying Serco the same rate that Barcelona pays for its system operation, Barclays Bikes would have cut its operating budget deficit by over 80% from £11 million to £1 million. If TfL was paying an operator the same general rate that the American firm Alta Bike Share charges in Washington DC, the system would actually be turning a significant profit, even without Barclays’ contribution.  

Fig. 1: Cost comparison of major bike share systems. London is an outlier with high costs on both operating cost per-bike and per-trip basis. Source: The Bike-Share Planning Guide
Fig. 1: Cost comparison of major bike share systems. London is an outlier with high costs on both operating cost per-bike and per-trip basis. Source: The Bike-Share Planning Guide

An even better comparison of operating cost competitiveness of various systems is comparing operating cost on per-trip basis (see graph, left), since the basic objective of any large bike- share system is to accommodate as many trips as possible with the lowest costs. For instance, London’s high cost per-bike could be justified if each bike were receiving heavy daily usage rates, like Barcelona. However, due to mediocre system usage, London’s per trip costs is even less competitive than its per bike operating cost: 3-5 times higher than the most successful systems. It seems that the best thing that could happen to the London bike-share’s financial viability would be attracting some more globally competitive bids for operating the system.

Fig 2. Source: The Bike-Share Planning Guide
Fig 2 Source The Bike Share Planning Guide

Low Usage

While London’s bike-share has done well with market penetration, for a system of its size it has still suffered from low usage on a per-bike basis, as mentioned above. While there are a number of factors that undoubtedly contribute to this, ITDP’s recent analysis of bike-share system performance  worldwide indicates that increasing the station density (currently 8 stations per square km) of the system would likely drive higher usage of the system. This would not only bring bikes closer to people and their destinations, it would also likely help alleviate the London systems’ serious “peaking problem” whereby London’s highly directional peak-hour demand causes user accessibility problems, with stations empty at the point of origin and full at popular destinations. To address this, future expansions of the systems should not increase the area of the coverage zone, but instead bring more docks inside the existing zone, perhaps allowing for a higher dock-to-bike ratio. Finally, London’s bicycle infrastructure has been criticized for being incomplete and not safe enough. More cycling facilities such as cycletracks will not only keep cyclists safer but also attract more people to cycling in the city.

The Good News

While many nay-sayers have claimed that bike-share is not viable in London, this analysis demonstrates that bike-sharing is not only viable, but has a good opportunity to be highly successful in terms of both profitability and popularity in the future. With a more competitive operations contract, more stations and docks, and continued improvement in bicycle facilities, London may still have one of the most successful bike-share systems. We look forward to seeing the London system grow bigger and better.


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