The cycling experiment in NY city- an update

Indian cities have more or less abandoned the humble bicycle(though price wise bicycles are no more humble!)  but the west cities are picking it up.  NY city had started an experiment called Citi Bike where one could rent and share the bike across the city.

Nicole Gelinas of City Journal has an article updating on the status of the experiment:

Citi Bike, New York City’s new bike-sharing system, has prompted its share ofcriticism. But recently released data show that the nearly year-old program is providing a credible upstart alternative to the Metropolitan Transportation Authority, New York’s transit monopoly. Bike sharing in the Big Apple is succeeding economically, then, if not yet financially (it’s not making a profit). That’s quite an achievement, if only a tentative one, and New York City mayor Bill de Blasio must reckon with it as he considers the program’s 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 Journalreported 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 aren’t enough bikes and bike docks to meet current demand.

Overall, despite some initial glitches it is providing a choice to commuters:

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 Central’s 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, what’s holding innovation and competition back are supply constraints, not demand limits.

Why should it cost that much to travel by a bicycle? Would competition help in lowering the fares?

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