Parsing The Takeover of Alta Bicycle Share
Bev. Licensed under Creative Commons
It was months in the making, but the deal has been done. Alta Bicycle Share, the company that operates the bike-share programs in several of America’s biggest cities including New York, San Francisco, Washington DC, Chicago and Boston, is now owned by Bikeshare Holdings, part of REQX Ventures, a self-described "hands-on investor in businesses that enhance urban life and health and wellness."
Bikeshare was put together for the purpose by REQX's principals: Harvey Spevak, chief executive of gym chain Equinox Fitness; Jeff Blau, chief executive of billionaire Steve Ross’ New York real-estate giant The Related Companies (and Equinox’s owner); and private-equity investor and keen cyclist Jonathan Schulhof.
They are bringing in Jay Walder to be Alta's new chief executive. Walder has held senior positions in the mass transit systems of New York, London and Hong Kong. That is raising speculation about the possible tighter integration in the future of bike-sharing with cities' other public transportation.
It is too early to say what more immedate changes will come to public bike-sharing progams across America — save for in New York, the nation’s largest such program and the one reportedly that has been teetering on the edge of bankruptcy. There, some of the $30 million of cash that Bikeshare is bringing with it to stabilize Alta will go into expanding the geographical reach of the Citi Bike program.
The goal is to double the existing fleet of bikes and number of docking stations to 12,000 and more than 700 respectively over the next three years. The first phase of this expansion will be in Long Island City, Greenport and parts of Williamsburg. Later service will extend to more areas in Manhattan, Queens and Brooklyn (see map).
Citi Group, the bank that paid to put its name on the bikes, has extended its initial five-year, $41 million sponsorship of the now 18-months-old program through 2024, adding an additional $70.5 million to the pot. A further $5 million is coming from the Partnership Fund for New York City, an urban investment fund back by big businesses in the city.
Citi Bike riders will be chipping in through higher annual fees. These have been jacked up to $149 a year from the current $95, a stiffer increase than predicted. New daily and weekly charges have not yet been announced.
The pricing of these last two usage fees is challenging. One of the reasons that Citi Bike, which is unique among U.S. big city bike-share programs in not receiving public subsidies, has not met its financial goals is that these two high-margin categories of ridership have not been as heavily used as forecast. The annual pass, on the other hand, has proved popular. Citi Bike has 96,000 annual members.
The heavy usage of the Citi Bike program — each bikes is used for an average of six trips a day, more than in any other city — has led to unexpectedly high maintenance costs for bikes and docks as well as incuring ‘rebalancing’ costs — moving bikes between docks according to supply and demand. These issues have been compounded by glitches with the system’s software and complaints about its pay kiosks being difficult to use.
On top of all that there have been supply chain problems. Bixi, the Canadian company that supplied Alta with the bikes it used in New York and other cities, went bankrupt earlier this year. A Montreal businessman now owns what is left of Bixi’s assets, including its patents.
Alta’s latest launch, in Seattle, uses non-Bixi bikes, which could be a harbinger of what is to come in other cities. Bike-supply problems have hampered the expansion of Alta’s bike-share programs in Washington DC, Boston and Chicago and delayed launches of programs in Portland, Baltimore and Vancouver.
Walder says he will be visiting each city for which Alta holds the operating contract to review development plans locally, but New York City is his first order of business. Alta will move its headquarters there.
Beyond that he is looking beyond North America. Alta already operates in Melbourne, Australia. Public bike-sharing is well-established in Asia and Europe. “I think we could have operations in a lot more places,“ Walder says.
A longer-term question is how the bosses of Equinox and The Related Companies see bike-sharing fitting with their existing businesses. As well as its own gyms, Equinox owns the Pure Yoga, Blink Fitness, Soul Cycle and Creative Juice brands, whereas Related is a real-estate developer. Throw in a public transportation heavyweight like Walder and it makes for an intruiging mix — just as more urban residents are taking to regular cycling and cities are starting to rethink how they make themselves both more liveable and more sustainable.