Why America’s Grand Bike-Sharing Experiment Is Failing

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Bixi bike in Montreal.

The Montreal-based bike-sharing company Bixi is like something out of a right-wing nightmare. The firm is a government-owned entity, in Francophone Canada, that sells solar-powered bike-share equipment for cities around the world. And yesterday, the company filed for bankruptcy protection, citing $50 million in debts. Part of the shortfall comes from $5.6 million owed the company by bike-sharing programs in New York City and Chicago, payments that have been withheld because of widespread problems with the company’s software which reportedly have caused many users to be unable to rent or return bikes.

The question now is whether this is the beginning of the end for the bike-sharing experiments that have spread quickly across the U.S. So far, officials from various bike-sharing programs are saying no. “Companies operate under bankruptcy frequently. I would be shocked if the whole system here were curtailed,” said one Chicago official who has worked on that city’s bike-share program, according to the Chicago Tribune. “Worst case, [we] find a new supplier.’’

Alta Bicycle Share, which administers New York City’s program, wrote on its website, “Our systems across the country … are up and running and ABS will ensure that they continue to operate without interruption.”

The operators of bike-sharing programs seem nonplussed. But Bixi hasn’t been able to operate profitably and is now owned by the City of Montreal—which only two years ago approved a whopping $108-million bailout package to keep the company afloat. That may call into question the long-term viability of these programs.

Most new services take many years to achieve profitability. The New York system, for instance, has caught on quickly with New Yorkers, but is still in the red, despite $30 million in revenues since its launch and millions in sponsorship funding from Citibank and Mastercard. The hope is that as the kinks get worked out of the system, and more people learn about it and decide to use it that it will become self-sustaining.

But the latest news of Bixi’s bankruptcy should disturb supporters of bike-sharing schemes. It’s one thing if the operators of the bike-sharing programs in cities across the U.S. aren’t profitable yet. But if the suppliers of these programs are so in debt as to require government bailouts, that is only likely to darken the picture.