News broke Monday that the Canadian public bike maker PBSC (AKA Bixi) has declared bankruptcy. The company supplies the equipment and bikes used in most of the biggest US and Canadian bike share systems, including systems in New York City, Chicago and Washington DC.
They are also the supplier Puget Sound Bike Share was planning to use for the launch of the Seattle-based system this summer. So does this mean bike share in Seattle is in jeopardy?
“This [bankruptcy] is not necessarily a huge surprise to anybody,” said Puget Sound Bike Share Director Holly Houser. In fact, Houser said that it could help move the company forward after years of uncertainty have plagued PBSC, which has significant financial backing from the City of Montreal. We reported previously that Puget Sound Bike Share was aware of financial struggles at PBSC and were making efforts to shield itself from any impending troubles.
Houser also said that, as of now, Alta Bicycle Share (the chosen operator for the Seattle system) and PBSC (the supplier Alta contracts for bikes, docking stations and other equipment) expect to be able to deliver on planned bike share expansions scheduled this year in Vancouver, Seattle and Portland.
Houser also said that Puget Sound Bike Share has not yet signed anything obligating it to use PBSC equipment, though she is still hoping to do so.
“PBSC’s equipment is fantastic,” she said. “It’s the best out there at the moment.”
Most early analysis of the bankruptcy suggests that it shouldn’t prove to be a huge impediment to the magnificent growth of bike sharing around the nation and the globe in recent years. But it might be a sign that seeing bike share systems as profitable business ventures may not always work.
“I don’t see this as being a very big bump in the road for bike share,” Portland author Elly Blue told NPR. “I just see this as a chance for cities to learn — we can’t run our transportation systems like a business, it doesn’t really work that way because then we run the risk of not serving the people that need to be served.”
PBSC is a somewhat complicated business because it is both an international equipment supplier and a bike share operator of the Bixi bike share systems in several Canadian cities. The City of Montreal loaned the company millions, and is a major creditor as PBSC starts the bankruptcy process. As you might imagine, PBSC’s financial situation is a bit of a scandal there.
While bike sharing systems have proven to be immensely strong marketing opportunities for sponsors and several bike share systems have been able to cover operating costs using user fees (an impressive feat for any transportation system), they have not pulled huge profits for their operators and may find it hard even to fully recover the costs of launching.
The best financial model for bike share systems is still being figured out. The City of Vancouver, for example, has pledged $7 million to start a system there. But Puget Sound Bike Share’s business model is based on a combination of grant funding and private sponsorships for start-up costs.
That, of course, doesn’t mean the City of Seattle and King County have no role in bike share here. Indeed, both are partners in the project, and ordinance changes and fundraising support from the government are vital. In fact, Mayor Ed Murray has made it a goal to help launch Puget Sound Bike Share this year.
“Ed Murray is getting involved personally and reaching out to potential sponsors,” said Houser. “That’s been really helpful.”
Houser cannot speak publicly about the ongoing sponsor search process, but she said things are going well. The system has already secured grants to launch in the University District and South Lake Union. Seattle Children’s has pitched in the money needed to cover the helmet vending costs, which added to the system’s price tag due to King County’s all-ages helmet law (Vancouver is also dealing with this issue due to British Columbia’s helmet law). The remaining sponsors are needed to launch the downtown and Capitol Hill sections of phase 1 (roughly noted as Phase 1A in the map above).
If the system is going to launch in August, as is now the plan, the needed sponsorships would have to be mostly figured out by mid-February so a purchase order can be made. The name and branding of the system would need to be figured out shortly after that, which means time is running out for a single organization to step up and buy naming rights to the system (seriously, it’s a great deal).
If no single sponsor steps up, Puget Sound Bike Share will develop a unique branding scheme, and a set of sponsors will have a display ad presence on the system (this is also a great deal). And no, it will likely not be named “Puget Sound Bike Share.”
The group has not officially launched the branding process yet, but they have created an online survey to gather input from potential users of the system about how they see themselves using the system.
Have an ideas for non-corporate names for the system? Post them in the comments below.