Should Citi Bike Pay New York City $1 Million in Parking Fees? Slate
Flat tires and split seats. Docks roughed up from the harsh winter. These are a few of the more obvious signs that Alta Bicycle Share, the private company behind New York City's Citi Bike, is hard up for cash. The popular bike-share program is losing money and, as Felix Salmon writes, that's largely because of Alta's initial vision for a cross-subsidy model: "The annual memberships would be underpriced, at $95 per year, with all the profits coming from the daily and weekly renters," he explains. "Certainly CitiBike is losing money on me: I’ve taken over 250 trips in the past year, which works out to roughly 37 cents per trip."
The business model itself was not crazy. In Washington, D.C., and other major cities, bike-share programs tend to be used most by tourists and other one-time riders paying the higher fees, says Mitchell Moss, director of the Rudin Center for Transportation at NYU's Wagner Graduate School of Public Service. But in New York, Citi Bike proved less popular with tourists while also opening up parts of the city to locals that were previously inaccessible through mass transit. Alta's unique existential crisis is that its very usefulness for city dwellers has stymied its profitability.