There’s no denying that Citi Bike is in some financial trouble, but a new report suggests that its future might be brighter than originally reported. The bike share program incurred much of its costs this year during Hurricane Sandy, when a major warehouse was flooded and equipment destroyed, and in expenses related to getting the program off the ground.
Capital New York, which obtained the private report from Alta Bicycle Share, the company that owns the program, has details:
The analysis acquired by Capital found that in those 18 months, start-up and operating costs exceeded expectations by about $9 million. The report attributed more than two thirds of that to disastrous software problems and Hurricane Sandy, which delayed the system’s rollout and its revenue generation, even as Citi Bike was paying to store equipment and hire staff…
Without the start-up costs and the hurricane, neither of which are likely to recur to such devastating effect, as far as Citi Bike is concerned, the program would have suffered cost overruns of $2.6 million.
Lower-than-expected sales of daily rides — which generate far more revenue than long-term passes — also contributed to the company’s woes. However, yearly passes exceeded expectations to the point that the entire program made $3.4 million than expected. Eliminate first-year startup costs and the toll exacted by the Hurricane, and Citi Bike would have ended the year with a surplus of $800,000.
Not all is rosy, however. The company lacks the funds for planned expansions to the system, and a significant fare hike might be on its way.
(Photo: @Shinya Suzuki)