Bixi bankruptcy a blow to bike sharing, but cities vow no disruption

By Robbie Webber

Bike sharing has rapidly become a part of the urban transportation mix, easily supplementing both transit and walking for trips less than five miles. But financial problems for a large system supplier have cities wondering if their planned or already operating systems will also be impacted.

PBSC, the company that manufactures the Bixi bikeshare system, sought bankruptcy protection on January 21. Originally a project of the Montreal parking authority, it has grown into the supplier of bike share parking systems for some of the largest cities in North America, Europe, and Australia. Several other large systems are set to go on line in 2014 and 2015, and those cities are now wondering whether their implementation will be delayed. However, mayors and transportation officials were quick to reassure the public that they planned to go forward.

Some of PBSC’s financial problems stem from payments withheld by Chicago and New York over disputes about software delays, glitches, and updates; and in October, Minneapolis-based Nice Ride filed a “notice of material breach,” alleging that Bixi had failed to fulfill their contract. The delays were triggered by PBSC’s own dispute with its original software vendor, leading to substantial company outlays for development of a software system that Bixi could control outright.

But from the start, the Montreal Gazette raised questions about the city’s role in PBSC. As originally envisioned, the company wasn’t supposed to receive any public funds, and loans were to have been quickly repaid. International sales would support the Montreal Bixi system. However, as the company rapidly grew, the city extended further loans, which the company now seems unable to repay. Montreal officials want the company to be sold, but no buyers have been found.

In the United States, most of the Bixi systems are operated by Alta Bikeshare, while PBSC operates the Canadian systems in Ottawa, Montreal, and Toronto. Alta has insisted that all their bikeshare programs will continue to operate, and systems in Portland, Seattle, and Vancouver, BC, will open as planned. They have not said whether they still intend to use the Bixi system, however Alta has also sued the company over software problems. Since other companies manufacture the bikes and kiosks, Alta could continue to purchase the components of the system. They could also switch to bikes, kiosks, and software provided by Trek-supported B-cycle. Most B-cycle programs are run by local non-profits, although the company also operates the bikeshare program in some cities.

Perhaps to quell concerns stirred up by those who confuse PBSC’s problems with viability of bike sharing as a concept, B-cycle issued a statement January 22 reiterating that they are both financially stable and successfully operating systems around the world.

Robbie Webber is a Senior Associate at SSTI.