How do you solve a problem like Bixi?

10.09.13

Morning bike ride through Parc Lafontaine, October 2013Montreal’s bike-sharing system is used by thousands of people, myself included, to get around. Montreal is a city where the ubiquitous orange cone is practically a symbol, with road closures and sinkholes and traffic nightmares and transit service outages the norm as opposed to the exception. In this context, Bixi is often the least stressful and most reliable way to get from point A to point B. My morning commute by Bixi takes about the same amount of time as it would take to drive, or to take the metro. But it’s certainly nicer, more pleasant and much better exercise to hop on a bike on a cool, crisp autumn morning and enjoy the views through the park as I make my way to work, as opposed to elbowing my way onto a crowded and smelly metro, or fighting traffic and circling endlessly for parking. Plus, it’s great for the environment. Win-win, right?

But the service is in financial crisis.

Financial woes or mis-management?

How much crisis is the subject of some debate. Jacques Bergeron, Montreal’s auditor general, claims that Bixi is in fact in serious financial trouble, going so far a couple of weeks ago as to express doubts about its ability to continue operations. Bixi claims its problems are strictly related to cash flow, not profitability, and are merely a function of too much international success too fast. The truth is, nobody really knows the extent of the problem, because Bixi has delayed releasing its financial statements — something that a partially publicly-funded entity should not be allowed to do, and that smacks of either incompetence or cover-up (or some combination thereof). But what is known and generally agreed by all parties is that the system is running an operating deficit in Montreal and may require another bailout in order to continue.

Cyclists and motorists have debated Bixi’s existence since its inception. Users — myself included — have expressed our frustrations with some of the hassles and early hiccups of the system. Drivers bitch about Bixi the same way they bitch about all cyclists taking up valuable road and parking spaces that they believe belong to them by divine right. Hard-core cyclists have been known to gripe about casual Bixi cyclists for not bothering to invest in their own spiffy road bikes that cost hundreds of dollars and get stolen every time someone blinks. The system has been plagued with financial woes from the start, partly because of its disingenuous managerial structure, being run as a ‘private-public partnership’ that got Montreal into the dubious business of selling a bike system internationally for profit. We never should have been in this business to begin with, and Bixi has been trying to spin off its international arm, but a deal to sell it reportedly fell through earlier this year, leaving taxpayers on the hook for millions of dollars of expansion costs to cities like New York, London and Chicago.

Indeed, this debate sounds very much like déja vu from two years ago, when the city of Montreal loaned Bixi $37 million to bail it out of its operating deficit. You see, early proponents of the system had announced — to much fanfare — that Bixi would be financially independent and profitable all on its own. Hubris? Naive optimism? Outright lying? It seems hard to imagine, in retrospect, that any public transit system could be self-sustaining in that way. Bixi’s costs include the bikes and docking stations themselves, but also ongoing bike maintenance, repair, redistribution of bikes from full to empty stations via trucks, call centre employees, website operations, expansion and marketing. Even with Bixi’s decision to accept sponsor ads on its bikes (much to the chagrin of its often anti-corporation clientele), and despite its user fees, Bixi was still in the red.

To be sure, simple managerial incompetence could well be a factor here. Bixi started off as a small operation, run by well-meaning people who were perhaps less than adequate business managers. It could be a victim of its own success. Lots of small businesses in the private sector go through these sorts of growing pains; a hot start-up gets to the point where its founders don’t have the know-how or experience to manage it, and it needs to bring in outside managerial help or sell to a larger entity. Bixi now claims it is bringing in ‘restructuring experts’, something that could be a stall tactic or a legitimate strategy, but which begs the question of why nobody did this years ago. Say, back in 2011 when the city last bailed it out?

To this, I ask, how do we solve a problem like Bixi?

Is Bixi public transit?

But this time, there’s a mayoral election going on. And transportation is a hot issue for the candidates, making Bixi a political hot potato. The candidates all claim to like Bixi in theory, and see it as an essential part of the city’s transit network. But all believe that the murky ‘private-public partnership’ has gotta go, and fast.

If Bixi is indeed public transit, the argument goes, let it be managed by the public transit agency. Stop expecting it to make a profit — after all, the STM gets huge subsidies from tax dollars, because we recognize that it’s a valuable and essential public service. User fees only cover 46% of the STM’s $1.2 billion annual operating budget; the rest comes from provincial (13%), city of Montreal (30%) and regional/suburban municipal (7%) subsidies. The STM consistently runs a deficit — which topped $20 million in 2012 — and nobody suggests scrapping public transit. Indeed, the PQ just pledged $39 million to ‘study’ a metro blue line extension to Anjou that would theoretically cost more than $2 billion to build — an empty election promise that we all know will never happen. That $39 million could’ve wiped out most of Bixi’s debts in one fell swoop, but the PQ prefers to use it to try and buy votes.

Candidates: Give it to the STM to manage

All three leading mayoral candidates believe that the solution is to have the STM take over the Montreal operation of Bixi, and to spin the international arm off and sell it as soon as possible.

  • Denis Coderre wants to make the STM a true umbrella organization for managing island transit, from buses and metros to cycling. His somewhat jumbled transit plan would also involve the STM taking over Stationnement de Montréal and managing the city’s parking system. A lot of his ideas sound zany and hubristic more than practical; he favours the metro expansion (which we can ill afford), and wants to use “technology” to direct drivers to available parking spots (which just sounds like a nightmare for public safety, with all those drivers looking at their devices instead of watching the road). But at least his plan takes multiple modes of transportation into account and attempts to balance them, in however cobbled a fashion.
  • Richard Bergeron also thinks that Bixi’s Montreal operation should be managed by the STM, and that the international arm should be sold off as quickly as possible. Projet Montreal team sounded the alarm about Bixi being on the “verge of bankruptcy“. Bergeron’s party, which has been the most vehemently anti-car since its inception, is also calling for a tramway project that the other candidates dismissed as foolish pie-in-the-sky (and that invariably makes me think of the Simpsons “Monorail” episode.) My borough of Plateau Mont-Royal has been run by Luc Ferrandez, a Projet Montreal mayor (in)famous for his drastic traffic reduction measures — blocking off streets, drastically reducing free parking, angering merchants, and even picking a fight with the fire department over right-of-way priority access. I’m a transit and Bixi user, but even I think that Ferrandez’s confrontational style has gone too far. In a campaign speech, Bergeron claimed that his vision of the ideal city is “one where a grandmother can walk her 3-year-old grandchild to the daycare and cross the busiest street in Montreal without any fear at all.” To that, I ask, what about my grandfather, who is in a wheelchair and cannot walk or cycle but likes to visit me for brunch in the Plateau? A transit plan dedicated to reducing cars needs to target certain groups of people — those who are able to go car-free — while still providing necessary access for those people who need to drive.
  • Marcel Côté, for his part, also agrees that the STM should manage the Montreal operation of Bixi, and that the international arm should be spun off to private investors. Côté claims that the city has no business being in business of international bike sales for profit. The Coalition Montréal transportation plan pooh-poohs the opposition’s focus on flash, and urges less lavish spending on projects that he claims the city can ill afford, like tramways and metro extensions. Instead, it favours more cautious maintenance of the transit network that we already have, and sees an STM-managed Bixi as an important part of that network.

But is it really a solution?

All three leading candidates believe that the STM would do a better job managing Bixi’s Montreal operations. But all fail to address the giant white elephant in the room: The STM is so incompetently managed that it makes the folks running Bixi look like geniuses.

  • Near-daily metro outages due to “computer” problems. When the whole system goes down at rush hour so that the STM can reboot, it strands millions of people and makes them late for work, class, meetings, whatever. The outages have become so common that CHOM even recorded a “which line is down” audio clip to use to announce them. The STM is long on excuses and short on fixes, blaming everything from software bugs in its new control centre to outdated equipment to users themselves to the “complexity” of running the system. To that I say, hogwash; Imagine if any other essential system went down with anywhere near the frequency of the metro? Think of what would happen if the banking or credit card processing systems went down for even an hour? Or the cell phone network? Or the air traffic control network? You’d think that nobody at the STM ever heard of backups and redundancies to avoid system-wide outages every time you have to hit CTRL-ALT-DEL (or the equivalent). In any case, the STM hasn’t even managed to solve the logistical problem of keeping its own trains up and running; what on earth would make anyone think that they could keep the Bixi network operating, too?
  • Customer lack-of-service is what passes for service at the STM. The unionized employees act as though a smile would cost them their lives. Stories of passengers getting beaten up or being refused service for daring to speak English, or thrown off busses in the middle of the night with a sick child for failing to pay with exact change, abound. The Bixi call centre agents are sometimes varying degrees of helpful, but at least Bixi has a call centre. To file a complaint or ask a service question to the STM, you have to send a letter in writing, which gets swallowed up into some bureaucratic void, never to be heard from again. The level of customer non-service is a joke, and someone wants to give them control over the one quasi-public transit piece that we have in this city that actually pretends to care about its customers?
  • Communication is required for Bixi to work. Stations get temporarily relocated for construction or special events; questions need to be answered. After a slow start, Bixi has been getting better at answering customer questions on its Facebook and Twitter pages. There’s still a long way to go on this front. But putting it in the hands of the STM would be a giant step backwards. After all, the STM can’t even manage to communicate service outages to users stranded on the metro. Its inane switch to four separate twitter feeds for each line of the metro — each equally uninformative — is just one more example of how it doesn’t understand customer communication. While Bixi has released mobile apps showing the location of bikes and empty docking stations, the STM has been promising realtime bus location information via GPS since 2009… and it’s still nowhere in sight. Whenever there’s a metro shutdown, frustrated customers ask the ticket booth employees for information on alternate bus and transport routes, and none of them ever have any information to provide. Communication done by the STM is a perversion of the word.

Bixi is my backup transportation whenever the metro goes down. Having them both run by the same people would be a recipe for disaster.

So what are the alternatives?

  • Option 1: Status quo.
    Most people would dismiss this as a non-starter, but should they be so quick to do so?  If you believe Bixi’s claims, this is a temporary cash flow issue due to the rapid expansion costs associated with the sale of the system to international cities. Bixi claims that it had hired a restructuring expert and will be restarting the process of looking for a buyer for its international arm. There’s no time frame being provided, and it begs the question of how Bixi expects to stay in the black in the meantime. But even if the city or the province throws more money at it in the form of another bailout, would that be the worst thing? It would keep Bixi afloat, and would still cost less than the money we waste every day on metro expansion ‘feasibility studies’, charter of value nonsense, the OLF, and a host of other questionable spending projects. At least there is a tangible benefit being provided here. And it would keep Bixi out of the clutches of the STM. The trouble is, people are understandably wary of throwing more tax dollars at a sinking ship, since we’ve heard this song and dance before.
  • Option 2: Privatize it completely.
    Get the city out of the business altogether, and turn Bixi over to the private sector to run as a for-profit enterprise. This would force it to sink or swim on its own merits, and to seek out private investment to help with any cash shortfall. It would get taxpayers off the hook for the risks associated with the international sales, and would no doubt please all the anti-cycling detractors who see it as a silly waste of money and a threat to their SUV-driving ways. But it would also probably spell the end of Bixi, since the service clearly can’t operate at a profit entirely through user fees. Bixi provides a public good that benefits the entire city in the form of reduced emissions, reduced road congestion, and a much improved multi-modal public transit network. Privatizing it would be killing it off for failing to do something it never should have been expected to do in the first place. Which is why I agree with all the candidates that this option ought to be off the table.
  • Option 3: Subsidize it, but keep it managed separately from the STM.
    This is actually my preferred option. Instead of more loans and bailouts, let’s create a regular annual subsidy to Bixi to allow it to break even by generating only part of its revenues via user fees — just as the STM does. Spin off the international arm as soon as is realistically possible, and then set up a separate agency to run the Montreal operation as a public transit system that both complements and competes with the STM. Add oversight and transparency (including open books), and keep the management agency as small as possible to avoid bureaucratic waste. But for the love of all things bicycle, keep it out of the hands of the STM! Just because transit is public doesn’t mean it needs to be centrally run by an incompetent monopoly. While it may seem counter-intuitive to set up yet another public transit agency in Montreal, we all should’ve learned our lesson from the municipal mergers by now: Bigger is not always better. More choice, even if it’s a choice between separately run public services, will nearly always benefit users.

There’s been a lot of talk by all the mayoral candidates about transportation infrastructure in this campaign. I’d love to see some reasoned debate on this issue. Because I really do like Bixi and I rely on it as a critical part of my strategy for getting around between April and November. I’d hate to see it go bankrupt, but I’d also hate to see it disappear into the STM’s mismanagement vortex.

So, what say you, candidates?


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