When the price of cycle hire doubled in January 2013 there was, not unreasonably, considerable disquiet amongst the scheme’s customers; the latest user survey cites it as the most frequently quoted worsening aspect of the service.  With the publication of the per-day ridership for the final month of 2013-14 we can now see the effect on the full year numbers, and it’s not good:

  • 2010-11 (partial year, period 5-13 only) – 3,538,438
  • 2011-12 (first full year) – 7,579,184
  • 2012-13 (Olympics in periods 5 and 6) – 9,302,704
  • 2013-14 (wet March and price hike) – 8,160,398

That’s 1.1m fewer rides, a drop of 12% year on year.  So, apart from not having the Olympics, what happened?  Crucially the per-period ridership shows that the Olympic effect lasted much longer than the games – the two Games periods (2012-13 P5 and P6) showed 80% and 73% rises in hire bike use, but the following periods still recorded healthy rises of 20-30% on 2011-12.

 Period 2010-11 2011-12 2012-13 2013-14
1 673,639 607,613 591,235
2 664,267 776,764 685,584
3 569,476 808,714 734,625
4 639,776 846,241 884,765
5 234,834 632,967 1,137,496 848,738
6 447,470 577,517 998,477 721,250
7 507,236 683,916 829,822 642,866
8 465,024 577,704 729,789 523,513
9 368,535 520,508 641,295 484,589
10 231,195 327,806 437,010 360,580
11 403,103 471,230 511,129 469,150
12 391,136 486,910 517,502 527,782
13 489,905 753,468 460,852 685,721
3,538,438 7,579,184 9,302,704 8,160,398

Then came the price hike, at the end of 2012-13 Period 10 – the change between the two years up excluding the Olympic periods reads:

  • P7 :  21%
  • P8 : 26%
  • P9 : 23%
  • P10 (last before hike): 33%
  • P11 (first after hike): 8%
  • P12 : 6%
  • P13 : -39% (wet March 2013, mostly)
  • P1 : -3%
  • P2 : -12%
  • P3 : -9%
  • P4 : 5%

Fairly clear there that the price hike had an considerable effect on ridership growth during the low winter/spring months, in many cases sending it negative.  In total for those non-Olympic periods the position was basically flat – 6.9m to 7m, barely a 2% rise.

We also need to factor in the two scheme expansions into our timeline:

  • Original (central London) – 30th July 2010 (2010-11 P5 W1) – ‘44 square km
  • Phase 2 (east London) – 8th March 2012 (2011-12 P13 W1) – ‘almost a third‘ bigger – ’65 square km’
  • Price rise – 2nd Jan 2013 (2012-13 P10 W4)
  • Phase 3 (west London) – 13th December 2013 (2013-14 P10 W1) – ‘2000 new bikes‘ – ‘over 100 square km’

We should probably look at the two graphs – first the year-on-year ridership by week, latest year in red, year before in dark blue:

Cycle_Hire_Year_On_Year_Weekly

 

Then the seven day rolling average, same colours:

Cycle_Hire_7DRA

 

The original Phase 2 expansion shows up well, although it was launched just at the turn of spring there’s an immediate leap of 20-60k a week most weeks, rising massively during the Olympics.  Then comes the price hike, and our post price rise line suddenly starts tracking the previous year quite closely, sometimes above, sometimes below.  Through the summer it dips considerable below, but this is post-Olympic blues – pre-Olympics in P4 W3 it was quite a lot higher, but after that it’s downhill all the way as the post Olympic honeymoon is not repeated – there’s a substantial gap of anywhere up to 60,000 riders who’ve gone missing after the price was raised.  Finally we have the Phase 3 expansion, now well over double the original scheme area, since when the red line has virtually matched the dark blue line from the year before. Remember that the price hike was already in by the but the scheme was smaller.  From that, over the winter and early spring at least the costly expansion of the scheme by around a third has merely restored the ridership levels from where the were the year before – it’ll be some months before we see if better weather encourages higher take-up.

We can revisit our estimates of cost and subsidy, therefore:

  • Opex 2012-13 – £24m (Phase 2 sized scheme)
  • Rider income 2012-13 – £8m
  • Sponsorship 2012-13 – £5m
  • Ridership 2013-14 – £9.3m
  • Fee paid per ride: 8/9.3 = £0.86
  • Subsidy/ride: £1.20

For 9 periods of 2013-14 the scheme was the same size, while the last 4 it was about 33% bigger in area – assuming a pro-rata increase in opex that’s 24/13*9 + 24/13*4*1.33 = £26.4m

For 10 periods of 2012-13 the scheme was priced at half the remaining 3 periods, so we need to allow a pro-rata factor for income, also allowing for the lower income in the winter months – 16% of the ridership was after the price hike – a bit of fiddling (don’t ask) suggests about £1.48 income per ride after the charges were hiked.  Assuming which based on our 8.2m rides in 2013-14 we get a useful boost from £8m to around £12m.  Barclays we assume stays the same at £5m a year given that the contract stupidly has no uprating in it.

Putting it together:

  • Opex 2013-14 – £26.4m (mixed Phase 2 and Phase 3 scheme)
  • Rider income 2013-14 – £12m
  • Sponsorship 2013-14 – £5m
  • Ridership – 8.2m
  • Subsidy – 26.4 – 12 – 5 = £9.4m
  • Subsidy/ride = 9.4/8.2 = £1.15

So after doubling the price the subsidy per ride is down 5% or so.  Given how loose some of the assumptions here are (we really need full year opex and full year sponsorship to make it work) it’s probably safest to say it’s made no provable difference we can see to the levels of subsidy either way.

Where do we go from here?  Clearly the price can’t be raised again if growth is essentially flat as a result and, expanding the scheme further out merely increases opex, again resulting in high levels of subsidy.  The only thing left really is to ensure that whoever replaces Barclays as scheme sponsor pays a considerably higher whack towards it – £10m to £12m a year would reduce subsidy levels from eye watering to comparable to those that the buses were running at in, er, 2008.  Whether this is possible from a single sponsor or via the much more obvious idea of competitively tendering advertising space on bundles of bikes a hundred at a time it’ll be interesting to find out.  The current deal runs out in August 2015.

 

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