A few weeks ago, as the employees of Montreal’s bike-sharing program put the sturdy bicycles in storage for another winter, the city’s mayor was inviting citizens’ input on the future of the money-losing venture, and speculation swirled over whether the city would finally pull the plug on Bixi.
A massive $108-million bailout in loans and loan guarantees approved by the city in 2011 had not been enough to rescue the troubled company and in August, a judge formalized the transfer of the Public Bike System’s assets to a new, city-owned non-profit, Bixi Montreal. Taxpayers took possession of 5,120 bicycles and 461 automated rental stations without any further discussion.
But when it was announced that continuing to operate the service until 2019 would cost the city another $3 million per year, even former supporters could have been forgiven for balking. In 2011, I said Bixi was “too cool to fail,” but I thought I might be proven wrong.
I should have had more faith. Leadership demands fortitude, so on November 24, Mayor Denis Coderre announced that the city was renewing the contract.
The Montreal Gazette cheered the decision, dismissing the concerns of naysayers. If the city were to discontinue the bike-sharing service, one editorialist wrote, “the almost $40 million Montreal has pumped into the venture in loans and other bailouts would [be] money down the drain, and those clunky grey bikes and hulking stands would be left to gather cobwebs.”
Whether this fine example of the “sunk costs” fallacy was one of Coderre’s reasons for keeping the grey-coloured white elephant in the city’s enormous menagerie, no one can say. The reasons he expressed were… typically compelling:
In any case, he added, the costs would only amount to 77 cents per
citizen per year. Also, there will be more transparency in Bixi’s
operations, something which has been promised on other occasions.