When the new generation of Boris bikes were unveiled earlier this week, Sadiq Khan was nowhere to be seen.
His predecessor as Mayor, Boris Johnson, rarely missed a two-wheeled photo opportunity. By contrast, Mr Khan, despite picking up the £80m bill to keep the scheme running until 2022, preferred to be in Dagenham to plug his vision for a Hollywood-style film studio.
London’s affably intellectual walking and cycling commissioner Will Norman, (below), despatched in place of the Mayor, was predictably upbeat about the future of the Santander-sponsored bike hire scheme.
But this week a turf war began in earnest that pits the £1,000 Pashley-built bikes against cheaper upstarts from China and Ireland, and which could threaten the long-term viability of the City Hall scheme.
Ofo, which claims to have 10 million bikes in 180 cities across the globe, yesterday expanded from its pilot borough of Hackney into Islington and the City of London.
A day earlier, Urbo launched 250 bikes in Waltham Forest. Two months ago, Mobike launched 250 bikes in Ealing. Earlier this summer, oBike was first on the scene with 1,000 bikes spread across central London.
See here for my interview with Ofo co-founder Zhang Yanqi: https://www.standard.co.uk/news/london/boss-of-new-dockless-bike-firm-cycling-in-london-will-be-as-big-as-in-amsterdam-a3675391.html
From modest beginnings, great things are planned. Ofo wants to operate “across all of London, central, inner and outer” with a fleet of “50,000 to 150,000” bikes. Mobike is talking to numerous London boroughs. Urbo wants to expand across London and the UK.
The bikes are the latest example of “disruptor” firms shaking-up an established market. Look to China to see how they are on every pavement and have proved popular with the smartphone savvy, cost-aware younger generation. Globally there are millions in circulation.
Their primary advantage is that they are “dockless” – meaning that, unlike Boris bikes, they can be left anywhere. In-built with a GPS mapping device, they are located, unlocked and paid for with a smartphone.
“Geofences”, virtual geographic boundaries that prevent the bikes from being unlocked by others outside a chosen area, are used to encourage riders to return them to their “home” borough. Bonus points are awarded to riders who leave them in designated parking areas.
Unlike Boris bikes, dockless bikes require little infrastructure and can be introduced almost overnight. They are cheaper to hire – 50p for 30 minutes, compared with a £2 minimum daily charge for a Boris bike.
Ealing council leader Julian Bell was one of the first to spot their potential. He had failed to convince Mr Johnson to expand the Boris bikes scheme west to his borough. “We always got the message: ‘We are going east rather than west,” he told the Standard.
“Once I was shown the dockless scheme, I thought it was a much more flexible and customer-friendly system. In my view, docked schemes are more expensive, less flexible and dockless are the future. Once Mobike came and said ‘no cost to you’, it was a no-brainer.”
It was a similar situation in Waltham Forest, the capital’s “Mini Holland” borough, with its cycle paths and closed residential streets that favour the cyclist and pedestrian over the rat-running commuter.
It too had wanted Boris bikes, but was told they would go no further east than the Olympic park.
“There has been a history of requesting Boris bikes to a wider catchment than central London,” said Clyde Loakes, Waltham Forest’s deputy leader.
“We pretty much recognised two or three years ago that as we hadn’t got them for the Olympics, we were never going to get them, because of the cost of implementing the infrastructure. We have not been chasing that dream for the past couple of years.
“Dockless bikes came onto the horizon nine to 12 months ago, with a number of different players. We had all the companies in to present to us. We thought Urbo were the best fit for us.”
The dockless bikes are most easily differentiated by their deliberately eye-catching colours. Mobike is orange, Urbo is green, Ofo is yellow – as was oBike.
It was first on the scene in central London but its plans went horribly wrong when 130 oBikes were impounded (above) by Wandsworth council. It branded them a “yellow bike plague” for cluttering pavements, especially around Clapham Junction station.
oBike had to pay the council to get them back, and quit the capital for Oxford. But it has vowed to mend its ways and return to London. “We are in negotiations with numerous councils,” its UK lead, Haroon Khan, revealed.
“We had to pay an impound fee. We can look at that as a negative. But the conversations that came out of having to pay made us incredibly empathetic to the cost to the taxpayer of the council getting involved.”
There is big money at stake. Venture capitalists have invested billions in the likes of Ofo and Mobike. According to BikeBiz magazine, it is the use of smartphone technology – and the direct link it creates to users’ bank accounts – that has sparked interest, in the same way that apps for iTunes or Uber enable a one-click revenue stream.
The new firms also share an unwillingness to talk about their business models. Urbo is said to need each bike to be hired 10 times a day. Mobike aims for five hires a day. At present, its 250 bikes centred on Acton are being used about 600 times a week.
By comparison, the vital statistics of Boris bikes are measured in millions. They will clock up about 11 million journeys this year and generate more than £11 million in hire charges.
But even with Santander’s annual sponsorship of £6.4 million, they require £3.62 million a year from Transport for London to break even. That’s about 30p subsidy per ride.
Councils now have to pay TfL if they want Boris bikes to expand into their borough. The scheme will reach Brixton this winter, at a cost of about £3 million to Lambeth council. There are “no plans” to extend it into the suburbs.
Mr Johnson’s aim of requiring no taxpayer funding was never achieved but it is second only to Paris as the most popular bike hire scheme in Europe. It has clocked up more than 60 million journeys since launch in 2010.
Will Norman believes dockless cycles can co-exist alongside Boris bikes. City Hall is not panicking but “watching with real interest”, he said.
“There are almost 12,000 [Boris bikes] in London,” Mr Norman said. “We have seen five or six record hire months this year. I think we can see the enduring popularity of this. At the same time, we can count the dockless bikes in the hundreds at the moment.
“For our ambition to get more people cycling round the city, one of the biggest barriers is people who don’t have access to bikes. The Santander bikes are fantastic for that in central London, but in other places I’m really keen to see some of the dockless bikes work.”
He added: “I think the price point is not necessarily the key here. It’s the quality of the experience and the ability to know exactly where you are going to find the bikes, and their ease of use around central London.
“The dockless schemes will continue to grow and evolve, but I think there is a space for those to grow and evolve with the Santander scheme.”
Ofo, which launched in the UK in Cambridge, followed by Oxford, Norwich and Hackney, has set its sight on operating within the North and South circular roads, then possibly beyond.
Mobike, which has partnered with British Cycling to get two million people on bikes, is understood to be in discussions with Brent and Hounslow councils, and is also keen to move into Richmond and Kingston.
Steve Pyer, UK general manager for Mobike, said: “We are talking to pretty much every borough. I can see it going Londonwide.
“The rhetoric has changed from six to 12 months ago. Then it was: ‘The Chinese are coming, how do we stop it?’ Six months ago, people were a little bit nervous. Now they are starting to realise this is a benefit and it can work.”
Councils, for their part, are avoiding exclusive deals with one operator as they see how the market develops. They don’t pay for the bikes, but neither do they benefit financially from them – though some boroughs have tried (and failed) to levy a fee.
The main concern for councils, post the oBike fiasco, is for operators to behave responsibility and for streets not to be littered with abandoned bikes. A code of conduct has been drawn up by TfL and the boroughs.
“Clearly, we want to learn form others’ unfortunate experiences,” said Cllr Loakes. “If you are going to bring your dockless bikes to Waltham Forest, it’s got to be done with our consent and our support. Do it in the face of us and we will not be best pleased.
“Success for me is having plenty of people using the bikes, using them responsibly, a low level of complaints and good customer service response from Urbo if there is an issue.”
Most agree that there will be a “market shakedown” within the next 12 to 18 months that will determine who survives.
“I think there will eventually be two dockless models in London – the market will determine that,” said Cllr Loakes. “It will also be hard for boroughs to resist dockless bikes coming their way. The sooner we get there, the better – then we can ‘geofence’ the whole of London, and people can go out of borough and not be restricted.
“We still have not cottoned on to the impact of electric-assisted cycles. I think that is the next big thing coming over the hill. That is probably where Santander will go. The infrastructure is largely there to support that.”
Cllr Bell agreed: “We need to resolve the issue of having a Londonwide scheme that can cover every borough and is much better for the customer. Yes, we do want competition, but we also want the ability to cover all of London.
“I think we will find that the dockless bikes will go into central London as well. We will have to see how the Santander scheme holds up against the competition.”
- An edited version of this article appears in tonight’s Evening Standard