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Budapest bike-sharing system: Hype on two wheels?

From the Budapest Business Journal print edition: The winds of bike sharing change have finally reached the Hungarian capital. The scale of the service should be enough to help spread environmental awareness, and though it will not be cheap, there ought to be a good chance for expansion in due time.

Environment-conscious folks in Hungary have a new reason to cheer. Public bikes are finally available in Budapest, as in some 700 other cities worldwide. The scale of the service still has a long way to go to reach the record number of 90,000 cycles in Wuhan, China, or the largest European public bicycle farm in Paris at some 20,000 pieces.

“Installing 75 docking stations and 1,100 bikes should be enough to start with. The capital will be able to soak up a lot more; around 10,000 would be needed,” Hungarian Cyclist Club president János László informed the Budapest Business Journal.

Step one at last
The main purpose is to get the scheme going, which will hopefully then attract further development. “The direct benefit will be changing traffic habits and promoting cycling as such,” László explained. Accordingly, the Budapest public transport authority BKK projects the annual number of users at 12,000. “Relieving the burden of car traffic and reducing the pressure on overcrowded public transport vehicles are both our priority,” company officials told BBJ.

The project is being called Bubi (for BUdapest BIcycle), and has cost HUF 899 million. The EU covered some 85% of the budget, with the rest financed by city hall.

Cyclists’ patron saint at work
But keeping the system running won’t cost peanuts, either, with the yearly budget set at HUF 250 million. An agreement with MOL, the leading national oil company, has helped overcome that financial bottleneck. It not only provided about half of the costs, but also agreed that revenues from the scheme (estimated at HUF 70 million per year) will go to the municipality as well.

It is not the first time cyclists have received support from MOL. They are assisted at 126 of its gas stations with repair kits and spare parts. Bike rental at certain summer festivals is also free thanks to the firm’s commitment.

Engaging a major sponsor is nothing new in the realm of bike sharing, but financial models do have an impact on pricing. “Systems with lower charges are normally operated by companies running public space advertising which results in big revenues from that advertisement. Schemes with municipality ownership such as in London or New York apply higher rates even if a name sponsor is involved,” BKK explained.

The scale of the service is also an issue. “In London, where 10,000 pubic bikes are in use, Barclay’s covers 17% of the costs which is a lot less than our share of burden,” MOL stressed in a statement to the BBJ.

Bittersweet symphony
The path is being smoothed for the launch by kickoff discounts and free trial periods. Permanent discounts connected to public transport passes are also at play.

Critics still target Bubi’s pricing, however. The two-pillar system is based on access and usage charges. The first 30 minute-period of use is advertised as free since the whole idea is to create a situation where there are bikes constantly available and they are not used for, say, day-long excursions. Yet, the yearly charge for access only comes to HUF 18,900, and rides of longer than 30 minutes carry extra fees. Spur-of-the moment users will have to stump up a deposit of HUF 25,000 even if they wish to jump on the saddle only once.

By BKK’s own assessment, the rates reflect the global average for municipality ownership-based schemes. It is telling that MOL has apparently told BKK “to reconsider Bubi charges”. Notwithstanding, the transport authority is ready to alter the rate structure or extend the launch-related discounts should the statistics require it.

That emotional bondage
Another bittersweet factor is that not enough city roads have been adapted to take heavier bike traffic. “An engaging advertising campaign would have been crucial prior to the launch that would have given extra impetus to it,” László noted.

Regardless of the lack of inspirational promotion, the system’s three-fold expansion is in the works. And if cyclists do have a 10% share of Budapest traffic by 2020, as BKK projects, few will complain.

Bubi’s body and soul
BKK and MOL created the Bubi system’s framework, but other actors are behind the body and soul of the bikes themselves. Csepel Zrt produces the bicycles, thus making them a success story for local development. T-Systems Zrt. delivered the IT solutions responsible for system integration and data communication. Nextbike, a main supplier, in turn supported T-Systems and together they added an international dimension.

The members of the consortium charged with executing the bike-sharing project came up with several innovative ideas. Docking stations operate using renewable energy, namely solar power, and almost every second station will have large, touch-screen terminals.

T-Systems told the BBJ, “A high quality mobile application will be available that provides real-time information on the number of unoccupied parking slots and available bikes, the balance of user credit or the location of the nearest docking station.”

No zero-sum game
A recent visit by European Union officials, during which they cycled along the Danube, shed light on the obvious: whereas biking infrastructure generates fat money in the West, Hungary lags behind in living up to its potential. More concrete measures have been identified in the National Cyclist Concept drafted by relevant NGOs, with special respect to the upcoming EU budgetary period 2014-2020.

“Our country could be a top destination, we have the right features,” László said. “There is a need for development that grants biking tourism priority status. The reality is, however, that half-hearted measures rule the day.”

Two major aspects must be improved. “Within settlements, integrated traffic systems should be created where every road and junction should be assessed whether they are suitable for cycling; if they are not, they need to be altered accordingly. The other task is to develop a network of cycling roads that serves tourism as well,” László said.

Such a full-fledged approach would require a HUF 120 billion investment, but that would be compensated by revenues of up to HUF 150 billion, as estimated by National Cyclist Concept. Not a bad deal after all, then.