BIXI is dead. Long live BIXI!

By Dan Delmar on December 16, 2011


Another nail was hammered into the coffin of Montreal’s bike-sharing service when BIXI president Roger Plamondon quietly resigned; the news released just like any dignified public figure with a clear conscience would have it – on a Friday evening. 

Plamondon took parting shots at Quebec’s municipal affairs minister, Laurent Lessard, for blocking more than $100-million in loans and loan guarantees that the city of Montreal (illegally) extended to BIXI in May. 

BIXI’s projections were off, he conceded in an interview with Radio-Canada. Instead of making $2-million this year, they will lose $3-million, selling one-third fewer bikes than expected. And he blamed the media for hurting sales. 

The resignation comes just a few months after an optimistic Plamondon painted a rosy picture of BIXI’s future in front of city councillors, begging them for the handout. Without the prospect of a welfare payment courtesy of Montreal taxpayers, the Société de vélo en libre-service’s future now looks quite bleak. 

From the start, BIXI took Montreal taxpayers for a ride. The company is a private, non-profit affiliated withStationnement de Montréal (SDM), the private for-profit firm that manages parking meters. The SDM takes a cut of parking revenue for itself, but must hand over most of it to the city (the auditor general has noted in the past that millions in revenue went unpaid to the city and wondered why Montreal wouldn’t want to save money by managing parking itself). 

BIXIs use public land, occupying parking spots that would otherwise be generating revenue for the city. However, unlike SDM, BIXI pays no rent – so far, it has been under no obligation to give the city a cut of revenues. Montrealers who have wondered how the BIXI network has expanded so quickly need only look at where the money is going or, more accurately, where it’s not going. 

BIXI’s business model is unsustainable without this type of indirect public subsidy – it’s even unsustainable with the subsidy. Plamondon and his supporters at city hall who have consistently claimed the company takes no public money are, in effect, lying. With sluggish sales, taxpayers could have been on the hook for tens of millions more, if not for Minister Lessard wisely recognizing that the city of Montreal is not a last-resort lender for failing businesses. 

So, where does BIXI go from here?

The Ministry has ordered the sale of its international operations (the only commercially viable part of the business). With sales from the US to the UK, there is reason for optimism; even though BIXI has been poorly managed locally from Day One, the system itself is quite brilliant in its design and functionality, and easily marketable abroad. 

The city of Montreal itself should take over complete control of BIXI and run it as a para-municipal corporation, even if it means paying fair market price for the company’s assets. It is the only solution to repair the damage done to the public purse and would ensure that Quebecers benefited from home-grown innovation.

Since BIXI was introduced in 2009 (it was supposed to be profitable by now), politicians milked the made-in-Chicoutimi system as a source of pride for all Quebecers. Montrealers were promised a cheap bike rental service that would be subsidized by international sales.

But Plamondon and BIXI management have been walking on thin ice with municipal governments in the US– they weren’t paying attention and didn’t foresee the Obama administration’s Buy American Act interfering with their dealings. As a result, future expansion may be in jeopardy and BIXI manufacturing is being partially outsourced to companies south of the border.

Even if BIXI can make a go of its international operations, there is still no clear timeline or agreement for revenue-sharing with the city of Montreal, which was used thanklessly as a launching pad for the company. Officials from the city of Toronto were more shrewd in negotiations with BIXI, cutting a deal to split revenue 50/50 – no such luck for taxpayers here who may have been under the impression that BIXI’s benefits extended beyond those related to physical well-being and a negligible reduction in greenhouse gas emissions. 

The BIXI debacle is an illustration of a dogma that is becoming more commonplace in traditionally progressive Quebec: Profits are reserved for the private sector, while losses can easily be socialized. If there are profits to be made for the citizens of Quebec, why not compete with the private sector and make them? If there’s money to be saved, why outsource the work to private companies, costing taxpayers more in the long-run?

If the city of Montreal can only overcome its newfound aversion to the free market, BIXI could become thatsource of pride it was expected to be. That might require, however, putting an end to this current relationship, which could be described at best as parasitic, and at worst, sinister. 



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