Hilkevitch Writes an Informative, If Skeptical, Review of Divvy Stats

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This Tribune graphic shows that late fees are much more common among 24-hour pass holders.

In the early days of Divvy, the Tribune’s Jon Hilkevitch was one of the leading naysayers, but after the system proved to be a hit, he wrote an article acknowledging its success. On Monday he once again put bike-share under the microscope, but in a reasonably balanced manner, including some interesting statistics. Granted, the headline “Overtime fees pad Divvy’s bottom line / Users rack up more than $700,000 in late charges” makes it sound like he’s exposing shady dealings by the city, and other language in the piece comes across as a bit slanted against the system, but it’s an otherwise solid piece.

Hilkevitch reveals that Divvy took in about $2.5 million in user fees during its first five months, with roughly $703,500 coming from late fees. The vast majority of these fines were paid by daily pass users, many of whom are tourists, rather than annual membership holders.

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Divvy riders on Dearborn. Photo: Steven Vance

“It’s not clear whether the Divvy public-private partnership, supported by $25 million in federal funding and $6.25 million in local matches, is turning a profit,” Hilkevitch writes. The $31.25 million in public funding Hilkevitch refers to is the startup cost for the 475 planned stations – there are currently only 300 stations on the street. The city of Chicago owns the equipment and Alta Bicycle Share, which is paid via user fees, runs the system. Per the contract, profits or losses will be shared between the city and Alta. While it’s hoped that Divvy’s revenue will more than pay for operating costs, there’s no expectation that the initial $31.25 million investment will be recouped.

Hilkevitch writes that about $1.6 million of the $2.5 million in user fee revenue came from 24-hour passes and their associated late fines. The roughly 131,000 daily pass users, who tend to be visitors, accrued more than $656,600 in overtimes charges. However, the roughly 11,500 annual members spent only $47,000 in late fees, docking their bikes within the time limit 97 percent of the time.

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Text above a Divvy kiosk’s touch screen explains the fee structure. Photo: John Greenfield

There are a couple of possibilities for this discrepancy. It may be the case that tourists are more likely to accidentally rack up late fines because they don’t understand the fee structure. Unfamiliarity with the docking station locations may also make it more challenging for them to find a place to park within the 30-minute time limit.

On the other hand, some of these late charges may be intentional. While locals are more likely to use the bikes for short trips, such as from a transit station to their workplace, tourists are more likely to want to go for longer cruises, such as along the Lakefront Trail. Even factoring in late charges, Divvy rides under 90 minutes are cheaper than renting a comparable cycle from Bike and Roll Chicago, the city’s largest rental company (and a Streetsblog sponsor).

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Steven rides a Citi Bike in Brooklyn. Photo: John Greenfield

“Newbies to bike sharing are understandably confused — and perhaps misled — by the time-limit policies that could result in overtime charges,” Hilkevitch writes. He notes that an ad for Divvy at O’Hare tempts visitors to “See all the sights for just $7 per day” but doesn’t mention the 30-minute time limit. I wouldn’t call that misleading. Bike-share works great for making short trips from one sightseeing destination to another, as I recently did using New York City’s Citi Bike system, which is also operated by Alta and has a similar fee structure.

It’s worth noting that while Hilkevitch discusses the $2.5 million in user fee revenue, he fails to mention that income from the sale of placard ads on the docking stations, as well as a potential corporate sponsorship, greatly increase the chances that the system will turn a profit. Chicago Department of Transportation spokesman Pete Scales told me that ad sales figures should be available in a month or so.

  • Greg LeMond

    Do you have any hard numbers or even ball park estimates for corporate sponsorship revenue or ads?

  • I don’t. Citibank is paying $41 million to bankroll NYC’s Cit Bike program, but the Divvy sponsorship will probably be far less than that. Let me see if I can get the ad rates from CDOT.

  • Chris McCahill

    It’s probably wise not to call these “late fees” or “late charges,” since they’re not really a penalty, just cost of use. It’s an hourly rate, just like many services. We recognize this difference, but it sounds like Hilkevitch (and probably many others) don’t.

  • Well, as you can see from the photo of the kiosk sign above, Divvy calls them “overtime fees.”

  • Chris McCahill

    Hmmm, yeah. Maybe a PR misstep. Maybe not.

  • Fred

    Or social engineering. High turnover is part of the system, so discouraging longer rides is part of their job.

  • Katja

    30 minutes goes by fast on a bike.

  • Voltaire

    It also goes far. I’m an annual member, and so far I’ve had one trip I had to make where, for various reasons, I wasn’t going to be able to swap out my bike. I told myself I’d be fine with a late fee given the circumstances.

    My entire trip took 18 minutes. Now, I’m new to biking in Chicago (only started via Divvy), and that experience taught me just how much you can do with 30 minutes.

  • Katja

    True, but it can also swing the other way. I was convinced that I could make it from the Museum Campus station to my apartment (then, near the Campbell/North Ave station) in under 30. I made it to the DesPlaines/Kinzie station and had to re-up. Looking at my account, I made it there just under the wire, at 28 minutes.

  • BlueFairlane

    It’s not an hourly rate, as the rate changes according to the number of hours you have it.

    I’ve been bitten by the fee more often than not, as my usage tends to be between points almost exactly 32 minutes apart. I am a very rare and reluctant Divvy user.

  • In your case, to avoid a late fee all you have to do is check in your bike somewhere in the middle of the trip to avoid a late fee. If you’re an annual member with a key, this only adds about 45 seconds to the journey.

  • BlueFairlane

    Yeah, that strikes me as way more trouble than I want to go to, as I’m using Divvy with the goal of getting someplace quickly and conveniently. And there’s the added issue that on the one occasion I tried something like that (trading out a bike that was busted for a new one), there was at least a five-minute delay for the station to register I’d returned the first bike. (I say at least a five-minute delay because I didn’t wait it out.)

  • Chris McCahill

    I guess what I’m getting at is there must be a way to communicate that the rate goes up the longer you have the bike, without people feeling like they’ve been “bitten” by a penalty. Sometimes short-term parking rates work on the same principle.

  • BlueFairlane

    But it is a penalty. And, as Fred hints at above and others have stated more overtly, Divvy wants it to be a penalty. It doesn’t want to be a bike rental organization. It wants you to use the bike to go directly between two points and then put it back in the system.

  • Chris McCahill

    I understand, but (to use jargon) I see it as Demand Management. All services are priced so that people don’t hog them.
    I was really just talking about the way that the language can make it seem like they’re trying to rip you off… the same way people view all these new airline fees.

  • BlueFairlane

    I understand what you’re saying about the language. I just don’t agree that the language as it is runs contrary to Divvy’s goal. They don’t want people to think of it as a usage rate, as that will eliminate the incentive to put the bike back quickly in many willing to pay that rate. Some will simply say, “$15 for 90 minutes? I can pay that,” and go on. Simply upping the rate won’t instill a sense of urgency or a concept of limited use. They want people to envision a time limit, and a negative outcome to exceeding that limit.

  • Chris McCahill

    Gotcha :)

  • Jennifer

    Do we know for a documented fact that “[t]he roughly 131,000 daily pass users” are “visitors”? Or is that just an assumption, like the dogma that tourists cruise the Lakefront Trail and locals ride from point A to point B?

  • No one is claiming all 131,000 daily pass users were visitors, or that only tourists cruise the LFT and only locals ride form point A to point B.

    I wrote, “The roughly 131,000 daily pass users, who tend to be visitors” and “While locals are more likely to use the bikes for short trips, such as
    from a transit station to their workplace, tourists are more likely to
    want to go for longer cruises, such as along the Lakefront Trail.” Those seem like pretty safe assumptions.

  • Jennifer

    I seem to recall an earlier Tribune piece about locals who were checking out bikes for lakefront cruises and getting slammed with late fees.

  • I’m kind of interested in the thought of a 4-day or 7-day pass, after seeing it mentioned in the Citi Bike story. It’d be great for weekend or week-long tourists, and also might provide a local a way to try it out without paying for a whole year after their first day pass or two …

  • Joseph Musco

    “We don’t want to compete with bike ownership, or bike rental. Those
    businesses are very important to the city. This is more like bicycle
    taxi. We want you to use it for less than 30 minutes,” – Gabe Klein, CBS Chicago 6/28/13

    Or, CDOT directly advertises to tourists (“See all the sights for just $7 per day”) as a bike rental and 28% of their budget comes from “overtime fees” for rides beyond 30 minutes.

  • The 7-day Citibike pass is an extremely good value: $25. That’s the cost of three 1-day passes on their system ($9.95 per 24-hour pass).

    I was there for four days and used it about six times, though. That’s $4.17 per trip, more expensive than the subway but also more convenient sometimes. I didn’t use it more because I also wanted to ride the subway and I was meeting different people here and there and walking. It’s definitely a great, new tool for the car-free life and city.

  • With the upcoming Divvy Brags extension for Chrome browser you’ll be able to track time, distance, and speed for all your trips via Divvy.

    https://github.com/alexsoble/DivvyBrags

  • Cameron Puetz

    My attitude in a situation like that is that the late fee is less than a CTA ride. Therefore Divvy is still an enjoyable and cost effective way to get where I’m going.

  • If it’s like a bike taxi, and tourists take taxis, then I can see how they’d still be “honestly” advertising it. But I do get how people can be confused about time limits. I also understand how not knowing where all the stations are could make it harder to return them in 30 minutes. This would be easier if we had bike infrastructure that made tourists (and everyone) feel safer riding on street than having to go out to the LFT!

  • Hugh

    The spin in the article is silly. The stats show that the vast majority of rides by daily users get their bikes back within the 30 minute window. Yes, there is a discrepancy between annual pass holders and daily users, but in the case of annual pass holders 18% of rides are over 30 minutes vs. 29% from daily users.

    The article makes it seem like “confusion” is the main reason for the daily fee overtime usage. Sure, there may be some of that. But given the fact that more than 70% of the daily fee users get them back on time should give the reporter/editors pause before presenting the story in such a bizarre way.

  • Ryan Wallace

    I am also what you could call a rare user (only 5 trips since joining in October), but I would not call myself reluctant. As a member I can attest to the fact that the bike swap/dock surfing is extremely quick with a membership key. My standard rides are also just over 30 minutes, so I find the station sometime along the way that is near the route. I agree that 45 seconds is all it takes.

  • Ryan Wallace

    Exactly the same way that I look at it.

  • BlueFairlane

    My view on this is different. I’m willing to pay $7 for a bike or $2.25 for a train. I’m less willing to pay for both.

  • BlueFairlane

    It may be quicker for members, but my experience with Divvy suggests I wouldn’t find the benefit of membership worth the price. This is not a knock to Divvy, which I think is a good system despite my quibble with the 30-minute limit. I just don’t think the logistics work out to me personally using it enough to justify the cost of membership.

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