Rental bike operator Publibike does not extend contract

About a confusion with an expensive end.

Rental bikes should still be on the road in Zurich, but not necessarily those from Publibike.

Gaëtan Bally / Keystone

Confusion broke out in the cycling city of Zurich on Tuesday. Confusion comes in the form of the small-wheeled, compact Publibikes that so many zip around town on (though not enough to make the business profitable).

Will the Publibike bikes disappear from Zurich? Or will they stay?

These questions arose after the city of Zurich issued a statement saying that Publibike had not extended its five-year contract with the city beyond November 2023, despite the option to do so. The operation of the bike rental network will now be put out to tender again.

A withdrawal from Publibike, a clear case, thought whoever read the message.

“We’re not retreating”

However, a call to Publibike CEO Markus Bacher paints a different picture. His company does not necessarily want to withdraw from Zurich, but on the contrary is considering applying again for the new job advertisement. “We’re not withdrawing,” says Bacher. “The city never asked us if we wanted to continue.”

So what now? Will Publibike go or stay? And if the company wants to stay, why not just renew their contract with the city?

The answers to these questions are crucial for the future of Zurich’s bicycle network – above all because a lot of money is involved. Publibike does not currently receive any direct subsidies from the city, the company is only allowed to use the public space free of charge for its bike stations. The company hopes that this could change now.

So what’s behind Tuesday’s confusion?

Publibike: The desire for subsidies

On the one hand there is the Publibike company, which has just come through turbulent times. In January, three former employees took over the company. It previously belonged to Postauto AG. The latter had recently made it clear that it would not extend the contract with the city of Zurich without additional subsidies.

After the takeover, the new owners remained silent on this ultimatum – and thus accepted that the city did not consider the contract to be extended.

Publibike now wants to take part in the new tender, despite the decision not to extend the contract. The company hopes to be able to negotiate better conditions, as CEO Bacher said openly to the NZZ. “It needs subsidies,” he says. “Self-supporting business models do not yet work in this market.”

This is a remarkable statement insofar as Publibike received the order to operate the city of Zurich’s rental bike network mainly because the company promised to be self-supporting.

City of Zurich: The desire for expansion

On the other side of this story is the city of Zurich, which in turn is pursuing its own interests. The aim of the new tender is above all to expand the bicycle rental network, according to the responsible civil engineering office.

Publibike currently operates 173 stations and 1,900 rental bikes in Zurich and some affiliated communities in the Glatt Valley. Especially in neighboring communities (e.g. in the Limmat and Glatt valleys) and in less well developed districts such as Wollishofen or Schwamendingen, there should now be even more.

They're still in line, but for how much longer?  Publibikes at the Zurich Stadelhofen.

They’re still in line, but for how much longer? Publibikes at the Zurich Stadelhofen.

Joel Hunn / NZZ

The city calls this expansion “Züri Velo 2.0”, which begins with the re-tendering of the Publibike business. “The non-extension is also an opportunity,” writes the civil engineering office when asked by the NZZ. The current offer no longer meets the demand. The market and technology have evolved since the Publibike contract was first advertised.

The city reacted accordingly relaxed to the threat of the former Publibike owner Postauto not to renew her contract. Last year – long before the change of ownership – the city council decided not to respond to the threat and simply to re-advertise the bike rental.

Ultimately, it was the ideal opportunity to relaunch and expand the rental bike network.

GLP: Real competition looks different

In the end it seems that both sides are not unhappy that the contract between Publibike and the city of Zurich will not be renewed. A lot now depends on how the city’s new tender is designed – and whether subsidies are planned for the bike rental network.

At the request of the NZZ, the city writes that it expects to pay a contribution margin to the new rental bike provider in the future. With the size of the network, this will also tend to increase. “The market has shown that there is hardly a nationwide system that can do without public support.”

How high the city subsidies are exactly will depend on the offers that can be submitted to the city from Wednesday. It is already clear that the new operator will have to work together with a social services work integration project as before. In addition, the rental of e-scooters or bicycles without fixed stations (“free floating”) is not permitted.

This requirement has already met with criticism. For the GLP councilor Sven Sobernheim, the city’s specifications are too narrow. “Real competition looks different.” He threatened the public sector with high costs. Sobernheim believes that free-floating providers should also be able to apply. The job advertisement is currently designed in such a way that one applicant in particular has a chance: Publibike.

The transport politician’s suspicion: Here, tenders are only being put out again so that in the end the current provider is awarded the contract again – simply with subsidies.

SP: Subsidies are not taboo

Publibike and the city dispute that. And the SP also protects the new tender. Co-President Oliver Heimgartner says: “Anyone can apply for the call for applications. The best offer wins.”

Heimgartner does not accept the criticism that Publibike receives unfair advantages over other providers. However, it is becoming clear that he and his party prefer a solution co-financed by the state. «High-quality bike sharing is part of the public service and may be supported by the city. The population doesn’t want vehicles from a dozen different providers standing around the city competing with each other.”

So subsidies are not taboo for the SP. After all, Publibike announced last year that an operating contribution was needed to finance the offer in the long term, says Co-President Heimgartner. It is understandable that the provider does not want to extend a contract that is in deficit. However, it is important that the offer is fulfilled by the end of the contract period in November 2023 according to the agreed conventions.

Rental bikes in Zurich: A turbulent story

The confusion surrounding Publibike is the latest chapter in the long and checkered history of the city of Zurich and its rental bikes. This reached a peak in 2018 when several private providers flooded the city with cheap bicycles. As a result, bicycles of all shapes and colors with flat tires and bent wheels lay in bushes and ditches, in the Limmat and in the lake.

Unforgotten are the pictures of the bicycle graveyard near Winterthur, where hundreds of bicycles from the Asian supplier O-Bike met their inglorious end. When the bike-sharing company finally went bankrupt, the remaining bikes in Zurich had to be cleaned up by city employees.

The junkyard near Winterthur became a symbol of waste in 2018.

The junkyard near Winterthur became a symbol of waste in 2018.

Annick Ramp / NZZ

The Zurich city parliament had proposed a completely different idea years earlier. After a corresponding initiative, the city announced a rental system in 2014. It should be tied to stations, unlike the free-floating offerings. Publibike, founded by Postauto AG, was awarded the contract, but was only able to start operations in 2018 due to a legal dispute. In 2019, the city finally made free-floating offers subject to approval and fees, which gave the stationary offer a further boost.

Today, Publibikes are part of the cityscape. In 2021, a total of almost one million trips were made, the city announced. Between 2019 and 2021, the number of people who would have rented a bike at least once rose from 17,600 to 27,000.

Now, in 2023, the previous Publibike regime will come to an end. But whether the company is really going is more unclear than ever after Tuesday’s confusion. The only thing that is certain is that the city will do everything in its power to continue allowing its population to cycle through Zurich on rental bikes.

After all, as a supplement to public transport, these are a central element of the city’s climate and cycling agenda.

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