An increase in membership fees for the Mayor’s flagship cycle hire scheme has failed to deliver the expected rise in revenue.
In January all access fees were doubled, with the cost of an annual membership pass rising from £45 to £90.
The price hike was expected to raise an additional £4-6m per year to minimise Transport for London’s multi-million pound losses on the scheme caused by the gulf between its £225m construction and operating costs and TfL’s sponsorship deal with Barclays which was claimed to be worth “up to £50m”.
In December MayorWatch revealed that Barclays had paid just £13.43m of the promised sum. In April an FOI request by this site forced TfL to admit the bank had reduced the total sponsorship sum by at least £1.5m owing to performance failures.
The doubling of access fees was designed to reduce the level of subsidy for the scheme but early internal TfL figures suggest the move has failed.
As reported in April, the doubling of fees has proven unpopular with users, with 20% of users saying they didn’t intend to renew their membership.
A survey of users suggested that TfL’s aggressive promotion of the Barclays brand in return for the sponsorship cash had back-fired by leading users to believe the scheme was self-funding or even profit-making.
This perception is likely to be a key driver in dissatisfaction about the price increase.
A report prepared for TfL’s Finance and Policy Committee by Leon Daniels, Managing Director of Surface Transport, shows that revenue in the most recent four accounting periods was below expectations.
In the final period of last year revenue was almost £300,000 below projections while in the second period of this year the shortfall was approximately £200,000.
Although overall revenue is up on the previous year, the increase is “20 per cent year on year, compared to a predicted 36 per cent.”
The report also confirms that there has been a noticeable move away from annual memberships towards daily use and users reject the new £90 annual fee.
It states: “The number of active annual access periods has fallen by around 10 per cent since the tariff increase, having remained relatively stable for the preceding year, although this needs to be observed over a longer period to assess whether it is a trend that continues through the summer months.”
