Tel Aviv Bike Rental Network Runs Up Against Competition From Electric Bikes

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Tel Aviv's Tel-O-Fun bicycle rentalsCredit: Alon Ron

Tel-O-Fun, the Tel Aviv bicycle rental network that lets people go for a spin for an hour or a day at a time using bikes parked at stations across the city, has had a bumpy rise since the service was launched in 2011.

In 2014, the Gaza war kept cyclists indoors for most of the peak summer season and now the company, FSM Ground Services, is encountering a new problem: The huge popularity of electric bikes that have begun to present Tel-O-Fun with stiff competition.

“The use of electric bicycles has grown dramatically and has caused us to lose subscribers for Tel-O-Fun. The brunt of the decline was in the second half of 2015,” said Gidi Altman, chairman of FSM parent company, Fridenson Logistic Services, a Tel Aviv Stock Exchange-listed provider of trucking and freight forwarding.

At the end of last year, Tel-O-Fun counted just 12,100 subscribers, a 22% decline from a year earlier, Fridenson said in its annual report released on Tuesday. Revenues from bike rentals, which are offered on a subscriber and one-time-use basis, held steady at 14.4 million shekels ($3.75 million), but that was only because the service was expanded – 17% more bicycles, a total of 3,500, were in the fleet and the number of parking stations increased 10% to 204.

Electric bicycles and scooters have become wildly popular in Israel, with over 120,000 imported to the country in 2013-15. But the core population of riders, namely teenagers, is likely to fall: Responding to a sharp rise in accidents, the Knesset Economic Affairs Committee two weeks approved raising the minimum age for riding electric bicycles from 14 to 16 and tightened other rules for them and electric scooters.

Despite the downturn, Tel-O-Fun expanded last year, adding 10 stations in the Tel Aviv suburb of Givatayim, nine in Ramat Gan and four in Tel Aviv. Neighboring Bat Yam is mulling letting the service expand to it.

Altman said he is counting on the tougher rules to revive interest in bike rentals.

“The authorities are moving ahead with regulations and plan to step up enforcement because of the growing safety risk, so I think the downtrend [for rentals] will stop,” he said. “In central cities all over the world riding ‘green’ bicycles is gaining momentum and now has a central role.”

Tel-O-Fun is modeled after similar operations in a host of European and North American cities, including Paris, Brussels, London and New York. But like Tel-O-Fun, bike rental schemes have not proven to be profitable.

Altman said he is also counting on the launch of Tel Aviv’s Light Rail to give Tel-O-Fun another boost, with bikes serving as connecting transportation between homes and workplaces, and tram stops.

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