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LTA Penalises Ofo For Having Too Many Bikes – Its Fleet Has Over 15,000 Bikes In Excess

[Update 7 November]

After the deadline (1 November) passed for bike-sharing firms to “right-size” their fleets, LTA found that ofo’s fleet still exceeds the maximum number of bicycles they were granted, and will take action against the Chinese company.

ofo still has “significantly above” 25,000 bicycles on the streets now, despite requesting for a lower maximum fleet size of 10,000.

LTA says it has “given notice to ofo of [their] intention to take regulatory actions for the breach of this licence condition”.

Both LTA and ofo have not confirmed the penalty that will be imposed for the breach.

According to ofo’s Singapore General Manager Isaballe Neo, the firm had previously been communicating to LTA that they required more time for the “additional right-sizing of [their] fleet to 10,000 bikes”.

“We are confident to be fully compliant in the coming days. It is disheartening to learn that a fine was so quickly imposed and towards only one operator. We hope that the LTA will consider giving us more time to do so,” says Neo.

Last month, the Land Transport Authority (LTA) awarded 6 bicycle-sharing companies licenses to operate in Singapore, and all 6 firms have since paid their license fees.

Among them, Mobike, ofo and SG Bikes were awarded full licenses that allow them to operate for 2 years.

Chinese firms Mobike and ofo were granted the largest fleet sizes, both allowed to deploy up to 25,000 bicycles, while Singapore’s SG Bikes was granted 3,000 bikes.

ofo had originally applied for a fleet of 80,000, and was “disappointed” by the much lower number awarded to them. However, the firm later requested for a reduction to 10,000 bicycles, citing financial difficulties to support a fleet of 25,000.

The remaining 3 companies, Anywheel, Grab, and new Chinese entrant Qiqi Zhixiang, were given sandbox licenses, which have to be renewed yearly and will only grant the firms much smaller fleets.

Anywheel, and Grab’s bicycle-sharing service GrabCycle, are each allowed to deploy 1,000 bikes. Qiqi will have the smallest fleet at just 500 bikes.

This will bring the total number of shared bikes in Singapore down to 40,500, less than half of what we had six months ago.

The 6 firms will have until 1 November 2018 to “right-size” their fleets, and LTA may consider imposing regulatory sanctions on the companies if they fail to meet this deadline.

Firms that fail to keep within their maximum fleet size could risk fines of up to $100,000, fleet reduction, suspension or termination of their licenses.

What It Will Cost To Operate

With a full license to operate, Mobike, ofo and SG Bikes will be required to pay $60 for each bicycle they deploy, comprising a $30 license fee and $30 security deposit.

Companies with a sandbox license will only have to pay $12 per bicycle, while LTA monitors their performance and decides whether to grant them full licenses in the future.

To finance the fleet of 25,000 bikes ofo had been awarded, it would have cost the company $1.5 million a year. Instead, their reduced size of 10,000 will cost them $600,000.

ofo Singapore General Manager Isabelle Neo said, however, that the company “looks forward to applying for the license to increase [their] fleet size” during the next application exercise in January 2019.

Since October, the Chinese firm announced a raise in their prices to cope with LTA’s licensing fees, coming up to 3 times their original rates for their subscription and pay-as-you-go services.

On the contrary, Mobike Singapore Country Manager Sharon Meng said Mobike does not believe raising prices will solve problems.

“Eventually it’s about increasing efficiency, better fleet management using technology, and to generate revenue through other sources of income streams,” she said.

Featured Image Credit: Yicai Global

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