Israel Signs New Public Transport Deals Worth $7.5 Billion
Translated & summarized from Davar by baba
Israel's National Public Transport Authority signed new agreements worth NIS 28 billion with six bus companies, excluding major players Egged and Dan. The deals increase the weight of passenger numbers in company payments from 7% to 15% and reallocate resources from less-used to busier routes. Concessions for the companies are extended by two years, with potential for another two, contingent on meeting service targets. The full impact on remote areas and service accessibility is yet to be determined.
The story in 5 lines · by baba
- Six Israeli bus companies signed new agreements worth NIS 28 billion with the National Public Transport Authority.
- Passenger numbers will now account for 15% of bus company payments, up from 7%.
- Less-trafficked bus routes will be reduced to bolster service on busier lines.
- The concessions for the six bus companies have been extended by two years.
- Major bus companies Egged and Dan were not included in the new sector-wide agreements.
Israel's National Public Transport Authority has signed new sector-wide agreements with six bus companies, totaling approximately NIS 28 billion (about $7.5 billion USD). These agreements aim to restructure payment mechanisms and operational methods for bus lines in the coming years. The companies that signed are Egged, Metropolin, Kavim, Nativ Express, Superbus, and Electra Afikim. Notably, the two largest companies, Egged and Dan, are not included and are expected to reach separate agreements with the Ministry of Transport. Tanufa, which is in proceedings with the authority and may become a Dan subsidiary, is also not part of these deals.
A significant change in the agreements is the increased weight of passenger numbers in the payment structure for bus companies. Currently, only 7% of a company's remuneration is based on passenger validation, with the remaining 93% tied to kilometers traveled. This system was intended to ensure the economic viability of less-trafficked, remote routes. However, critics argued this provided insufficient incentive for companies to increase ridership or improve service, as they were paid regardless of passenger numbers.
Under the new agreements, the passenger validation component will rise to 15% of the remuneration, while 85% will remain based on travel distance. While some support this change, others argue the new weight is still too low to create a significant incentive. The authority initially sought to raise this to 25% but later withdrew the demand. The agreements also involve reallocating service, with less-trafficked routes being thinned out and resources shifted to bolster busy lines and expand service in high-demand areas. This is intended to reduce crowding and improve service reliability on popular routes.
However, this shift raises concerns about accessibility for residents in smaller, remote communities or areas with lower demand who rely on public transport. The extent of service reduction and the specific lines affected remain unclear, as the full agreements have not yet been published. The agreements also extend the concessions for the bus companies by two years, with a potential additional two-year extension without a new tender, provided they meet service standards and passenger targets. This approach aims to incentivize existing companies to improve service without immediately opening routes to new tenders.
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