Egged to transfer 17% of its routes to other operators

Competition will allow development of public transportation.

By RON FRIEDMAN
egged bus 311 (photo credit: Courtesy)
egged bus 311
(photo credit: Courtesy)
The Ministries of Finance and Transport released a joint statement on Wednesday announcing they had reached an agreement with Egged Bus Company to transfer 17 percent of its operations to competition by other bus operators.
After lengthy negotiations, the ministries came to an agreement with Egged regarding the advancement of competition on public transportation over the next decade. The agreement, scheduled to be signed on Sunday in Jerusalem, will determine the method by which 17% of the company’s operations will be released for open competition by other operators over the next five years.
According to the statement, the competition will allow the continued development of the public transportation industry, while establishing the status of the new public transport operators and ensuring improvement in the level of services provided by Egged.
The agreement determines that all future mass transit systems, including Bus Rapid Transit systems, will be promoted competitively and that both local and international companies will be able to take part.
“The agreement creates the groundwork for Egged’s continued transformation from being a cooperative to becoming a company and will help improve its ability to function in a competitive market, where quality of customer service is given considerable weight,” read the statement.
As part of the agreement, Egged’s activities will be divided into clusters, which will be continuously reviewed to test the level of service given to the public. Failure to meet the required standards of accuracy and reliability by Egged may lead to high fines and the transfer of other portions of its operations to competition.
Moreover, the agreement ensures that public transportation services will not be negatively effected by Egged’s other activities by creating a separation between its public transport operations and its private travel activities.
Finance Minister Yuval Steinitz, said that “improving the competitiveness and service standards of public transportation services...is a social objective of great importance, which will improve the standard of living of all sectors of the population, improve efficiency and service availability and will also lower prices.”
Transport and Road Safety Minister Israel Katz noted that since the start of the reform in public transportation, more than 2,000 new employees had been hired and 10 new public transport operators had been introduced, currently operating about 30% of Israel’s public transportation services.
Katz added that so far the public transportation reform had resulted in average reductions of about 25% in public transportation fares. He said that over the last four years, the number of passengers using public transportation had increased by 25% from 490 million passengers in 2004 to more than 650 million passengers by the end of 2009.
“The new arrangement is fair and allows Egged to focus on its core activities, developing services and long-term planning,” according to Egged Chairman Gideon Mizrachi.
As part of the agreement, 15% of Egged’s routes will be offered up to competition and it was agreed that 3% of them will be operated by Egged’s subsidiary company, Egged Taavura.
“The fact that the agreement will allow the organization to enjoy the fruits of its investments is an important incentive for continuous efficiency improvement,” said Mizrachi.
“Egged takes upon itself, as part of the agreement, to meet the required service objectives with full faith that the organization can meet them.”
According to Transportation Ministry figures, buses are the most popular form of public transportation in Israel. With 760 million bus rides in 2009, buses make up 86% of all public transportation rides, followed by service taxis (Sherut), with 70 million rides and Israel Railroads with 36 million rides.
Egged currently controls 46% of all bus activities, down from 70% in 2000.