A joint bid by Gett (formerly GetTaxi) app and Hadar Taxi has won the tender for tax services to Ben Gurion Airport, thereby ending Hadar's monopoly on the airport routes. Taxi traffic from the airport totals 1,100,000 rides a year.
Starting on May 30, 2017, travelers landing at Ben Gurion Airport will be able to order taxis using the Gett app from the airport, and will not have to order the taxi before takeoff, as they had been forced to do by the monopoly.
The bid by Hadar and Gett is 31% less than the consumer fee rate established in the Commodities and Services Price Control Ordinance set by the Ministry of Transport, whether the fee is determined by taxi meter or by special journey according to the rate list. The companies will be obligated to publish the new lower prices, which will now be anchored in the ordinance.
Travelers can now order taxis for themselves either through the Gett app or from the conventional Hadar taxi stand providing service on the spot. Under the new tender, all taxi drivers can collect travelers from Ben Gurion Airport going anywhere in Israel, which currently cannot be done legally, due to the Hadar monopoly on taxi services from the airport.
Up until now, Hadar has paid NIS 6 million for its monopoly. This amount is now being eliminated; every driver will pay NIS 5 upon leaving the airport, but only when carrying passengers. The tender terms bar rolling this fee over onto the passengers.
The Israel Airports Authority stresses that all of these rules will be strictly enforced. The tender is valid until 2021, with an option for a three-year extension.
Gett CEO Mark Oun says that the model under which his company won "opens the gates of Ben Gurion Airport to any driver coming into the airport. Today, 18,500 taxi drivers a month come to the airport. They arrive with a full taxi, but only 5% of them return with passengers. As soon as any driver is allowed to enter with passengers and leave the airport with a full car, we'll balance out. Including the discount we'll give (31% on the list price), it's worthwhile, because today, you either earn nothing on the return trip and lose your expenses, or you earn less, and I emphasize that the discount will be given only on the price of the journey. Drivers will still be entitled to charge for extras, such as for luggage or a third passenger,"
According to Oun, even after taking into account the NIS 1.5 million paid by the company to the Airport Authority a month for operating costs (for buildings, personnel, and supervision), the tender is worthwhile. "Our guideline is to create a situation in which there will always be passengers in the taxi, thereby enabling the driver to maximize his profit."
Actually the situation portrayed by Oun is similar to the one reported by Hadar after lowering the fee scale it has been offering for years to passenger ordering taxis through the passengers station at the airport. Despite the lower fees, the company will profit, because Hadar taxis will not return empty to the airport after dropping their passengers off at their destination.
Oun complimented the Airports Authority, saying, "Let them adopt in innovative system here with a model that exists nowhere else in the world, under the assumption that the market is progressing, and the necessary adjustments must be made. This model enables the operator to use his data to balance supply with demand. The entire nature of work at the airport will change; instead of 50 drivers, there will be 150-200 drivers at any given moment. It's already known that the way the traditional taxi stand worked, with the drivers waiting in line, is inefficient. In the taxi industry, the motto is that the driver should be in motion, and should always have a full taxi. Today, our efficiency rate is 75% of the journeys, and that's an amazing figure."
8,000 drivers spread all over Israel are currently registered at Gett. The company's payment model is based on a fixed monthly payment (NIS 500 or NIS 900) to the company by the driver.
The Hadar-Lod taxi stand was founded in 1948. It is one of the largest and longest-standing taxi stands in Israel. The company currently employs over 600 drivers. Hadar won a five-year tender for Ben Gurion Airport in 2012.
Hadar-Lod taxi stand CEO Menachem Ben-Haim said, "Just as it has since Israel declared independence and to this day, the Hadar-Lod taxi stand will continue to provide professional, reliable, efficient, and modern service to millions of Israeli and foreign passengers at Ben Gurion Airport. We welcome cooperation with Gett, and are convinced that together, we'll be able to continue providing passengers with service at the highest level, while preserving the drivers' employment terms and livelihood."
Hadar currently pays NIS 530,000 a month, in addition to a NIS 5 travel fee per driver. To this should be added NIS 1.5 million in monthly operating costs (each driver pays Hadar NIS 3,000 per year for this). The Airports Authority therefore received NIS 6.5 million a year, plus NIS 5.5 million from the NIS 5 paid for each journey (NIS 1.1 million a year according to the calculation) - a total of NIS 12 million.
The Airports Authority will no longer receive a fee for the franchise, but the exit fees that the drivers will pay after the tender are NIS 6, so that NIS 11 will be paid, while the operating costs will remain with the operator (Gett). The Airports Authority's revenue, according a calculation of the number of journeys will exceed NIS 12 million (without including the operating costs, which are expected to increase with the number of drivers.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 14, 2017
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