Israel Antitrust Authority head Adv. Michal Halperin will soon be asked to rule on whether Egged Israel Transport Cooperative Society Ltd. should be allowed to operate the Jerusalem light rail. Hopefully she will make the sensible decision and bar Egged from operating it.
For if Egged were allowed to operate the Jerusalem light rail it would deal a lethal blow to the possibility of any competition in public transport in Israel's capital. If as expected Egged is prevented from operating the Jerusalem light rail it will only have itself to blame. For years, Egged has successfully blocked the entry of competitors to the city's public transport sector, in no small measure thanks to its supporters at the Ministry of Transport. At least, the Ministry of Transport, in a surprise move, has now lined up alongside the Ministry of Finance on the Tenders Committee in recommending that Egged by disqualified from operating the Jerusalem light rail.
Above and beyond the local Jerusalem aspects of the matter, the antitrust regulator's decision has national importance. Egged would achieve a powerful advantage in bidding for future tenders for operating metropolitan light rail systems around the country, having already won the tender to operate the first line of the Tel Aviv light rail.
Egged is also set to sign a new subsidy agreement with the government. The talks have been dragging on for over two years with Egged having much to lose. In recent years, egged has earned a high subsidy from the Ministry of Finance of almost NIS 1 billion. But what does the consumer get for this generous assistance? Jerusalem's bus services are a classic example of what happens in a monopoly market. Egged has full control of the Jerusalem bus market with virtually 100% of bus journey in the city on the veteran bus cooperative.
Yet the level of satisfaction regarding Egged's services among Jerusalem residents is especially low. An international comparative study quoted recently by the Bank of Israel ranked Jerusalem near the bottom in terms of consumer satisfaction for public transport with only Naples and Rome lower. Investigations by consumer organizations like 15 minutes found that Jerusalem has one of the highest rates of bus service cancellations in the country. Following these findings Egged was summoned to a hearing by the Ministry of Transport last year and warned that sanctions would be imposed on it if it did not improve services.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2018
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