After months of negotiations, sector-wide regulatory agreements were signed this morning (Monday) between the National Public Transport Authority in the Ministry of Transport and most of Israel’s major public transport operators. The initiative is worth NIS 28 billion.
This initiative, which required extensive coordination and consensus among various government bodies and the bus companies, is expected to transform the sector. The public transport service network has been upgraded, and an economic model has been formulated that links the revenues of operating companies to service quality, ridership levels, and compliance with stringent performance benchmarks. This marks a departure from the current system, under which companies are compensated solely on the basis of kilometers traveled.
Under the new arrangement, routes with low ridership will be scaled back, and a direct incentive mechanism, tied to growth in passenger numbers, will be implemented. The Ministry of Transport also aims to accelerate the launch of new competitive tenders.
Metropoline to reduce low-demand routes
Meanwhile, Generation Capital reported to the stock exchange this morning that bus company Metropoline, which is 79% owned by the fund, had signed an agreement with the Ministry of Transport. Negotiations between the operators and the ministry have been taking place for the past two years. Metropoline currently operates a fleet of about 1,800 buses across four public transport clusters: the Negev, the Sharon, the Greater Sharon-Holon Area, and the Ono-El'ad cluster.
Under the regulatory arrangement, the operation period of the service clusters will be extended by four years beyond the original concession term. Service maps will be updated and streamlined to ensure optimal service for passengers, which involves reducing service on low-demand routes and reallocating services to areas with higher demand. Additionally, the payment and incentive mechanism will be adjusted: approximately 15% of the compensation will be based on passenger trip validations, while the remaining 85% will consist of a fixed payment per kilometer traveled.
Idan Moalem, head of the National Public Transport Authority, said: "The signing of these regulatory agreements today marks a milestone for public transport. Despite the doubters, we have demonstrated that through professional dialogue and determination, it is possible to drive profound, systemic change, change that places the passenger at the center and links financial incentives to the level and quality of service provided. I would like to thank our partners, the Accountant General’s Department and the Budget Division in the Ministry of Finance, as well as Minister Miri Regev and Director General Moshe Ben Zaken, for their support for the Authority’s staff and their intensive, dedicated work. I also thank the public transportation operators for their cooperation; without the collective effort of all these parties, such a complex initiative could not have succeeded."
Lobby 99, a public advocacy group that has campaigned for years for reform of the incentive model, said, "We commend the head of the National Public Transport Authority for spearheading this significant initiative with the bus operators to improve service. Historically, these operators have faced no pressure to attract passengers or enhance the quality of their service. For several years, we have advocated for a restructuring of the compensation model and the tender system, based on the principle that the operators' business interests should align with the public interest: providing reliable, efficient, and accessible service that encourages more people to use public transportation.
"We are pleased that the Authority is advancing these important changes and linking a portion of the compensation to passenger numbers. This is a significant step toward a system that measures success on the basis of real-world outcomes, an approach that should be further developed and deepened."
Published by Globes, Israel business news - en.globes.co.il - on November 2, 2026.
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