The Egged 'tax' and the Dan 'fee'
Sometimes, when people frighten me with the prospect of the gargantuan traffic jams that will clog downtown because of some special event, I decide to go by bus.
Sometimes, when people frighten me with the prospect of the gargantuan traffic jams that will clog downtown because of some special event, I decide to go by bus. What could be more efficient?
I go to a bus stop. However, after a few seconds, doubts begin plaguing me: "When will the bus arrive?" Looking right and left, I turn to someone else waiting there, who is in the same predicament: "When did a bus pass here last?" My neighbor, giving me a helpless look, replies: "No idea, I've been waiting 10 minutes."
What does that answer tell me about when the next bus will arrive? Nothing. There is no sign on the bus stop with any information or promise about when the bus should be here.
Okay, let us not use Switzerland as an example. There, you can set your watch by the timetable posted at every stop. Instead, let us talk about France, England, the Czech Republic, Hungary, Slovenia and Brazil - a random sampling of countries where a timetable at every stop is mandatory for the bus company. Because the two most important things for passengers are reliability and precision. They want to know how long they must wait for the next bus, so they will not be late for a meeting or work.
But in Israel, because two giant monopolies control public transportation, there is no real competition - and they are not that concerned over whether we will reach our meeting or job on time. As far as Egged and Dan are concerned, you can just stand around and wait.
That is primarily why the Israeli public relies on private transportation, which increases traffic congestion and traffic jams, intensifies air pollution and undermines our quality of life.
The Finance Ministry's budget division is trying to increase competition for Egged and Dan by issuing external tenders for more and more bus routes. This process began in 2002 and has been implemented with remarkable success. Prices on the privatized routes plummeted by dozens of percent, because the private companies are much more efficient (see table). The inefficiency of the two cooperatives has resulted in added costs of NIS 1.1 billion annually (see table); this, in effect, is the Egged "tax" and the Dan "fee" that the public is paying.
With the entry of private companies into the field, the Transportation Ministry checked the quality of service: departure times, bus serviceability, informational signs, driver courtesy, crowding on buses, whether drivers stop at every bus stop, the handling of complaints from the public, etc. The results were summed up in an Operational Quality Index, where - not surprisingly - the private companies scored top marks, while Egged and Dan lagged far behind.
Privatization produced another blessed result: Because of the lower prices, the number of passengers in areas that were privatized grew. For example, in the Netanya-Hadera area, it climbed from 3.2 to 4.7 million annually, while in the greater Ramle area, it rose from 5.8 to 7.4 million annually. And the same was true for other areas where competition was introduced.
In other words, the price passengers paid decreased, service improved, the number of passengers rose and the Finance Ministry saved hundreds of millions of shekels. Who could oppose this winning formula?
Egged and Dan, of course. The giant cooperatives oppose expanding the reform. So far, they have received NIS 1 billion from state coffers for consenting to opening up 25 percent of public transport routes to competition. The treasury wants to continue, and even to reduce their compensation.
Thus Egged and Dan are waging World War III. They say they will not allow the "treasury boys" to liquidate them, and Histadrut labor federation head Ofer Eini supports their demands. He thinks it is more important to defend Egged and Dan's 2,600 members than the millions of potential passengers on public transportation.