New Year to Bring Cheaper Cab Fares on Longer Trips in Israel, Higher Fares Within Cities

As of January 1, there will be 3 fares, based on when the passenger is traveling, but a ridesharing plan is being delayed because the required ‘smart meters’ are not available

A taxi cab in Tel Aviv, December 8, 2019.
Eliran Avital

Israeli taxi fares are being revamped as of Wednesday, January 1, making it less expensive to travel between cities but more expensive on shorter trips within cities.

The Taxi Drivers Association opposes the fare restructuring plan and has announced plans to disrupt cab service this week.

The new fare plan is ultimately due to include a money-saving ride-sharing option, but the implementation of that part of the plan has been deferred, and it is not clear when it will go into effect. The cost of a taxi ride of at least 15 kilometers (9 miles) will drop by about 6.5% as of Wednesday, while rides within cities are projected to be about 13% more expensive.

This is the second time that the ride-sharing part of the plan, which requires the installation of new taxi meters, is being delayed, because the technological aspects still remain to be worked out. (It should be noted, however, that ride-sharing has been available in Israel since 2016 for customers using taxi apps such as Gett, Yango, Uber and Raxi.)

The restructuring plan, which is being carried out at the initiative of the transportation and finance ministries, follows recommendations on the matter issued in 2016. The new plan replaces a current fare structure that is based on either the duration of the trip or the distance traveled. When the cab is stuck in traffic and is moving at less than 19 kilometers per hour (about 12 miles per hour), the fare is currently based duration. At faster speeds, it is based on distance.

As of January 1, the fare will be dictated by a formula combing the two – duration multiplied by the fare per minute and distance multiplied by the fare per kilometer. The combination is expected to result in cheaper fares between cities – trips of 15 kilometers – but is expected to substantially increase taxi fares within cities.

The average urban fare is projected to increase from 40.30 shekels ($11.61) to 45.50 shekels ($13.11). The cost of the average inter-urban ride as of January 1 is projected to drop by 6.6% from 114.50 shekels ($32.99) to 106.90 shekels ($30.81). Since most taxi rides are taken within cities, at distances of less than 15 kilometers, all told, it should result in an overall jump in taxi fares.

The restructuring also includes the introduction of three kinds of fares from the current two, in addition to a base amount of 10.40 shekels tacked on at the beginning of each ride.

A man considers getting into a taxi, Tel Aviv, July 2018.
Olivier Fitoussi

Fare 1, which is based on 1.63 shekels per minute and separately for every kilometer traveled, will prevail Sunday through Thursday until 9 P.M. and on Fridays until 4 P.M.

Fare 2 will be in effect Sunday through Wednesday between 9 P.M. and 6 A.M., on Thursdays from 9 P.M. to 11 P.M., on Fridays from 4 to 9 P.M. and on Saturday from 6 A.M. to 7 P.M. The fare during these hours will be 1.95 shekels per minute and per kilometer (which is 20% higher than the regular daytime weekday fare).

Fare 3 will prevail from 11 P.M. on Thursday, Friday evening from 9 P.M. and Saturday evening from 7 P.M. until Sunday morning at 6 A.M. The fare during these hours will be 2.28 shekels per minute and per kilometer.

The fare restructuring plan had initially been due to take effect last April, but it was deferred to January 2020 in part due to the unavailability of the “smart taxi” meters that the ride-sharing aspect of the plan requires. A major consideration for the government in raising the average fare was that as of January 1, the government subsidies to the taxi industry in the form of tax breaks on fuel, are also being reduced, a move required by law. The smart meters make ride-sharing possible (for those who don’t have a taxi app) because they enable the driver to charge individual passengers separately.

Transportation Minster Bezalel Smotrich confirmed to TheMarker that the introduction of the meters was being deferred by several months. The ride-sharing plan will not only enable passengers to save if they share a cab with strangers. It will also make it possible for the driver to earn more. Each passenger would pay about 80% of the fare of someone traveling alone.

Another benefactor from the new plan will be the companies that install the smart meters, Monitex and Kuponit. That’s because every smart meter, which the plan will require every driver to ultimately have installed, costs 3,500 shekels. And since there are more than 25,000 cab licenses in Israel, it should generate revenues of between 80 million and 90 million shekels for the two companies.

Nevertheless, at a meeting at the Transportation Ministry about two weeks ago that was attended by Smotrich and the ministry’s director general, Keren Terner, it became apparent that the smart meters are not available for installation, in part because the work on the interface with apps such as Gett, Yango and Uber has not been completed.

The companies with the taxi apps might also benefit from the ride-sharing plan if they charge the drivers a separate commission for each passenger picked up via the app. The companies have not said at this point that they would do so, however, and the taxi owners’ association, as opposed to the taxi drivers’ group, has not protested the plan.

The smart taxi meters will provide a greater measure of oversight, which should curb the number of unregulated “pirate” cabs and benefit the legally operating licensed drivers. The new meters will also help the regulators supervise safety and working conditions in the industry, making it possible, for example, to spot a driver who is working more hours on a shift than the law allows. The meters are also expected to help reduce other illegal practices, such as the forgery of taxi licenses, money laundering and tax evasion on cab fare revenues.

The delay in the introduction of the smart meters limits the achievements that the overall plan had aimed to achieve. A Transportation Ministry document from 2018 said: “The very core of the structural change is the adoption of the smart meter, which will enable an interface with [taxi hailing] system based on apps or telephone or another computerized system.” The document also noted that “in the absence of a smart meter, it will not be possible to … realize the benefit of the change in the fare structure.”

Controversy in the industry

Over the past couple of weeks, the plan has led to protests by taxi drivers around the country, and has also caused disruptions. Some drivers claim that the new plan will ultimately put less money in their pockets, but the sentiment has not been universal and many drivers have refused to join the protests.

A notice was posted to the Taxi Drivers Association Facebook page announcing that requests for cabs would not be answered between 10 A.M. and 4 P.M. between Monday and Wednesday of this week. The post noted that the drivers have planned protest marches, and the association said that each cab station would allocate 5,000 shekels to a strike fund.

Drivers who work with the taxi-hailing apps, as well as drivers who are not members of the association, have not announced any plans to strike. And the taxi owners’ association, as opposed to the drivers’ group, have not opposed the new fare structure.

A Facebook page devoted to opposition to the plan declared: “The attempt to divide the industry is [cause for] celebration for the authorities but a disaster for the industry, which is like a family in which everyone is running to the police to complain about one another and in the end the entire family breaks up.”

The Transportation Ministry did not respond to TheMarker on whether negotiations are being held with the drivers who oppose the fare changes. There have been several hearings at which the drivers were presented with the details of the planned changes, the ministry said, and there are no plans to delay the first phase of the plan beyond January 1.