Egged Side Swipes the Cabbies

The taxi business in Israel got a new partner several months ago - the Egged Transportation Cooperative Society, which ordinarily operates buses.

The taxi business in Israel got a new partner several months ago - the Egged Transportation Cooperative Society, which ordinarily operates buses. Egged operates two taxi ranks under the name "Personal Egged" - one at the Hof Hacarmel central bus station in Haifa and the other near Ben-Gurion International Airport in the Airport City business compound. Egged contends it is running a supplementary service that does not contradict the inter-city public transportation it operates, but all that cab drivers see is a competitor entering an already crowded market.

There are some 18,000 taxis on the road with "a green number," an operating permit issued by the Ministry of Transportation, which costs an estimated NIS 180,000. Until the late `90s, permits were distributed according to fixed annual quotas. Then the market was deregulated and now anyone who meets MOT requirements can purchase a permit.

MOT officials are not worried by Egged's entry into the taxi market. It is a legitimate move, they say, available to anyone who is interested. They acknowledge that the market is extremely competitive and crowded, but contend that strict price regulating will prevent wild competition among the operators from disadvantaging the weak.

The Treasury sees no cause for concern either, saying this is a free market in which anyone may compete.

Egged operates between 40-50 vehicles at each of the taxi ranks, according to Ofer Linchevski, its vice president for finance. He says the cab drivers in question were already working anyway, just not for any particular cab company. They pay Egged a "station fee," and Egged is responsible for marketing and managing the station, as well as for registering and assigning fares.

Linchevski traced the impetus for Egged's "supplementary service" to the rise in some Israelis' quality of life: "There is a corresponding growth in the sector that is more pampered and has not been using inter-city public transportation because of poor accessibility from the final stations to their destinations." Egged decided to offer a door-to-door solution that combines inter-city public transportation and inner-city taxis, he explained.

However, cabbies say it is a competing service, which operates where there is demand in order to make a profit. Linchevski counters that Egged located its taxi service where there had previously been a vacuum.

The Airport City station services 5,000 employees in that compound, as well as 11,000 workers at the nearby Israel Aircraft Industries, plus the residents of Lod, Ramle, and even Modi'in. The Haifa service serves passengers disembarking from buses or trains at the recently opened public transport hub.

Linchevski doesn't deny that the service is meant to generate additional revenue for the cooperative, and said Egged may expand the service as needed at the two stations and also extend service to other regions.

Since the government decided in 1997 to deregulate public transport, the field has been undergoing a privatization process that has effectively ended the monopoly by Egged and Dan. Egged has been forced to compete against new operators who offer service at sometimes 30-50 percent cheaper rates. Although Egged says the demand for taxis is high and its new venture is a success, the company is in no hurry to advertise it. Egged spokesman Ron Ratner ascribed the company's reticence to the newness of the enterprise, but noted that advertisements have appeared in local papers in the North, and will soon appear in the center of the country.

Antitrust Commissioner Dror Strum said that Egged's expansion into other services is within the province of the Transportation Ministry, but that regulatory policy frowns on allowing a monopoly in one area to gain entry into another area, so the ministry's decision is regrettable.