Passenger transport in Israel - current state and related problems

Abstract

This article studies economics of contemporary passenger transport market in Israel. Three key problem areas have been identified: private cars demand, supply of transport infrastructure and public transport market. Analysis of private cars market has shown that private cars are perceived as the main mode of transportation by today’s Israelis. Due to acute transport congestion issues Israeli government aims to reduce the demand for cars by introducing extremely high taxes on car purchase and maintenance. International comparative analysis has revealed the issue of transport infrastructure deficit in Israel. Relatively low level of motorization in Israel and a stable trend for increase of number of private cars per kilometer of roads are highlighted. Together with transport infrastructure deficit this implies higher likelihood of deterioration of transport congestion issues in the future which will negatively affect Israeli economy. Analysis of public transport markets has revealed some positive effects following the increase in competition in bus transit markets introduced by Israeli public transport reform in 1990s. These include increase in output, quality, and efficiency of bus companies. The reform has also led to revitalization of railroad passenger transport in Israel, making trains a feasible alternative for buses. On the other hand, some potential issues have been outlined, such as relatively low level of railroad-passenger kilometers per capita and relatively highly centralized system of transport planning in Israel. The study concludes with underlining complementarity and interconnectivity between the three areas of Israeli passenger transport, thus stressing the importance of integrated approach to passenger transport economics analysis.