Economists Bash Tel Aviv-Eilat Railway Plan

A month ago, Dr. Yaakov Sheinin, an expert on the transportation project, was asked if a Tel Aviv-Eilat passenger train was worthwhile. “Today, Eilat receives two million tourists a year,” he replied. “If it were to receive 30, 40, or 50 million tourists –then it would be worthwhile.”

Israeli Prime Minister Binyamin Netanyahu reportedly wants the trip from Tel Aviv to Eilat to take just two hours, instead of the current two and a half hours, which would make it a viable alternative to domestic flights to Eilat.

But that would render the airport superfluous. On the other hand, if the 30 billion shekel bullet train project to Eilat is uneconomical, then building an airport to compete against the train is hard to understand.

Meanwhile, the Ministry of Transportation insists that the new airport is necessary because Eilat’s current airport is overburdened and too close to the city. Keeping the airport open blocks local development, disturbs residents and tourists, and jeopardizes passenger safety and security.

They argue the security angle, as well: Israel needs a second civilian airport to handle international flights in the event Ben Gurion Airport is closed by strikes, missile attacks or the weather.

But, if so, why build the railway too?

The link to Eilat would serve two purposes: A cargo railway for cars imported from the Far East to the center of the country, as well as phosphates from the Dead Sea back to Eilat for export to China and India.

Sheinin’s analysis supported the idea. A diesel train traveling at about 25 miles per hour on a single track would cost $900 million. Based on that figure, Sheinin calculated that the project would yield returns of 8-9% annually.

However, two years ago Prime Minister Netanyahu and Transport Minister Katz decided to expand the project to include a double track, electric railway with tunnels and bridges that could carry cargo at 85 miles per hour and passengers at up to 160 miles per hour. Katz believes that the Chinese could build it quickly and cheaply, and they would undertake much of the financing.

Egyptian opposition to the rail project cropped it right away.

Sources informed Globes that the day after Katz returned from a trip to China, the Egyptians informed the Chinese regarding their opposition to such a project. Were the Chinese to become cool to the project, the financial underpinnings could be jeopardized.

Regarding the passenger track, the most recent study was carried out by Ezra Sadan when he was finance ministry director general. He concluded that even with the most optimistic estimates of Chinese participation, it would be difficult to break even.

That assessment did not even take a competing new airport into account. But an airport plus, as Sadan estimated, doubling of the present 11,000 hotel rooms in Eilat by the time the rail would begin operations, there was no rationale to justify the rail line.

He concluded, “Ultimately planning a railway to Eilat is purely an economic project, and such a project would almost certainly be doomed to economic failure it has no purpose. That would undoubtedly be the fate of a project focusing on building a railway principally to carry passengers. Such a project would cause damage of billions to the national economy.”

This article appeared in print on page 7 of the March 8th, 2013 edition of Hamodia.