New Deal to Reduce Dan Bus Subsidies

After two years of negotiations, the Dan bus company has accepted a deal that will eventually reduce the subsidies provided by the government. The agreement covers the years 2015 through 2025, and provides for a total subsidization of a billion shekels during that period.

That sounds like a lot, but overall it is a good deal for the state; in 2015 alone, it gave Dan NIS 400 million in subsidies. In return for the money, the company has promised service upgrades, including installing information screens in all buses, wireless internet service on buses, and recharging points for mobile devices on all new buses. The company will also be subject to heavy penalties if it fails to stick to schedules.

Dan chairman Shmuel Refaeli and CEO Ofer Zilbiger said in a statement that the deal “shows our commitment to improving service and advanced technologies in public transportation. The deal will also ensure the company’s financial stability.” Transport Minister Yisrael Katz said that the deal will require “an improvement of service in many parameters, and an increase in the number of electric buses that Dan operates.” Within two years, said Katz, Dan will run 126 electric buses, up from 20 it currently runs.

Still not signed on to a subsidy deal is Egged, which has experienced numerous strikes in recent months over the issue. For the past year and a half, Egged has not received what it claims are much-needed subsidies to goose its budget. The bus company claims that without a renewal of the government subsidy to the firm – with the former agreement expiring over a year ago – the company may not be able to pay salaries of drivers in the coming months.

According to the Finance Ministry, the fault is completely with Egged. The company has been losing lines over the past two decades, as competing firms outbid Egged for lines in many cities, such as Modiin, Raanana, Beitar Ilit and other places. Currently, Egged controls 45 percent of Israel’s bus traffic, down by more than a third over the past 20 years, but the company has not cut its staff by that amount. According to the Ministry, Egged has refused to sign the pro-rated subsidy agreement offered it, demanding more per passenger than it had been receiving previously.