Reforms in the regulation of public bus service in Israel

- Regulatory structures focusing on national-level authorities seem less effective than those focused on the regional level.
- Excessive involvement of the private sector in the regulatory structure increases the “regulatory capture” phenomenon.
- When operators' involvement is limited to the operational level, knowledge and information, held by operators, are not reflected in setting policy.
- Encouraging operators to conduct self-regulation mechanisms may achieve good results at relatively low costs.

Regulation of public bus services in fixed routes is common worldwide. This article presents regulatory reforms instituted in Israel from 2000 to 2014, in which part of the public bus services are being provided through competitive tendering. The results generally indicate relative success in most of the variables examined: the average cost per vehicle kilometer, the level of service, fares and the number of passengers. However, the reform has also been accompanied by fairly frequent changes in the characteristics of the tenders. These changes may reflect difficulties in imposing regulation on the operators. The findings indicate that the existing regulation in Israel should be changed, both structurally and in terms of the organizations involved in the process. In addition, it is recommended that a new measure be developed to examine the quality of passenger service provided, which should also be included as a significant criterion in the selection of operators.