Dynamic tolling to incentivise carpooling and minimize congestion

Context

Tel Aviv is Israel’s second-most populous city and its main business, technological, and cultural center. Its population has grown at 2% per year; Israeli population growth is ten times the OECD average.
The Tel Aviv Fast Lane is operated under a 30-year licensing agreement as part of a build-operate-transfer model, with the project concessionaire, Fast Lane Ltd, which is a special purpose company.

The stretch of highway along Highway 1 (Jerusalem–Tel Aviv) from Lod Interchange to Kibbutz Galuyot Interchange was a bottleneck. Travel time was 90% longer during peak periods.
The government needed to encourage the use of public transportation, while taking advantage of high private vehicle demand along the route to raise revenue.

The project created an extra lane for 13km. Buses use the lane for free, as do vehicles carrying four or more people. Other vehicles must pay a toll.
The fast lane is complemented by a 4,000-car parking lot and privately run high-speed shuttles between Jerusalem and Tel Aviv.
Fast Lane Ltd is able to levy tolls on users of the fast lane and receives payment from the government based on the number of vehicles parked in the parking lot for the bus between 6:30 and 9:30AM.
The toll varies according to demand, within a set range of 7 to 97 Shekels. The average toll during peak morning periods of 6AM to 10AM is 30 Shekels.
An annual targeted return mechanism guarantees a certain level of tolling for the operator.
The concessionaire is paid for the tolls, and the number of vehicles parked at the bus parking lot.

Fast Lane Ltd: A special purpose company established as the concessionaire for the project
Shapir Civil Engineering: The shareholder and operator under the build-operate-transfer model
Israeli Ministry of Finance

Shorter travel times: Average travel time along Highway 1 between Jerusalem and Tel Aviv was reduced to 18 minutes in the general public lane, and only took 8 minutes in the new Fast Lane.
Reduced commuter private car usage: Most commuters who use the fast lane do so for free, on the bus shuttle system. Of those using the shuttle system, 84% are workers, and 56% used a car before the Fast Lane opened. It is estimated the Fast Lane has removed 8,000 commuter cars per day from the 13km stretch.
Occasional users subsidise regular users: 86% of people who pay to use the Fast Lane are occasional users (having used it less than five times).
Due to the success of the Fast Lane project, in 2019 the inter-ministerial committee for Tel Aviv issued tenders for new fast lane networks in both directions on Highway 2 and Highway 20.

Commuters are willing to change their behavior, and even switch from private vehicles to public modes of transport, with the correct incentives – such as faster times and dynamic tolling.
Occasional fee-paying users can subsidise a service for regular, non-fee paying and commuting users to help generate project revenue.
Clear objectives can help private sector operators play an important role in realising project outcomes (i.e. average speed and minimum flow requirements).