Transport in Europe

The search for mobility

Transport

• Supports all other economic activity• An important factor in costs and competitiveness• Facilitates trade – important to European

integration and SEM• Important for other policies

o e.g. energy, environment, social and economic cohesion, etc.

• One of only two sectors explicitly in Rome Treaty

Importance of transport and transport services in Europe

• Over 1 million transport-related enterprises • 10.5million jobs• Value-added of over €458 bn• 32% of energy consumption• 40% of public sector investment

Transport trends

• 1970: Personal mobility 17 km per day → 38 km per day by late 1990s some stabilisation

• 1975 – 2000: European car ownership levels doubled but 2004 enlargements kept car ownership levels down – range from 224 per 1,000 of the population in Romania to 621 in Italy

• Congestion and resulting costs are a problem

Transport modes

• Road = dominant passenger transport mode – door-to-door flexibility

• Rail transport long term decline in transport share – freight and passenger

• Rail relatively more important in 2004 accession states

• Renewed emphasis given to transport – TENs

EU-28 passenger transport by mode, % bn passenger km

2%

1%

9%

7%

8%

73%

Car Bus, coach, trolleybus Rail Tram & metro Waterborne Air

Note: Air and sea refer to domestic and intra-EU journeys onlySource: Eurostat, EU Transport Policy in Figures: Statistical Pocketbook, 2014

EU-28 freight transport by mode,% bn tonne km

45%

11%4%

3%

37%

Road Rail Inland waterway Oil pipeline Sea

Road transport thedominant sector infreight transport but less so than in passenger transport

Note: Sea refers to domestic and intra-EU journeys onlySource: Eurostat, EU Transport Policy in Figures: Statistical Pocketbook, 2014

Evolution of the Common Transport Policy

• Pre-SEM – one of most heavily regulated sectors

• Despite Treaty of Rome, transport policy dormant

• 1982: EP took Council of Ministers to ECJ for failure to fulfil Treaty obligations and won

• SEM also highlighted need for CTP

2011 Transport White Paper sets out long term priorities

• Pre-SEM – one of most heavily regulated sectors

• Despite Treaty of Rome, transport policy dormant

→• 1982 EP took Council of Ministers to ECJ for

failure to fulfil Treaty obligations and won• SEM also highlighted need for CTP

Developing the CTP

The case of road haulage

Wide range of transformative measures

• Market access, e.g.oMutual recognition of qualificationso Admission to the profession oRemoval of quotaso Lifting of cabotage restrictions

• Tax measures• Safety measures

o e.g. driving hours

• Customs controls and regulationsoReduction of formalities

• Environmental regulations• Technical harmonisation

oDimensions, weights, technical characteristics• Infrastructure charging?

Review of road haulage changes

• Relatively little third country involvement in cross-border trade

• Cabotage movements remain low – mostly in France and Germany

• Current policy – simplify cabotage rules to remove differences in interpretation and implementations that restrict cabotage movements

Freeing up of road haulage

• Facilitates emergence of holistic approach to logisticso across borderso across modes

• Emergence of pan-European distribution strategies and logistics companies

• Transformational effect on the spatial distribution of economic activity?

Developing the CTP

The case of airlines

Pre-SEM airline sector

• Large state monopolies• Fares subject to state approval• Access to routes tightly controlled• Cabotage restrictions• No competition and airlines operating at a

loss and highly subsidised

• By 1997, after 3 airline packages: o freedom to set fareso full cabotage rightso any carrier with community licence could

serve any international route in Europe• State aids less of a problem

Problems remain

• Airport capacity not keeping pace with demando Slot allocation issues. Long term solution = more

capacity. Short term – greater transparency and higher utilisation

o Air traffic management (ATM) issues from fragmented systems → Single European Skies (SES, SES II and SES II+). Gives EU competence in ATM and a series of measures resulting in greater co-ordination of ATM in Europe

Problems remain

• Civil aviation is an international business – many flights cross EU-borders

• International airline agreementso Since 2002, Commission has right to negotiate airline

deals on behalf of EUo Agreements with US (restrictions remain on

ownership of US airlines and cabotage in US) o Deals with Brazil, Canada, Australia, New Zealando 2012 policy to sign agreements with all EU

neighbours by 2015 – some successes

Changes in airline sector

• Market determines commercial decisions • Decline of idea of national flag carrier as strategic

necessity• Restructuring and rationalisation via M&A:

o Air France and KLM; British Airways and Air Iberia; Lufthansa buys Belgian, Swiss and Austrian airlines; etc.

o Purchase of small airlines as feeders• New business models – emergence of low cost

carriers

Low cost carriers – a new business model

• Not possible without EU liberalisation• Originally developed Southwest Airlines

following US deregulation• Based on driving all cost components down• Vulnerable to energy prices, security, etc.• Some low cost practices spreading to traditional

airlines

Contrasting models

• Low costo Direct sales – Interneto No frillso High plane turnaround:

simpler boarding, etc.o Regional and secondary

airports o Standardised fleeto Higher seating densityo Direct flights, short haul,

no transferso Staff incentives

• Traditionalo Multiple sales channelso Full serviceo Slower turnaroundo International airportso Several aircraft typeso Lower seating densityo Long and short haul, transfers,

greater complexityo High basic costs, fewer staff

incentives

Developing the CTP

The case of rail

Rail

• Long term decline in traffic share• Mostly heavily subsidised state

monopolies• Commission sees role for rail to relieve

congestion → modal shift as policy objective

• Prospects for modal shift – low

EU rail policies

• Last mode to experience EU liberalisationo First rail package in force 2003 – opened international

freight to competitiono Second rail package in force 2004 – safety,

interoperability, domestic freight, cabotage, European Rail Agency

o Third rail package – agreed 2007 Opening of international passenger markets European driving licences, allowing qualified drivers to

operate across whole European network Enhancement of passenger rights

Fourth Rail Package

• Proposed 2013 – still under negotiation in 2015o EU-wide approval, via European Rail Agency, for

safety certification and vehicle authorisationo Separation of network managers and train operators

reinforcedo Liberalisation of domestic passenger markets

CTP priorities

• Completion of SEM – rail and short sea shipping• Continuing development of trans-European

transport networks• Environment