Transport in Europe

The search for mobility

Importance of transport in Europe

• 1 million transport-related enterprises

• Over 7million jobs

• Value-added of over €300 bn

• Almost 30% of energy consumption

• About 40% of public sector investment

Transport

• Supports all other economic activity• An important part of business costs• Facilitates trade – important to European

integration and SEM• Important for other policies

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

• One of only two sectors explicitly in Rome Treaty

Transport trends

• 1970 – personal mobility 17 km per day

• Late 1990s – 38 km per day

• 1975-2000 European car ownership levels doubled

• Result = congestion

• Congestion costs = 0.5% GDP – will double if present trends continue

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

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

• Rail more important in 2004 accession states

• 2004 enlargement – reinforces need for better transport

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bn passenger km

1970 1980 1991 2002

Cars Bus and coach Rail Trams & metro Air

Modal performance – passengers, EU-15

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bn - tonne km

1970 1980 1991 2002

Road Rail Inland waterways Pipeline

Modal performance – freight, EU-15

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Road Rail Inland waterway Pipeline

Freight modal split, 2002

Evolution of the Common Transport Policy

• Pre-SEM – one of most heavily regulated sectors

• Despite Treaty, transport policy dormant

→

• 1982EP 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,– Mutual recognition of qualifications– Admission to the profession – Removal of quotas– Lifting of cabotage restrictions

• Tax measures

• Safety measures– E.g. driving hours

• Customs controls and regulations– Reduction of formalities

• Environmental regulations

• Technical harmonisation– Dimensions, weights, technical characteristics

• Infrastructure charging?

Freeing up of road haulage

• Facilitates emergence of holistic approach to logistics– Across borders– 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: – Freedom to set fares– Full cabotage rights– 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 demand – slot allocation issues

• Air Traffic control

• International airline agreements– Since 2002, Commission has right to

negotiate airline deals on behalf of EU– Many deals concluded, US proving more

difficult nut to crack

Changes in airline sector

• National flag carrier idea declining:– E.g Air France and KLM– End of Sabena

• Purchase of small airlines as feeders

• Strategic alliances – international rather than European

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 cost– Direct sales – Internet– No frills– High plane turnaround:

simpler boarding, etc– Regional & secondary

airports – Standardised fleet– Higher seating density– Direct flights, short haul, no

transfers– Staff incentives

• Traditional– Multiple sales channels– Full service– Slower turnaround– International airports– Several aircraft types– Lower seating density– Long and short haul, transfers,

greater complexity– 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

Rail

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

international freight to competition– Second rail package in force 2004 – safety,

interoperability, domestic freight, cabotage, European Rail Agency

– Third rail package – proposed 2004 – to open passenger markets and measures re qualifications of drivers