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

EU-28 freight transport by mode, % bn tonne km Note: Sea refers to domestic and intra-EU journeys only Source: 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. o Mutual recognition of qualifications o Admission to the profession o Removal of quotas o Lifting of cabotage restrictions Tax measures Safety measures o e.g. driving hours

Customs controls and regulations o Reduction of formalities Environmental regulations Technical harmonisation o Dimensions, 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 logistics o across borders o 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 fares o full cabotage rights o 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 o 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 agreements o Since 2002, Commission has right to negotiate airline deals on behalf of EU o Agreements with US (restrictions remain on ownership of US airlines and cabotage in US) o Deals with Brazil, Canada, Australia, New Zealand o 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 cost o Direct sales – Internet o No frills o High plane turnaround: simpler boarding, etc. o Regional and secondary airports o Standardised fleet o Higher seating density o Direct flights, short haul, no transfers o Staff incentives Traditional o Multiple sales channels o Full service o Slower turnaround o International airports o Several aircraft types o Lower seating density o Long and short haul, transfers, greater complexity o 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 liberalisation o First rail package in force 2003 – opened international freight to competition o 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 2015 o EU-wide approval, via European Rail Agency, for safety certification and vehicle authorisation o Separation of network managers and train operators reinforced o Liberalisation of domestic passenger markets

CTP priorities Completion of SEM – rail and short sea shipping Continuing development of trans-European transport networks Environment