Barcelona, July 18, 2018.- The liberalisation of the European aviation market, that celebrated its 25th anniversary in 2017, already benefited the aviation sector, as well as air passengers. One of the main problems affecting its performance is the fragmented EU airspace that leads to high operating costs for airlines, as it limits the optimisation of flight paths or duplicating costly functions. As a consequence, in 2014 the unit costs for providing air navigation services were around 35% lower in the US than in Europe.
In addition, major European airports are likely to face a capacity crunch in the near future. It has been estimated that by 2035 there will be a surplus annual demand of some two million flights which European airports will be unable to accommodate due to capacity shortages. The Benelux countries, Germany and the United Kingdom risk having the highest unaccommodated demand in 2035.16 These two issues are seriously impeding the European aviation sector’s ability to grow sustainably and compete internationally. The inability to grow and compete is causing congestion, delays and rising costs.
Challenges also include creating better market access and investment opportunities with non-EU countries and maintaining high EU safety, security and environmental standards. All of which are pre- requisites for a competitive aviation sector.
Maritime transport needs to overcome bottlenecks and act on administrative simplification, port capacity and efficiency, connection to the hinterland and access to financing. The lack of high-quality infrastructure or low-performing port services can result in significant extra costs for shippers, transport operators and consumers. For EU companies, port and terminal costs can represent up to 25% of the total door-to-door logistic cost. The “Ports Regulation” of 2017introduces rules on transparent public funding to improve market access and make port investments and operations more efficient.
Inland water transport stands to lose its comparative advantage as an efficient, low external costs transport mode, unless long-term structural changes are made to improve the quality of its operating conditions. Suitable means include: investment in better infrastructure, skills, digitalisation and integration into the logistics chain. This requires both the definition of common standards at EU level and cross-border cooperation between EU countries, e.g. in the framework of the Danube Strategy.
Another common challenge of market functioning is to create conditions of fair competition between the various transport operators in a market that is not distorted by illegal state aid or by abuses related to the control over infrastructure.
State funding of regional airports is often needed to ensure territorial cohesion. However, undue distortion of competition in subsidising economically unviable airports must be avoided. Sustainable growth of airports and airlines requires full compliance with state aid rules. EU and non-EU air carriers benefit from equal access opportunities to the EU market. However, this is not always the case in non-EU countries.
As for maritime transport, the “Ports Regulation” requires that financial relations between public authorities and the port managing body, or any other entity that provides port services or dredging and receives public funds, must be reflected transparently in the accounting system. Thus, the risk of undue cross-subsidisation is reduced.
In rail, cases of (restructuring) aid and overcompensation of public service obligations are frequent. In addition, failure to separate infrastructure managers and service operators is
The Commission monitors the functioning of transport services for consumers in the Consumer Markets Scoreboard, which ranks over 40 consumer markets. Results of the 2015 surveyshow that train services continue to be perceived by the EU’s consumers as one of the poorest performing service sectors (24th out of the 29 services markets surveyed in 2015), with the fourth highest incidence of problems.
The heterogeneity of EU countries’ scoresis almost twice as high as observed for all services on average. Bulgaria, Croatia, Romania and Italy are at the bottom of the ranking.
Since the global economic crisis, the EU has been suffering from low levels of investment in transport infrastructure. This has held back modernisation of the EU’s transport system. Collective and coordinated efforts at European level, recently boosted by the Investment Plan for Europe, need to reverse this downward trend.
In particular the trans-European transport network (TEN-T) requires investment in new infrastructure, refurbishment and modernisation of the existing network. Better coordination is needed between EU countries on cross-border infrastructure projects.
While for some EU countries the main issue is to upgrade and maintain existing infrastructure, others need to develop or expand their transport network. The availability and quality of transport infrastructure is particularly low in the Eastern part of the EU. Renovation and upgrading of an otherwise extensive railway network is also a fairly common challenge there. In the last two decades efforts have concentrated on completing the network of motorways.
Building missing links at borders between EU countries and along key European routes, removing bottlenecks or interconnecting transport modes in terminals is vital for the Single Market and for connecting Europe with external markets and trade partners. The smooth functioning of the European network requires integration and interconnection of all modes of transport, including equipment for traffic management and innovative technologies.
Road and rail infrastructure across the EU has been degrading because of too little road maintenance. Maintenance budgets have often experienced severe cuts and have not evolved in line with the increasing length of infrastructure and the ageing of crucial links. This has led to a worsening of the state of roads in many EU countries and has generated higher risks of accidents, congestion, increased noise and a reduced service to society.
The adaptation of infrastructure to new mobility patterns and the deployment of infrastructure for clean, alternative fuels, pose additional challenges that require new investments and a different approach to the design of networks and business models.
To address infrastructure bottlenecks on routes of key interest for the EU, suitable planning has to be put in place. Conditions have to be created to ensure full absorption of funds earmarked in the Connecting Europe Facility for rail projects in EU countries that are eligible for the Cohesion Fund. For instance, in the cases of the Baltic States and
Poland, the Commission announced on 26 June 2017 almost half a billion euro for two projects on the global Rail Baltica project (EUR 110 million for the joint project by the consortium RB Rail, between Estonia, Latvia and Lithuania and EUR 338 million for the Białystok – Ełk line).
In Greece, Spain, France, Italy and Portugal, further improvement of port services and port hinterland connections by rail (and/or inland waterways) is crucial. Rail investments to implement rail corridors and revitalise rail freight transport is a priority for Spain and Portugal.
The upgrading and modernisation of infrastructures is needed in the inland waterway network of Belgium, Germany, France the Netherlands and Austria. Investments in the navigability of the Bulgarian, Hungarian and Romanian inland waterways, in particular the Danube, could remove significant bottlenecks in the EU transport network
In the light of a wave of technological innovation and disruptive business models (such as ride sharing), both the possibilities and demand for making transport safer, more efficient and sustainable have increased. Digital technologies help reduce human error. They can also create a truly multimodal transport system and spur social innovation. The market potential of cooperative, connected and automated driving is expected to lead to the creation of many new jobs.
Cooperative intelligent transport systems (C-ITS)
Allow road users and traffic managers to share information and use it to coordinate their actions. C- ITS are based on technologies which allow vehicles to “talk” to each other and to the transport infrastructure. In addition to what drivers can immediately see around them, all parts of the transport system are able to share information.
Communication between vehicles, infrastructure and other road users is also crucial to increase the safety of future automated vehicles and their full integration in the overall transport system.
Despite European initiatives, such as intelligent transport systems for road, the air traffic management system (SESAR) and the European Rail Traffic Management System (ERTMS), challenges emanate mainly from the fragmented
deployment of C-ITS across EU countries. This creates barriers within the Single Market and can hamper the interoperability between different electronic systems and technological standards.
The deployment of intelligent transport systems for road and its interface with other modes varies across Europe. Yet, there are a number of common priorities and initiatives for collaboration among EU countries. Further commitment of all EU countries to the deployment of continuous and interoperable intelligent transport systems will be vital for fully exploiting the benefits that it can bring to the Single Market and the common transport area including economic and environmental benefits.
Given the regional specificities and differences in transport patterns, a possible indicator to compare the situation among the EU countries is the index of satisfaction with transport infrastructure quality. It is produced by the World Economic Forum for its Global Competitiveness Report (see Figure 5). It points out that the overall satisfaction with transport infrastructure is the lowest in the Central and Eastern European countries, namely Bulgaria, Poland, Romania, Slovakia and Slovenia, but Greece and Malta also score rather poorly. In contrast, Germany, Spain, Finland, France and the Netherlands rank the highest.
Addressing the gaps in the Single European transport area is expected to improve transport services in Europe. As such it constitutes a prime policy lever for addressing the identified challenges. Studies suggest that for rail transport it primarily means:
- completing market opening;
- introducing the principle of competition for public service contracts;
- ensuring non-discriminatory access to infrastructure;
- reducing technical and regulatory barriers for market entry;
- implementing the single signalling system;
- introducing common passenger rights with fewer national exemptions;
- harmonising of technical standards across Europe;
- and fair working conditions.
The 4th Railway Package of 2016 aims to open up the market for rail passenger transport services. It establishes open access rights for railway companies in the EU from 2020 and lays down the principle of competitive awards for public service contracts. The policy focus will now have to be on effective enforcement of market opening and competition generation based on sectorial legislations and competition policy instruments. For road transport, measures could include:
- completing market opening;
- better enforcing existing rules;
- setting common vehicle standards;
- addressing road charging systems and technologies;
- making greater efforts for road safety;
- and addressing environmental sustainability and passenger rights issues.
On social issues, the Commission is launching initiatives to improve working conditions in road transport through the “Europe on the Move” package. This includes a proposal35 to clarify the application of EU rules on the posting of workers to the road transport sector.
Following the successful liberalisation of air transport that has benefited EU consumers and businesses, action should now focus on:
- completing the Single European Sky;
- ensuring the highest levels of safety and security;
- supporting the creation of high quality jobs in aviation;
- protecting passenger rights;
- making the best use of innovation and digital technologies;
- addressing the risk of capacity shortage;
- and ensuring aviation’s contribution to a resilient;
Energy Union and climate change mitigation. According to the International Transport Forum, maritime transport would benefit from:
- tackling direct state aid to terminal managers and maritime companies;
- liberalisation and transparency of port services;
- involvement of non-European ports in Motorways of the Seas;
- and proper emission taxation.
The establishment of a European Maritime Single Window environment, endorsed by EU countries in the “Valletta Declaration” in 2017, is central to simplifying and harmonising reporting formalities, reducing administrative and custom costs, and taking full advantage of digital means to optimise logistic chains.
Inland waterway transport requires policies addressing administrative and regulatory barriers, unused capacity and environmental externalities. The quality and capacity of transport infrastructure will have to be improved to handle the expected growth in passenger and goods mobility. Given the likelihood that public funds will be limited, increased
Investment levels in infrastructure have been low since the financial crisis of 2008. The cost of developing transport infrastructure in the EU is estimated at over EUR 1.5 trillion for 2010-2030. Completion of the TEN-T core network alone will require about EUR500 billion until 2030. This compares with total investment of EUR 859 billion in transport infrastructure from 2000 to 2006.It is estimated that the completion of the TEN-T core network could spur the economy. It would create 1.8 % additional GDP in 2030 compared to 2015 and 10 million jobs.
In 2017, the Commission agreed to invest EUR 2.7 billion in 152 key transport projectsthat support competitive, clean and connected mobility in Europe. Through this investment, the Commission is delivering on its Investment Plan for Europe and on Europe’s connectivity, including the agenda set out in the Communication “Europe on the Move”.
Selected projects are mostly concentrated on the strategic sections of Europe’s transport network (the TEN-T core network) to ensure the highest EU added-value and impact. The largest part of the funding will be devoted to:
- developing the European rail network (EUR 1.8 billion);
- decarbonising and upgrading road transport and developing intelligent transport systems (EUR 359.2 million);
- deploying air traffic management (ATM) systems (EUR 311.3 million).