Transport sector learns to pay its way

Date: 30/01/1997

By Chris Johnstone

IF IT is better to travel hopefully than to arrive, the European Commission's fight against state aid in the transport sector can add a promising future to an eventful past.

Almost every form of transport, from shipping and aviation to railways and roads, has its backlog of indirect or direct subsidy cases being probed by European officials.

Partly paying the price for its own enthusiasm, the Commission is now even having to vet subsidies which cross traditional transport divides - the day of the 'intermodal' transport probe is with us.

The number of aid cases handled by the Commission jumped from 29 in 1994 to 52 a year later, and as liberalisation and privatisation spreads throughout the sector that trend is expected to continue.

Individual road haulage companies might plead not guilty on subsidies, but the whole sector now stands charged with collective guilt for not paying its way in infrastructure costs or picking up the bill for environmental damage.

Even in individual cases, governments such as Italy's have not been averse to giving their truckers a helping lira.

The transport industry is particularly sensitive to aid since companies compete across borders, and sometimes across sectors, for freight and passengers. The only frontier is cost-effectiveness, which can always be pushed a bit further with a little cash help from friends.

Airlines increasingly accuse railways of having their infrastructure costs heavily subsidised, as competition between high-speed trains and short-haul air services grows.

But it is the airlines themselves which have created the biggest headlines over the past ten years with large cash injections to Sabena, Iberia, Air France and Olympic. Commission officials are still scrutinising two outstanding slices of a 1.8-billion-ecu subsidy to Olympic Airlines and the last 154 million ecu of funds for Air France, while Italy's Alitalia is courting the Commission for clearance of a 1.5-billion-ecu aid package.

The Commission says it is clamping down on airline aid as the 1 April deadline for the full liberalisation of the Union aviation market nears. On that date, existing capacity restrictions on EU airlines operating outside their home territory will be scrapped.

The shipping sector has a lower aid profile. Companies often form capacity-cutting alliances if the going gets rough, but subsidies are usually a last port of call.

But Commission officials are following French promises to aid Brittany Ferries through a package of measures which would include help to build new ships and lower port charges.

Meanwhile, ports themselves are coming under scrutiny, with aggressive private authorities, such as Felixstowe on the east coast of England, accusing rivals of receiving state backing, and German ports challenging Commission clearance for aid to Rotterdam.

Last November, the Commission deepened a probe into around 30 million ecu in subsidies and debt write-offs for Italian ports.