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Dr2 Consultants hosts webinar on competitiveness of transport sector post COVID-19

Main takeaways

The COVID-19 outbreak has seen an unprecedented impact on the transport sector in the EU. Due to national containment measures, travel restrictions and the closure of border crossings, passenger transport is at a standstill and trade flows are severely impacted. In order to help EU citizens and businesses, the Commission has issued several contingency measures to support the transport sector, e.g. by identifying green freight lanes, issuing guidelines on passenger rights and allowing financial relief under the temporary state aid framework.

In this context, Dr2 Consultants organized a dedicated transport webinar on 7 May 2020, focusing on the question how to reinstate the EU’s transport industry in a post COVID-19 era, in order to ensure the transport sector can enable economic growth, secure jobs, increase global competitiveness and allow people and goods to move across Europe and beyond. Mr. Daniel Mes, Member of the Cabinet of Executive Vice-President on the European Green Deal, Frans Timmermans, responsible for the transport portfolio, and Mr. Jan-Christoph Oetjen, Member of the European Parliament (Renew Europe) and Vice-Chair of the Committee for Transport and Tourism took part in the panel discussion and shared their views on the subject.

The main takeaways from the webinar are:

  • The Commission is working on a coordinated exit strategy in which all modes of transport are covered, including practical advice on how to restart operations while ensuring the safety of the passengers;
  • It is crucial that the transport sector returns to its old strength and becomes even more resilient. It is a joint effort by the EU and its Member States to ensure the European transport sector remains competitive on a global level;
  • Mr. Mes highlighted the need for political guidance when national measures are taken to ensure consistency in sectoral investments. The transport sector will be dependent on both public as well as private investments, which the Commission will aim to mobilize;
  • Both speakers highlighted that transport will be one of the main pillars in the green recovery of the European economy. Mr. Oetjen emphasized the need for using a mix of transport modes based on their characteristics and respective advantages. Mr. Mes stated that it is key to ensure that the recovery of the transport sector is green recovery, and conditions can be attached to financial aid received by the sector.

As the webinar was recorded, please find the playback link here.

As a next step, the Commission is expected to publish a follow-up to its ‘European roadmap towards lifting coronavirus containment measures on Wednesday 13 May, which will entail a broad package of recommendations aimed at reinstating connectivity and tourism. The package will include a Communication on tourism, protocols on health and safety for main tourism locations, guidance on safe and healthy resumption of passenger transport and guidance on lifting of international borders. The package is also expected to include an assessment of the application of the temporary restriction on non-essential travel to the EU.

European Commission sets out coordinated response to counter the economic impact of COVID-19

On 13 March 2020, European Commission President Ursula von der Leyen announced a set of coordinated measures to fight the COVID-19 outbreak in the EU Member States.

The Commission will use all the instruments at its disposal to mitigate the consequences of the pandemic, in particular:

  • To ensure the necessary supplies to our health systems by preserving the integrity of the Single Market and of production and distribution of value chains;
  • To support people so that income and jobs are not affected disproportionally and to avoid permanent effect of this crisis;
  • To support firms and ensure that the liquidity of our financial sector can continue to support the economy;
  • To allow Member States to act decisively in a coordinated way, through using the full flexibility of our State Aid and Stability and Growth Pact Frameworks.

The Member States are encouraged to take all necessary measures to decrease an economic downturn. The Commission will apply flexibility in its supervisory role, allowing for the implementation of wide ranges of state aid schemes and flexibility in the EU fiscal framework (e.g. wage subsidies, suspension of payments of corporate and value added taxes or social contributions). Also, EU State aid rules enable Member States to help companies that are in need of urgent rescue aid or need to cope with liquidity shortages.

The Commission considers that the COVID-19 pandemic qualifies as an “unusual events outside the control of government”, which allows for accommodating exceptional spending to contain the COVID-19 outbreak such as health care expenditure and targeted relief measures for firms and workers.

In the coming weeks, €1 billion will be redirected from the EU budget as a guarantee to the European Investment Fund to incentivize banks to provide liquidity to SMEs and midcaps.

Coronavirus Response Investment Initiative

Besides measures stemming from national budgets, the European Commission will set up a Coronavirus Response Investment Initiative worth €37 billion to stimulate the economy. In addition, the Commission is proposing to extend the scope of the EU Solidarity Fund by also including a public health crisis within its scope, in view of mobilizing it if needed for the Member States that have been hit hardest.

Transport

The transport sector has been hit especially hard by the spread of COVID-19. According to Von der Leyen, Member States are encouraged to take all necessary measures to support people in certain sectors such as transport, through, for example, short term employment schemes. Article 107 of the Treaty on the Functioning of the EU enables Member States to compensate companies for the damage directly caused by exceptional occurrences, which is applicable to aviation and tourism.

On aviation, the Commission has proposed targeted legislation to temporarily alleviate airlines from the “use-it-or-lose-it” rule – whereby air carriers must use at least 80% of their airports slots within a given period in order to keep them within the corresponding period of the next year. This is done to lower the economic impact for airlines, as well as the ecological impact of flying empty airplanes to be able to keep the slots. This targeted legislation, however, still has to be approved by the Council (expected next week).