Rail sector posts multi-billion euro losses amid pandemic in 2020

The losses made by the state-owned rail companies will expand the already significant deficits accumulated by EU countries over the last year. [hpgruesen / Pixabay]

European rail companies lost a staggering €26 billion in 2020 as the COVID-19 epidemic took a heavy toll on passenger and freight revenues across the continent, boding ill for 2021, designated to be the ‘European Year of Rail’.

The alarming figures were released by the Community of European Railway and Infrastructure Companies (CER), a trade body representing a host of national railway carriers including Germany’s Deutsche Bahn, France’s SNCF, and Italy’s Ferrovie dello Stato Italiane.

Passenger services made up the vast majority of the losses, registering a 42% drop compared to 2019 at a cost of 24 billion euros.

Freight services suffered a 12% reduction, which translated to a two billion euro shortfall.

While passenger rates saw an upswing over summer, spurred by Europeans taking advantage of relaxations in COVID restrictions, the numbers quickly deteriorated in autumn, with December reaching a record low with revenue half that of 2019.

CER Executive Director Alberto Mazzola acknowledged the serious hit taken by railway companies but praised the sector’s commitment to continued mobility despite the health crisis.

“The rail sector is showing resilience and capacity to help fight the pandemic and assist society on the road to recovery,” he said.

Railway operators will be hoping for a change of fortunes in 2021, which the European Commission has dubbed ‘the European Year of Rail’.

The EU executive will hold events across the continent to encourage Europeans to opt for trains over more polluting transport modes such as air or road travel.

Apart from the devastating impact of the pandemic, transport is also currently the only sector of the EU economy in which greenhouse gas emissions are increasing and rail has been touted as the way forward in decarbonising transport.

2021 on track to be 'European Year of Rail'

Next year will be designated the ‘European Year of Rail’, after EU negotiators agreed on Thursday (12 November) to back a train-travel-boosting plan. 

At present, around 7% of passengers and 11% of goods travel by rail. EU officials are hoping for an increase in these figures, which will boost efforts to reach the EU’s Green Deal target of a 55% fall in emissions by 2030.

2021 is also the first year of full implementation of the Fourth Railway Package, a series of measures to create a single European rail area with common standards. Greater standardisation will cut administrative costs, say the Commission, making rail more competitive with other transport modes.

The losses made by state-owned rail companies will expand the already significant deficits accumulated by EU countries over the last year.

Spending by EU countries was bound by the EU’s Stability and Growth Pact rules, which prohibited member states from exceeding budget deficits of 3% of GDP and required a debt-to-GDP ratio of no more than 60%.

But the COVID crisis saw the pact effectively suspended, as EU countries unleashed public spending to prop up the ailing private sector, bolster the public sector, and support citizens left without an income.

Dombrovskis: Continued suspension of EU Stability Pact will depend on spring assessment

The suspension of the Stability and Growth Pact in 2022 will depend on economic developments, European Commission executive vice-president Valdis Dombrovskis told EURACTIV’s partner Lusa, pointing to a possible decision in the spring.

[Edited by Zoran Radosavljevic]

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