AllRail says operators are experiencing severe drops in passenger volumes, some by more than 90%, with the situation particularly bad on cross-border routes due to the closure of many EU borders. “While understandable, the decision to shut down passenger rail has also shut down much of our members’ business activities,” AllRail says.
“Together our members face over €1bn in lost income by the end of this year. It is no exaggeration to say that we might already face the first wave of bankruptcies in April 2020. Urgent action is needed to prevent this from happening.”
AllRail states that independent passenger rail companies need to reduce fixed costs while securing the necessary cash flow to sustain the services that remain. If these costs are not covered, the association says these companies must declare bankruptcy.
AllRail says it welcomes the State Aid Temporary Framework recently adopted by the European Commission and hopes that the EU member states will make the best possible use of it. However, it says that to ensure that rail market competition survives, member states must quickly apply the following measures:
- offer direct grants to cover lost income, with caps for capital intensive industries being higher than the €800,000 cap stated in the Temporary Framework
- provide state guarantees for all existing loans and the ability to postpone lease payments
- protect workers from loss of income (short-time work schemes)
- defer payments of statutory company taxes and social security contributions, and
- offer the ability to refund customers for cancelled tickets with vouchers rather than in cash, redeemable at the same point of sale as where the original ticket was purchased.
AllRail’s rail operator members require:
- suspension of charges for state-owned track infrastructure, stations, service facilities and (rolling stock) stabling - after all, these are under the direct control of the EU member state governments, and
- extend this support until the end of 2021 - this would help with the economic recovery after the crisis.
AllRail’s rail ticket vendor members require:
- a reduction in financial deposits paid to all rail operators to reflect the reduction in bookings. These payments are guarantees to protect a much higher volume of tickets being sold. As long as such volumes are not happening, then this money should be returned.
AllRail adds that Covid-19 related financial support to the rail sector must be delivered promptly and must be made available and disbursed to all operators in urgent need of liquidity, irrespective of their ownership. Prioritisation of applications should also be based on the carbon footprint and contribution to the EU’s climate objectives, AllRail says. The Temporary Framework should not disproportionally help other modes of transport that compete with passenger rail, such as airlines.
“Whilst the money will come from member states, the European Union has the means to guarantee it is spent justly and wisely,” AllRail says, adding that saving the new entrants now will save the taxpayer money in the medium to long-term.
“In 2019, the passenger rail sector was growing and companies experienced the strongest increase in demand for a very long time,” AllRail says. “The EU and its member states must ensure that the sector can quickly resume business activity as soon as the crisis is over, both in the interest of meeting their climate ambitions and for the benefit of their citizens. There is an urgent need to secure the services of all passenger rail companies that were active before the crisis - and new entrants are an integral part of that.”
AllRail’s statement follows the announcement by the European Commission on April 8 inviting member states to extend the restriction on non-essential travel to the EU for a further 30 days from April 15.