With other meetings in the schedule, I did proceed with my trip. It was though noticeable how the regular conventions of business travel had changed; gone was the traditional handshake greeting, and during my visit to MTU and ZF’s respective plants in Friedrichshafen (p18), I was required to sign a waiver confirming that I was well and had not travelled to affected areas including China and northern Italy.
What appeared novel at the time, soon became a lot more serious. With Covid-19 infections and deaths on the rise, governments scrambled to contain the outbreak, which was declared a pandemic by the World Health Organisation (WHO) on March 11.
Blanket restrictions on public gatherings and unnecessary travel are now in place throughout the world with some predicting that the current measures could be in place for months.
Most industry events set to take place over the next few months have since been postponed or cancelled. Production at manufacturing plants has ceased or been severely scaled back, with many people working as best they can from the sanctuary of their own home.
Despite government efforts to stimulate economies through interest rate cuts and injections of cash, stock markets around the world have plummeted as investors baulk at the fall in demand. The global economy is staring down the barrel of a deep recession unheard of during many of our lifetimes.
For the passenger rail industry, the short-term impact is close to catastrophic. As we report on pages 6-7, operators are suffering substantial falls in demand. Many mainline and transit operators have responded by cutting back services with huge losses now anticipated.
Transport for London (TfL) says the pandemic could cut passenger revenue by up to £500m. TfL says it has sufficient resilience in its finances to manage the impact of Covid-19. However, others do not have the same stability. Britain’s Northern franchise was taken into government ownership on March 1 and the impact of coronavirus risked pushing other franchises in financial difficulty such as Southwestern and Transpennine over the edge. The government has now acted, switching all English franchises to management contracts for six months to prevent operators becoming insolvent.
Without the backing of the state, Europe’s private operators are in a perilous position. Italy’s high-speed open-access operator NTV has cut back the frequency of its services from 49 daily to just 14. Austria’s Westbahn has similarly halved operation between Vienna and Salzburg, which was already running at reduced frequency compared with a year ago.
The Alliance of Passenger Rail New Entrants (AllRail) predicts that its members could suffer a €540m hit by the end of the year as passenger numbers fall by 70-90%. Years of building up viable businesses in the face of strong and often hostile competition might be extinguished almost overnight.
European Commission (EC) president, Ms Ursula von der Leyen, said on March 17 that “the EC will use all the tools at its disposal to make sure the European economy weathers the storm.” The EC has adopted a Temporary Framework providing member states with full flexibility under state aid rules with five types of aid available. National governments have also committed to similar plans to keep business running.
The European Railway Industry Association (Unife) says it supports the measures and that it is essential they are directed to manufacturing bodies that form the backbone of the modern European economy. “Ensuring that they can operate immediately after this crisis and continue to have access to needed materials should be core to the EU’s crisis management approach,” Unife says.
In the United States, transit advocates are making similar arguments to make up the shortfall in farebox revenue which funds everyday operation. Amtrak has requested $US 1bn in state aid following a dramatic decline in ridership. New York’s MTA is requesting $US 4bn, while the American Public Transportation Association (Apta) is requesting $US 16bn to support public transit agencies and passenger railways. Apta estimates that its members will lose $US 14bn in farebox and sales tax revenues while $US 2bn will fund emergency measures.
Of course, rail is joining a long queue with many other sectors facing similar financial ruin. And with president Donald Trump stating that airlines will be at the front of the line for a $US 1 trillion stimulus, the challenges are significant.
Yet MTA alone carries 5.4 million daily passengers, twice as many as the US airlines. Transit is an essential service that must not be overlooked. In addition, if governments are serious about combating climate change, sustaining mainline rail rather than their fossil-fuel guzzling counterparts on equivalent routes should be prioritised.
Making such a statement now could prompt the social changes necessary to tackle this potentially far greater global crisis once the coronavirus pandemic subsides. AllRail is therefore right to make this the core of its argument.
This also could be the moment that rail freight finally shows its worth. With rail able to carry high volumes of goods using minimal manpower and lines clear of passenger trains, rail freight is set to play a key role in maintaining the supply of critical goods over the next few months. Advocates must harness this momentum.
While we are not sure when or how this current crisis will end, demand to move people will return. Policymakers must not lose sight of the importance of rail when making the decisions that will define all of our futures in the next few weeks.