Speeding Ahead – Public Affairs Challenges for Transport and Defence

European air traffic will triple over the coming decade

This is a particularly challenging time for the transport and defence industries. The fast-changing business environment and EU institutional and policy developments mean that companies and organisations with an interest in these sectors need to ensure their views are heard in Brussels.

A number of structural changes will have a fundamental impact on every mode of transport. Over the coming decade there will be a major consolidation of European airlines: air traffic will triple at a time when Europe already faces severe airspace congestion. Road traffic is increasing while Europe faces growing problems of pollution and insufficient transport safety. One of the key challenges in the transport sector, which is already being translated into legislation, will be the re-invigoration of the EU's central role in safety and security policy in all transport modes.

Air transport is on course for radical alteration in the near future. The creation of a single European sky, harmonised air passenger rights, increased attention to environmental control and re-evaluation of air transport safety all point to a heavy legislative agenda over the coming years. The events of September 11 have resulted in a major review of the EU's central role in controlling air transport safety and security.

The international role of the Commission in air transport is set to expand when it takes over the mandate to act on behalf of EU member states in the negotiation of international airline open skies agreements. In this fast-paced environment, stakeholders in air transport industries will need to stay close to the heart of European aviation policy developments.

Maritime transport is under an equal amount of pressure from new policy. In the aftermath of the Erika incident in December 1999, when the Erika sank off the coast of Brittany leaving a huge oil slick, the European Commission proposed two packages of measures to improve maritime safety and prevent oil spills. The prominence given to this activity means new European measures must also be adopted worldwide, and so Brussels is leading the maritime world in the development of safety measures, including the phasing out of single-hulled vessels.

Other items on the agenda in this sector include the creation of a European Maritime Safety Agency, maritime traffic monitoring, and compensation funding. In addition, yet more new measures are on their way to improve safety on cruise ships, marine environment protection, ports liberalisation, the fight against flags of convenience and full membership of the EU to the International Maritime Organisation.

In the road transport sector, issues such as congestion, environmental protection, safety and competition still widely determine the EU's legislative agenda. Rail transport will undergo significant changes in the future, however, as traffic congestion and the reduction of CO₂ emissions favour a move from road to rail. EU policy-makers are increasingly seeing the benefits of exploring the potential of railways and ensuring modal shifts of road freight to rail. This commitment has already been reflected in European Commission initiatives, a new White Paper on transport and a new railway package.

As far as the defence industry is concerned, policy development and the consolidation and restructuring of European aerospace industry in recent years have significantly altered European defence markets. In the past, member states have been totally independent and had their own individual defence industries. As a result, the European armament industry is fragmented and economically this is not sustainable when suppliers are competing with the U.S. giants. Consolidation of the industry has already started across Europe, but procurement is still done at national level, leaving companies fighting for small contracts. Companies are working hard to lobby the EU to provide for a common procurement policy, thus linking their own economic future to the future of economic integration.

The increasing importance of the EU Common Foreign and Security Policy (CFSP) and European Security and Defence Policy (ESDP) has underscored the interest that aerospace and defence companies must take in the EU.

The rapid creation of political and military security structures in the EU, the commitment of EU member states to collective procurement of military capabilities and the Commission's involvement in aerospace research and company mergers mean that defence players have good reason to build their activity around Brussels. Many European and U.S. aerospace and defence companies consider representation in Brussels key to their overall objectives for business in Europe. As a result of the ongoing interaction between the EU and NATO in military affairs, Brussels will become the hub of security-related activity.

Even in the short-to-medium term, there’s no doubt that all transport, aerospace and defence companies, and organisations with an interest in these sectors, will need to keep their finger on the EU's pulse.

By Marc Taquet–Graziani, managing director, Weber Shandwick | Adamson, Public Affairs, Brussels.