The good, the bad and the forgettable — or lessons the US can learn from European transport policy

PII: SO966-6923(98)00013-l

Journal of Trunsporr Geography Vol. 6, No. 4. pp. 285-294. 199X 0 199X Elsevw Science Ltd. All rights reserved Printed in Great Britain 0966.6923/9X/$ - see front matter

The good, the bad and the forgettable - or lessons the US can learn from European transport policy’ Kenneth Button Professor of Public Policy, The Institute of Public Policy, George Mason University, Fairfkzx, VA 22030-4444, USA

nansport policy has undergone considerable change over the past 30 years on both sides of the Atlantic. In many ways the US has led the way, and part of the impetus for change within Europe has been the result of demonstration effects from the US experiences. Nevertheless, the changes in Europe have not represented a mirror image of the reforms that have occurred in the USA. This suggests that there may be lessons from Europe that could be of interest on the western side of the Atlantic. Some of these lessons offer positive refinements or alternatives to what has been done in the USA (‘The Good’). An obvious example of this is the relative success of many cities in Europe in maintaining the vitality of their central areas though traffic restraint and public transport policies. The European lessons may not, of course, all be positive but may reflect paths that should be avoided rather than pursued (‘The Bad’). Subsidies for European airlines offer one example. This may prove to be a non-trivial issue at a time when there are undercurrents of pressure for some degree of reregulation of transport in the USA. Another form of policy experience is that which fades away into the distance as a possibility but has no real scope (‘The Forgettable’) - the forked tariff regime applied to international trucking in Europe is a case of this. The examples cited are simply illustrative, but given the globalization of economic activities that is occurring and the speed at which transport policy is continually developing, there is a case for exploring the insights that may be gained from considering the experiences of others. 0 1998 Elsevier Science Ltd. All rights reserved Keywords:

transport

policy, regulation,

European

transport,

US transport

Introduction

The aim of this paper is to look at the ways in which lessons can be learned from the experiences of others and, in particular, to consider whether there are lessons for the US to learn from developments in Europe. This latter element of the discussion is something of a mirror image of several studies that appeared in the 1980s and early 1990s that looked at the potential in Europe to adopt US style ‘deregulation’ of transport industries.’ There has also been a westward flow of intellectualizing over the form trans-

The past 20 years have seen very significant changes in transport policy on both sides of the Atlantic. These changes, though, have not been identical in their nature or in their timing. Equally, the resultant changes in the transport systems and the uses made of these systems have differed. These facts are not unexpected. The policy situation also remains fluid. The effects of past institutional changes continue to work their way through the systems, as suppliers of transport services and their users continually react to the evolving situation, as new trends influencing the market for transport emerge and as new policy priorities are shaped.

‘An earlier version of this paper was given to the US Bureau of Transport Statistics Seminar Series, Washington, DC. The author acknowledges the useful comments made at this meeting and also the helpful advice of two referees of the Journal.

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port policy should ideally take with concepts such as contestability that were formalized by US academics forming a key element in debates surrounding such things as UK bus deregulation and the transport element of the Single European Market initiative. The paper initially looks at some of the differences in the contexts in which US and European transport policy making is conducted. Further, it considers the extent to which European lessons can sensibly be transferred and the types of adjustment that may need to be made to make allowance for local conditions. There is also a brief account of developments in transport policy in Europe, particularly in the European Union (EU).’ It then moves on to look systematically at a number of areas where policy lessons may be helpful for the US situation. These embrace such matters as environmental policy, urban transport and land use, subsidies and high-speed railways. They are set within a systematic framework which embraces the various areas of policy concern. Before this, however, it is useful to digress briefly to explain how the notion of ‘Europe’ is being treated in this paper. At one level one can take it to mean a pan-European framework that embraces the entire European continent. The great divergences that exist within this domain, though, make this a rather cumbersome framework. At a more practical level there is the EU that offers a coherent institutional basis for comparative analysis but taken as a whole often misses many of the important concepts that have been developed by individual countries or city authorities within its boundaries. Overall, therefore, European here is seen as embracing both the wider EU macro perspective but also the meso and micro national and local policy perspectives which exist within it.

Are the experiences of the US and Europe comparable? There are important differences between the ways people and freight move in Europe and the ways they move in the USA. About 3% of person trips in the US, for instance, are by bus or train, the comparable figure for Europe is about 15%. Not surprisingly, these facts correspond to important differences in car ownership, and while there are some 574 cars per thousand people in the USA, in Europe only Germany of the major nations approaches that figure, with 566 cars per thousand persons, and many large countries, such as the UK (382) Italy (455) and France (420) have significantly lower ownership rates. As an extreme, Eastern Europe has about 130 cars per thousand population. It is worth noting, however, that physically there are 52 cars per square kilometer in Western Europe compared with only 15 per square kilometer in the US - the latter being a figure comparable with that for ‘For instance

Button

and Swarm (1992).

Eastern Europe outside of Russia. There are also notable differences in car use. The average car is driven about 12500 miles a year in the US, while European vehicles do less than 9000 miles annually. In terms of freight transport, the share of goods moved by rail varies markedly between European countries, but in aggregate accounts for about 18% of the ton-miles done in Western Europe, with road taking some 66%, pipelines 8% and waterways the remainder (European Conference of Ministers of Transport, 1995). This compares, for instance, with the 40% or so of freight that goes by rail in the US. In terms of infrastructure, Western Europe has only 30% of the freeway mileage per capita of that of the USA. Many of these differences between Europe and the US can be attributed to geographical and other natural features that influence the comparative advantages of the alternative modes. Nevertheless, there are also noticeable differences in the way transport is treated on the two sides of the Atlantic. While it is perhaps dangerous to think in terms of better and worse, there are experiences that can be learned from the transport policies that different countries have pursued. These though, must always be taken in the experiences, context in which they have occurred and to suggest that one could simply lift the better elements of European experiences and transpose them directly to the USA would be naive. Nor are lessons always positive, in many cases the important lessons are learnt from the mistakes, rather than the successes, of others. There are some important geographical and institutional differences between the US and Europe that partially explain their various transport situations. Europe, unlike the US, is not a homogeneous transport market.’ While the European Union has, since its inception in 1957, provided for a Common Transport Policy, this has been slow to come about.4 The actual membership of the Union has changed with time and many European countries, and most notably the former communist states, also remain outside of the EU. The result is that, until comparatively recently, there has been very limited coordination of policy. In that sense the EU situation is more akin to, although more advanced than, the North American Free Trade Agreement structure. NAFTA’s political objectives are more circumscribed than those of the EU, but the latter does offer some useful insights regarding such matters as reducing cabotage restrictions on transport operations .‘The title European Union is a comparatively new one and terms such as European Community or European Communities preceded it. For simnlicitv of exposition, however, it will be used throughout this paper. ‘Currently the EU consists of Austria, Belgium, Denmark, France, Finland, Germanv, Great Britain, Greece, Ireland, Italv, Luxembourg, Netherlands; Portugal, Spain, Sweden. Other states such as Norway and Switzerland do have important agreements with the EU, for instance regarding aviation, which tie them to the latter’s overall policy. ‘Recent accounts of specific national transport policies in Europe can be found in Cedrun and de Rus Mendoza (1994); Leulzbach (1995); Bovy rt al (1992); Nijkamp (1993).

European lessons for US transport policy: K Button

which may be important to the longer term development of the joint American market. Its particular institutional context has also left the US with a somewhat different physical legacy to that of Europe with more internally integrated transport infrastructure systems, as with the inter-state highway system rather than the independent national systems in Europe, and an established legal structure under which policies may be formulated and implemented. These are areas of institutional development which are only just emerging in the EU. There are also major differences in the philosophy underlying transport policies in the various European countries. In broad terms two distinct approaches have characterized the situation. The majority of EU countries have in the past tended to favor the ‘Continental’ tradition of treating transport as an element of wider social and economic policy and have been much less concerned with the economic efficiency of the transport industries themselves. In contrast, the ‘AngloSaxon’ philosophy, which is now more pronounced in European thinking and is more akin to the approach pursued by the US federal authorities and most US states, has focused on attempting to ensure that transport is itself provided as economically efficiently as possible.5 This has effectively meant that since the early 196Os, increasingly greater recourse has been made to market mechanisms. It is not only in political terms that Europe differs from the US. The spatial distribution of the population is also different. The USA, in extremely simple terms, has significant concentrations of population at its ‘corners’ with one or two central nodes. Europe, in contrast tends to have its population focus in its central core leading to traffic concentrations. This situation is made more pronounced by the increasing compression of economic activity in the so-called ‘blue banana’ of Europe - a region starting in southern UK, and swinging through Belgium, The Netherlands, southwest Germany, Switzerland and reaching down into Northern Italy (see Figure I). The result of this is that there is much less very long distance transport in Europe, for instance there are few air services of more than 2.5 hr duration, but there is also a considerable concentration of traffic in the central western European Region. In contrast, traffic in peripheral areas tends to be relatively light. The European

policy experience

Since the mid-1970s the US has been engaged in extensive liberalization of its transportation regulatory structure. Initially reforms were introduced into rail freight transport and domestic aviation, but this was subsequently extended to embrace inter-city buses and ‘The European Coal and Steel Community established in 1951 had already acted to coordinate many elements of rail freight policy such as the removal of discrimination in tariff setting.

Figure 1 The focusing of economic activities in

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Europe.

trucking. While the US did not lead the way in all sectors the 1968 Transport Act, for example, deregulated the UK trucking market6 - the early experiences of the US did provide important demonstration effects. Overall, the evidence suggested that the reforms in the US had improved the technical efficiency of transport industries and generated overall net economic benefits for society (Winston, 1993). The EU has a long standing remit under the 1957 Treaty of Rome to create a Common Transport Policy.’ Initial progress, however, was very slow. In part this was because other areas of EU policy, such as agriculture and monetary ties, were given priority, but lack of immediate progress also reflected quite divergent views concerning the type of policy that should be initiated. Significant variations in the efficiencies of the various national transport industries did little to facilitate reconciliation of ideas in the early years.’ Following the creation of the Single European Market (SEM) in 1993, important steps towards the reduction of barriers to international transport operations in Europe have been realized (Button, 1992). The SEM was seen as necessitating not only the creation of liberal transport markets to meet its overall objectives ‘The US and UK also had a long tradition of private financing of transport infrastructure in the past which was less common in Continental Europe. ‘For an analysis of the impact of the 1968 Act see UK Department of Transport (1979). “The Treaty specifically states that the objectives of the European Economic Community should be ‘. pursued by Member States within the framework of a common transport policy’.

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of exploiting genuine national comparative advantages in the production of goods and services within Europe, but also the need for coordination of transport infrastructure provision. These factors formed both an intellectual basis for a Common Transport Policy and effectively extended it beyond its original focus on transport operations. Modal coverage has also been widened, and the initial preoccupation with land surface transport has now been extended into the maritime and aviation sectors. Regarding the EU railway network, steps have been taken in order to introduce greater competition. The 1991 Directive 91/440/EEC was concerned with the accountancy separation of the management of railway operation and infrastructure from the provision of rail transport services. Further directives in 1995 focused on opening access to the EU international network and on appropriate charging regimes for infrastructure use. The intention is that access to the network should be open to any operator with the charging mechanism being non-discriminatory as between users. The system becomes operational in 1997. Regarding truck operation, the creation of the SEM means that international traffic between Member States and transit to and from non-member states has no rate or quantitative restrictions on it. Within EU Member States, the existing quota of cabotage licenses is being increased annually, and from July 1998 all quota restrictions will be removed. This overall policy has substantially altered the traditional European freight transport environment. The number of large operators has increased and freight traffic is changing from being carried by small undertakings to large, multi-segmented transport operators making extensive use of sub-contracting (Bayliss and Millington, 1995). The Third Package of EU air transport liberalization came into effect in January 1993. This, following earlier EU measures aimed at gradually distance fare setting and capacity controls from governmental controls, provided for a final liberalization of aviation markets within Europe, including full cabotage in April 1997. It also came after a number of Member States, such as the UK, Netherlands and Ireland, had signilicantly liberalized their bilateral air service agreements establishing essentially free markets in international air travel between them. Powers have been retained, though, to intervene in markets if they are felt to be unstable and there is no EU aviation policy that automatically provides a common interface with non-EU members (Button, 1995a). Liberalizing shipping within the EU has posed particular problems for policy makers because some Member States have sought to protect their fleets and geographical segments of their markets. Nevertheless, with the exception of some island markets in the Mediterranean, maritime transport between EU states has been liberalized and controls over port entry and use have been removed.

Combined with the liberalization of international transport markets the EU is also taking a greater role in infrastructure investment and planning. The Transport European Networks (TENS) program has identified links and nodes in the system where investment requires to be concentrated to meet growing problems of transport bottlenecks, especially for cross-border traffic. Much of the work on this, however, has been at the national government level, and has been developed for individual modes of transport and implementation which must rely on national sources of finance. There is still the need, therefore, for both greater national and modal integration in thinking and for a stronger mechanism to ensure adequate and timely funding is available to enable investment plans to be realized. The need to conform to EU regulations has removed many of the specific national regulations from the European transport market. Nevertheless, within what does remain, liberalization of markets and privatization of both operations and infrastructure is being introduced at the national level albeit at various speeds and in different forms across countries. Individual countries had different starting points and governments also had different perspectives as to the role of the private sector in the transport market. In this respect the UK and Swedish governments were generally among the first to liberalize and privatize with countries such as Greece and France taking a more cautious approach to the deregulation of transport markets. The UK initiated a number of liberalizing reforms, especially related to trucking and rail transport, in the 1960s but it was following the election of a Conservative government in 1979 that major changes began to be introduced. In terms of aviation, de facto changes in the policy of the Civil Aviation Authority (CAA) created an effectively free domestic market and liberal bilateral arrangements were made with several other EU states. Both British Airways and the British Airports Authority were privatized but the latter, because its control over London’s terminals could lead to potential monopoly power, is still subject to pricecap regulation (Foster, 1992). Other countries, such as Germany, have taken a more gradual path to privatizing air transport by putting assets on the markets in a piece-meal manner. But many European countries (notably France, Spain, Portugal, Italy and Greece) are still heavily subsidizing their nationalized flag carriers. The amounts of subsidy involved are often quite considerable (eg $3.6 billion to Air France and nearly $1 billion to Iberia) although the EU Commission is attempting to make such awards conditional on measures to improve efficiency (eg Iberia had to sell its participation in some inefficient companies). Sweden led the regulatory reforms in railway prior to becoming a member of the EU. Under the reforms, Swedish Railways remained responsible for rail operations while the National Railway Administration

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controlled the track. A limited number of routes were put out to tender but only one contract was won by the private sector with Swedish Railways winning the others (Brooks and Button, 1995). The UK has followed with a different approach. A Franchising Authority was created to govern relations between the owner of the infrastructure (Railtrack) and the operators. British Railways is being split into several operators and gradually services are being privatized, as is Railtrack (Nash, 1993). Germany, the Netherlands and Portugal are also experiencing important changes. France has new legislation complying with the EU directives governing separation of accounting systems, but it remains to be seen if the implementation follows the spirit of the directive. Sweden and the UK have enjoyed liberalized domestic truck markets for over 20 years. France (1986) Ireland (1986) Denmark (1989) Belgium (1991) and Netherlands (1992) have recently liberalized and Germany has a very liberal system. As might be anticipated, the results of the deregulation vary according to the base situation. In countries with previously very restrictive regulatory environments, such as France and Ireland, there have been substantial increases in the number of operators and in freight traffic volumes. In Belgium, with a liberal regime prior to final deregulation, the number of operators has remained roughly constant but they have increased in scale. In 1995, Greece and Portugal still had a very restrictive regime of domestic quotas and in Spain and Italy this was also still accompanied by price controls. There are increasing efforts to introduce more private sector involvement and commercial motivation in the provision of road transport infrastructure. France has, in the past, fostered the private provision of tolled auto routes and the possibility of encouraging more private sector participation is being explored. In the UK at least one privately financed major road has been approved and others are being considered on the basis of finance from shadow tolls. In all cases, however, residual regulations are in force to ensure that any private sector monopoly power is not excessively exploited. The trade-off between market failures and government intervention failures, in terms of inappropriate controls, in these circumstances has yet to be explored. The evidence that is available to-date suggests that many of the reforms of European transport have met the economic criteria of improving technical and dynamic efficiency. Studies of the earliest reforms, those to the UK trucking industry, indicate clear gains in terms of technical and dynamic efficiency that were passed on to consumers in the form of lower freight rates and more flexible services (UK Department of Transport, 1979). There has recently been an up-surge of interest in the European aviation market as the effects of both bilateral and multilateral regulatory changes have

begun to take effect. The indications from the bilateral reforms are that airlines’ technical efficiency and patronage have risen while fare levels have gone down. Empirical evidence from liberalized Irish-UK routes, for example, points to lower fare levels with the resultant user benefits estimated for 1989 as amounting to $38.6 million for the 994000 passengers already using the route at the time of regulatory change and $25.1 million for the 1.3 million additional passengers generated post-liberalization (Barrett, 1990). In terms of privatization, the evidence here is that economic efficiency has increased. One study looking at British Airways, for instance, finds its performance compares more than favorably with other carriers where privatization has only been partial (Eckel et al, 1997). Equally, over the period since privatization British Airways has consistently improved its overall productivity and Lufthansa dramatically improved its efficiency in 1992/4 as it restructured prior to further privatization. This is all very much in line with the longer term evidence flowing from the impact of deregulation of US air transport markets, although here the impetus came from relaxed fare and entry controls rather than changes in ownership. Framework for lesson learning Rather than just examine a series of ad hoc topics or issues concerning the contrasting experiences of Europe and the US, it is helpful to put some of the arguments regarding the usefulness of the European experience into a contextual framework. For purposes of exposition, therefore, the pentagon prism style of analysis developed by Nijkamp et al (1994) in the context of infrastructure provision is deployed. This essentially categorization approach (see Figure 2) argues that policy impinges on transport markets in five main areas: those of organization, software, hardware, ecology and finance. What this rather stylized approach does is to enable some of the key issues of European transport policy to be discussed in a systematic way. It highlights key dimensions in decision making and also enables one to

flN WARE

Figure 2 The Nijkamp

pentagon

of concern.

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look at those areas where policy initiatives can influence the way in which transport services are enhanced. What it does not do, however, is consider the important interactions which can often exist between the five areas of policy interest. For example, policies on hardware, such as infrastructure supply, cannot be considered in isolation from finance or environment. These cross-references must always be taken into account when using this type of approach, but it does, nevertheless, allow some systematic presentation of arguments.

Organization Market regulations. The EU, like the US, has introduced a wide range of liberalizing measures designed both to remove regulations that lead to excessive government intervention failures and to harmonize those regulations that remain and would otherwise distort transport markets (Button and Keeler, 1993). Included in the latter are regulations aimed at safety as well as narrow economic efficiency. In two ways the experiences of Europe offer useful guidance to other markets. First, where governments have continued to intervene to contain serious distortions which may emanate from market concentration, a shift to price capping controls rather than the more conventional rateof-return regulation has led to both enhanced technical efficiency and dynamic efficiency.” Essentially, the system allows suppliers the right to set a vector of prices for their various services provided that the overall price level does not rise annually above a regulated inflation adjusted rate. The British Airports Authority, for instance, is subject to such price capping. Price capping has experienced some problems since its initiation, not least of which is that of determining the appropriate price cap to set as technical efficiency has moved towards its maximum. It has, though, in the short term stimulated both a more efficient use of resources and encouraged technological change.“’ Second, the regulatory reforms in the EU have been gradual in their introduction in the sense that there has been no predetermined phasing in the set of changes which have taken place. By way of comparison, the EU aviation market has been liberalized in three main independent ‘Packages’ and there was no timetable or planning of these phases, while US domestic aviation was deregulated from 1978 with a single, predetermined timetable which even embraced a sun-set clause for the Civil Aeronautics Board. Another example was the gradual removal of bilateral regulations governing

“For an account of the early development of EU transport policy, see Button (1984). “‘For a general assessment of the impact of regulatory change in Europe on technical efficiency, see Button and Weyman-Jones (1992).

trucking rates through an intermediate stage of forked tariffs” and advisory rates vs the more direct changes inherent in the Motor Carriers Reform Act in the US. In theory, both approaches have their particular pros and cons. Unplanned, multi-staged regulatory reform theoretically allows temporal policy adjustments both in terms of learning from the previous phases and in terms of being able to take cognizance of important external shifts, but it also allows actors, such as transport service suppliers and lobby groups, a continuing potential to capture the reform process. Predetermined change gives little flexibility for later policy corrective actions, but it does limit the ability of players to take control of the situation. The experience of Europe is essentially that the gradual and flexible shift in policy has indeed permitted actors providing transport services to capture the system to a much greater extent than happened following US transport deregulatory actions. The subsidies extracted by state-owned EU airlines and railroads cited above are well-documented examples of this, but equally, the maritime activities of some Mediterranean states still enjoy protected status. However, markets in Europe have changed gradually in response to policy adjustments without the same level of volatility that was seen in some US transport markets post-deregulation.

Transport and urban form. Urban sprawl is often seen as a major problem in the US, not only in environmental terms but also in the context of creating problems for providing public services and in fostering social cohesion. European cities have generally been much more successful than the US in maintaining the vitality of their central areas. On average European cities, for instance, have population densities about twice that of their US counterparts where densities are usually less than 25 persons per hectare. The virtual domination of private transport in the US has led to decentralization and advantaged those with access to the automobile. This is despite large sums of money, estimated to amount to some $400 billion of public subsidies, being spent on transit systems in the USA over recent years. In contrast, the position of public transport systems in Europe has fared much better, and in major cities such as London, Amsterdam and Paris they still carry the majority of commuter traffic; they also play an important role in many other cities. The constraint of traffic growth in many European cities has, to a significant degree, been a simple physical function of their particular history, geography and design. The inner areas of most cities have few

“Price capping has also been used in the US, especially in the case of utilities, although the systems used have tended to be somewhat more complex than are generally found in Europe.

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European lessons for US transport policy: K Button wide streets and the grid pattern of road layout that facilitates efficient car use is absent in the majority of cases. There is also limited space to park cars. But equally, part of the reason for the comparative success of the European case is the stronger institutional framework under which land-use and transport planning is conducted. All major European cities have substantial public transport systems often entailing a variety of modes buses, trams, metros and taxis (Newman and Kenworthy, 1989). Additionally, in many instances the new towns which have been built in Britain, the Netherlands and Scandinavian countries have been centered around commuter rail facilities. This pattern contrasts with the US where, with the exception of a few, mainly older east coast cities, public transport systems provide at best minimal services and new urban areas are almost inevitably designed with the aim of easing car use. The provision of urban public transport in Europe has also possibly been on a more realistic basis than that in the US, where schemes have often, and primarily for political reasons, been credited with greater potential ridership and lower costs than have actually materialized (Pickrell, 1989). Good public transit is not a panacea for alleviating urban traffic problems and limiting sub-urban growth, but well designed systems can help. What does emerge is that good quality public transport, using dedicated track and computerized operating systems, can act to contain the growth in urban car use. In Zurich, for instance, the annual ridership of the public tram system rose from 169 million in 1953 to 277.1 million in 1990, and much of this can be attributed to the enhanced quality of the network (Fitzroy and Smith, 1993).” Hardware High-speed rail. While the US inter-city passenger rail system has been suffering from decreasing market share, rigorous attempts have been made to retain that share of European traffic that can efficiently be carried by rail. The TGV network in France has resulted in profitable competition with domestic air services between Lyon and Paris. It has also resulted in traffic diversion from internal air services on this route and the Paris-Geneva route (see Figure 3). The Channel Tunnel system has been gradually eroding the market share enjoyed by air and ferry services on competing routes. German high-speed railways (ICE) have been less commercially and operationally successful, but still retain an important market share. The attraction of high-speed rail to the user in Europe is its ability to provide reliable, frequent rapid ‘*The forked tariff was initially intended to apply to all trucking within the Union, but subsequently this was limited to international traffic. It involved establishing maximum and minimum rates with a 23% differential with the aim of containing monopoly exploitation and excessive competition at different points in the economic cycle.

440 420 400 380 360 340 320 300 280 260 240 220 200

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Pans-Marseilles Route

(4)

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(5)

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63)

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Figure 3 Internal

air traffic in France on major routes.

services to urban centers. Its planning has also incorporated consideration of inter-modal connections with links to major airports being a common feature. Investment is clearly needed for this, but so also is a dedicated, or quasi-dedicated, track to ensure the quality of service is attained. There is also the need to ensure that, where it is provided, high-speed rail can offer a genuine transport alternative to competing modes. The number of routes where this is likely in Europe is relatively large, although possibly not absolutely so, because of its geography with major cities often being located at distances apart that give the modes a comparative advantage. What does emerge from the systems which have been constructed is that there is a need for both a viable market for the services and a network coordination policy to be in place. The systems which have been most successful are those with limited stops - in other words with explicit high-speed objectives - and which do not use untested technology. The French ParisLyon TGV, for instance, was built using existing technology and enjoys most of its speed increases as a result of alignment changes and by the removal of intermediate stops. It would also seem that linking high-speed ground transport with long-range air services (as in Paris) offers the prospect of genuinely inter-modal hub-and-spoke operations. The current difficulties lie in the fact that the various national highspeed rail systems are often technically different and that many of the newer schemes sacrifice speed to allow more intermediate stops.

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Infrastructure supply. The EU has recently put considerable emphasis on improving its network of transport infrastructure. In part this is aimed at helping to stimulate greater social, economic and political integration, but it is also aimed at removing bottlenecks in the existing system. The institutional instrument being adopted is the Trans-European Networks (TENS) initiative. This has involved the definition of key transport networks in Europe and the allocation of funds to improve existing links or create new links. The concept may, in many ways, be likened to the creation of the inter-state highway system in the USA. The lessons to be learned here, however, are that while there may be merit in network planning, it should be undertaken with care. In the case of the TENS, there are problems not only in finding the finance to carry out the programs, but also in the way the networks themselves were defined. The various transport modes were treated independently and national governments were essentially asked to plot out their particular needs, While there was some effort at harmonization and consistency, the procedure lacks the important ability to bring together the potential of combined transport systems which are important in Europe and may provide an effective way of meeting future transport requirements. Software Information systems. In many ways the US has the least to learn from the software perspective of transport policy making. The EU, through such research initiatives as its DRIVE program, has put considerable resources directly into developing the software required for an efficient transport network. This research involves such things as route planning and guidance systems, automatic tolling technology and informatics. Implementation of these new systems, however, has been slow and, where implemented, has been driven more by the logistical needs of the private sector than EU initiatives. There have, though, also been significant reforms to the communications regulatory environment in Europe which are likely to benefit the transport sector (Button, 1995b). The liberalization and privatization that has taken place has considerably enhanced the economic efficiency of the European communications networks and in so doing has provided an important complement to the transport system. The lessons to be learned regarding software, therefore, are likely to be mainly in the field of conducting research and developing coordinated international research programs. There are also lessons regarding the detailed design and implications of different regulatory policy for controlling the way in which software is made available for the transport sector. Linked to this there are also useful insights to be gleaned for coordinating regulations which affect the

relative competitive positions of transport munications when they provide alternative

and telecomservices.

Finance Subsidies. Direct, indirect and cross-subsidies have been a traditional feature of transport supply in most European countries. They are less common in the US. They have been justified in EU countries on a wide variety of grounds, ranging from the need to maintain essential social services through arguments centered on structural adjustments to the importance of establishing and maintaining political cohesion. These subsidies have often in the past resulted not only in direct wastage (eg the Transport Research Laboratory in the UK estimated that only about 50% of subsidies to bus services were being passed on in lower fares prior to reforms in the mid-1980s) but also stymied technological development of many transport sectors. Subsidies continue and their effectiveness and efficiency in many areas such as international aviation must continue to be questioned. What has happened, however, is that in some countries such as the UK new forms of tendering for direct subsidies has resulted in services being provided at lower cost to the tax payer. A number of different franchising systems operate in Europe. The UK has two systems of franchising out unremunerative services which have replaced combinations of cross-subsidy arrangements and regimes of block subsidies. The first system involves competitive route tendering in regions outside of London, and the second involves network (or market) tendering within the London area.” In the Scandinavian countries extensive use has also been made of the network tendering approach (Anderson, 1995). This latter type of system has the advantage that carefully designed networks can avoid the problems of fragmentation which have been a problem in some areas outside of London where individual operators may have little incentive to coordinate services or timetables. The results of these different schemes, however, are that there has been a considerable reduction in the costs of direct subsidies to the authorities and greater flexibility in the types of services that are being offered. The evidence that is available suggests that efficiency gains of between 5 and 15% have been achieved in urban areas and up to 20% in rural areas. In contrast to the clear advantages of these types of direct subsidy allocation procedures, the European experiences with subsidies in other transport areas illustrate the serious problems which can arise. In particular, the extremely large subsidies which have been enjoyed by many state owned European airlines have resulted in them having high cost structures, “What this does not mean, however, is that improved public transport in cities will take back a significant number of those already in cars - rather it can slow the modal switch. There is strong evidence of hysteresis in the demand for transport services (Dargay, 1993).

European lessons for US transport policy: K Button

mainly as a result of severe problems with attaining technical efficiency (Distexhe and Perelman, 1994). These subsidies, which currently require EU approval, are aimed at allowing these carriers to restructure to meet the rigors of a liberal, market environment. They are permitted on the grounds that if the airlines were privately owned then private sector sources of finance would be available to them. Demonstrating that these financially unremunerative carriers would attract such finance if they were privately owned, however, is difficult, and there must remain a strong suspicion that it would not be forthcoming on the scale seen in recent history. Tolls. Much of the European road network was initially built through toll finance and that tradition is not dead. Tolled roads now account for about 30% of motorways in Western Europe, and there are also urban tolling systems in place. There is also a tradition of road tolling in the US. In two respects there are useful lessons which the European experience can offer. First, the system of tolling deployed on the major autoroute into Paris, the Al, provides information on the power of congestion charges. The high levels of congestion experienced on Sunday evenings when Parisians return from weekends in the countryside traditionally led to serious traffic congestion on the artery. The introduction of differential, but revenue neutral, tolls with a premium at the peak but lower tolls during the shoulder periods has acted to smooth the traffic flows. Much has been written in the US about the potential of peak-period tolling, but actual case study material is extremely thin on the ground. Second, the toll rings introduced into towns such as Oslo, Bergen and Trondheim in Norway as a means to collect revenues primarily to finance new road construction but also, in some cases, as a source of additional money for public transit subsidies provide evidence regarding the public acceptance of such charges and of how alternative mechanisms for investment funding can operate. The rings, each of which is slightly different in nature but all of which are being transformed from manual collection systems to electronic collection, are primarily designed as revenue raising devices with limited objectives regarding traffic management. They have proved successful in meeting their revenue raising objectives but more importantly they have gradually gained a higher degree of public acceptance since they have been in operation. The Bergen scheme, for instance, met with considerable initial opposition but a majority of residents now accept it (Larsen, 19??). The package of measures, including hypothecated revenues, seems to be an important element in this acceptance and offers lessons for US cities where road pricing is being reviewed.14 ‘“The aim of letting parts of a network out for tender rather than individual routes is to allow for a stronger integration of services and to ensure that coordination is maximized.

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Ecology Transport and the environment. Transport is a major source of air pollution on both sides of the Atlantic and, for instance, accounts for 47% of oxides of nitrogen, 39% of volatile organic compounds and 66% of carbon monoxide emissions in Europe with corresponding figures of 45%, 37% and 78% in the US. It is also visually intrusive, noisy and pollutes water. Measures to curb the environmental intrusion of transport have been applied on both sides of the Atlantic. There have been common elements to the policies pursued, but equally there have been differences in emphasis and priorities. In particular, both the federal government and states within the US have tended to place more emphasis on command and control instruments (eg the 1990 Clean Air Act Amendment) designed to make vehicles less environmentally intrusive while there has been a relatively greater use of fiscal instruments in Europe (Grant, 1995). Fiscal tools are more acceptable in Europe and there is a long tradition of high fuel and vehicle taxation with no hypothecation of revenue streams. This has allowed fuel taxes, in particular, but also vehicle taxes to be adjusted to take account of the wider social costs of transport. In the UK, for instance, the real level of taxation on fuel is being increased by 3% a year until carbon dioxide emissions targets are met, and this is in addition to existing levels of taxation which exceed the annual attributable track costs of road use and have traditionally been justified as reflecting local social costs. In Germany regimes of vehicle taxation incentives were deployed to stimulate a rapid conformity with EU environmental standards. There are clearly differences in national attitudes towards the way vehicles are taxed, with the hypothecation in the US reflecting a somewhat narrower definition of user-charges than that adopted in most of Europe. The result, however, is that vehicles tend to be much smaller in Europe with consequential savings in fuel and with lower emissions levels.

Conclusions It can be insightful on occasions to look at the experiences of others. It can provide ideas for assisting a country in developing its own policy positions and offer ammunition in debates over the merits of various transport policy reform options. Of course, European experiences with transport are not all rosy and replication of many policies is not to be recommended - they are the bads’. Some of these problems within the Union inevitably stem from the exercise of self-interest that exists across a range of diverse countries within the EU. Creating a common air traffic control structure, for example, from the patchwork of national systems is a clear illustration of

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the problem and magnifies the type of difficulties encountered in the US’s efforts at up-grading its domestic system. Equally, even within individual countries, or European urban areas, mistaken policies have been adopted. These, however, can frequently offer equally important lessons. As the globalization of economies continues and the demand for inter-personal interaction for business and leisure purposes rises, so there will also be enhanced intertwining of transport networks across the Atlantic. For this to be efficient, there will be the need for greater harmonization of policies between the US and Europe. Looking at the experiences of each others’ pasts should help remove some of the potential misunderstanding that could slow this process. References Anderson, B. (1995) Franchising alternatives for European Transport. In European Transport and Communications, eds. D. Banister, R. Cape110 and P. Nijkamp. Wiley, London. Barrett, S. D. (1990) Deregulating European aviation a case study. Transponation 16, 31i-327.. Bavliss, B. and Millinaton, A. (1995) and logistics ~ , Dereaulation systems in a Single European Market. Journal of Transport Economics and Policy 29, 305-3 16. Bovy, P., Orfeuil, J.-P. and Salomon, I. (eds.) (1992) A Billion Trips a Day; Tradition and Transition in European Travel Patterns. Kluwer, Boston. Brooks, M. and Button, K. J. (1995) Separating transport track from operations: a typology of international experiences. International Journal of Transvort Economics 22,235-260. Button, K. “J. (198’4) Road Haulage Licensing and EC Transport Policy. Cower Press, Aldershot. Button, K. J. (1992) The liberalization of transport services. In 1992 and Beyond,‘ed. 6. Swann. Routledge, London. Button. K. J. (1995a) Aviation deregulation in European Union: do actors learn in the regulation game? Contemporary Economic Policy 14, 70-80. Button, K. J. (1995b) European telecommunications policy. In European Transpon and Communications, eds. D. Banister, R. Capello and P. Nijkamp. Wiley, London.

Button, K. J. and Keeler, T. (1993) The regulation of transport markets. Economic Journal 103, 1017-1028. Button, K. J. and Swann, D. (1992) Transatlantic lessons in aviation deregulation: EEC and US experiences. Antitrust BuNetin 37, 207-255. Button, K. J. and Weyman-Jones, T. (1992) Ownership, institutional organization and measured X-inefficiency. American Economic Review: Papers and Proceedings 82, 439-445. Cedrun, G. and de Rus Mendoza, G. (1994) Spain’s transport policy. Journal of Transport Policy and Management 28, 211-214. Dargay, J. (1993) Demand elasticities - A comment. Journal of Transport Economics and Policy 27, 87-90. Distexhe, V. and Perelman, S. (1994) Technical efficiency and productivity growth in an era of deregulation: the case of airlines. Swiss Journal of Economics and Statistics 130, 669-689. Eckel, C., Eckel, D. and Vijay Singal, V. (1997) Privatization and efficiency: industry effects of the sale of British Airways. Journal of Financial Economics (in press). European Conference of Ministers of Transport (1995) European Transport Trends and Infrastructure Needs. ECMT, Paris. Fitzroy, F. and Smith, I. (1993) Priorities over pricing: lessons from Zurich on the redundancy of road pricing. Journal of Transport Economics and Policy 27, 209-214. Foster, C. (1992) Privatization, Public Ownership and the Regulation of Natural Monopoly. Blackwells, London. Grant, W. (1995) Autos, Smog and Pollution Control: The Politics of Air Quality Management in California. Edward Elgar, Aldershot. Larsen (19??) Please supply details. Leulzbach, W. (ed.) (1995) Transportation Policy and Practice in Germany, special issue of Transportation Research 28A, 6. Nash, C. (1993) Rail privatization in Britain. Juurnal of Transport Economics and Policy 27, 3 17-322. Newman, P. W. G. and Kenworthy, J. R. (1989) Cities and Automobile Dependence. Gower, Aldershot. Nijkamp, P. (ed.) (1993) Europe on the Move: Recent Developments in European Communications and Transport Activity Research. Avebury, Aldershot. Nijkamp, P. et al (1994) Missing Transport Networks in Europe. Avebury, Aldershot. Pickrell, D. (1989) Urban Rail Transit Projects: Forecasts versus Actual Ridership and Costs. US Department of Transportation, Cambridge. UK Department of Transport (1979) Road Haulage Operators’ Licensing (Report of the Independent Committee of Enquiry into Road Haulage Operators Licensing). HMSO, London. Winston, C. (1993) Economic deregulation: days of reckoning for microeconomists. Journal of Economic Literature 31, 1263-1289.