Europe has in recent decades had too many airlines, around 100 flying scheduled passenger services until recently, with regular casualties before COVID-19 struck. They were unlikely all to survive but the disastrous summer means that for dozens it will be their last.

Travel agencies and tour companies are failing every week and there will be more bankruptcies in the hotel business, especially in southern Europe, over the winter.

The controversies over foreign travel have overshadowed a deeper challenge for transport policy. The less newsworthy public transport business is in deep trouble. Bus and rail companies as well as taxi operators are facing catastrophic declines in volume all over Europe which have little to do with the holiday trade.

Public transport exhibits high levels of (excuse the economics jargon) operational gearing, which arises when the bottom line is especially sensitive to gross revenue. Lots of unvarying costs and the viability of the business gets damaged.

In transport, this means that seat occupancy matters – a bus or train company might make money with 70% of seats filled but goes bust at 50%. Costs are largely invariant to seat occupancy, which is the driver of revenue.

Throw in some balance sheet gearing (a bus or train fleet, or aeroplanes or taxis, financed with debt) and you have the perfect storm of double-gearing and high probability of failure when volumes contract rapidly.

And they sure have. Bus and train volumes collapsed in March and have not recovered to anything remotely close to breakeven.

On best available estimates, Irish Rail, Dublin Bus and Bus Éireann will need very substantial bailouts from the over-burdened Exchequer soon, and there is no realistic prospect that these companies will return to normal levels of revenue for the foreseeable future.

Bus and train volumes collapsed in March and have not recovered to anything remotely close to breakeven

The same is true for public transport operators which do not have the comfort blanket of State ownership. There are none in the rail industry but there are important firms offering unsubsidised interurban routes in competition with Bus Éireann and some unsubsidised competitors for Dublin Bus.

It so happens that the bus industry is pretty poor at putting over a collective viewpoint and it is depressing that well-meaning people seem to think that buses do not matter, and that heavy investments in heavy rail, to be financed by the Exchequer, are a pathway to better climate outcomes.

This makes no sense. There is no climate-friendly future in Ireland, or even in higher-density countries around Europe, for public transport unless the bus industry succeeds. Most public transport travels in buses on roads and this is unlikely ever to change.

Buses undermined

One of the consequences of the pandemic is that the economics of the bus industry have been undermined. This could prove to be temporary but there are no guarantees. The preferred mode of transport, in a COVID-19 wary world, is the single-occupancy private car.

Even if public preferences were to relax, the effective capacity of public transport vehicles, both buses and trains, has been reduced dramatically.

Some private bus operators reckon that a 50-seat bus, to comply fully with social distancing rules, can take no more than 12 or 14 passengers. Whatever the figure, demand has drained away and the State companies that have maintained schedules are seeing seat occupancy down at 10% and less. Heavy losses are inevitable – there is no management initiative, no trade union concession, which can deal with this.

Silver lining

If there is a vaccine and an end to the COVID-19 nightmare, the buses could find a silver lining.

Climate action could result in a recognition that the private car, as well as imposing serious carbon emissions, also congests our cities and some of our interurban roads, without facing the full costs. Road space is ‘free’, a pretence since the external environmental and congestion costs are not collected from road users.

Buses impose far smaller external costs, since they take up so little road space per passenger. Charging road users zero for road space is a tax on bus companies, particularly on urban bus companies. Congestion is a serious social cost in cities and several around Europe have decided to impose cordon charges on cars seeking to enter the central area, including London and Stockholm.

In London, the annual revenues have been deployed to enhance the bus product and the bus share of public transport has risen as people have preferred buses to the underground railway.

In a post-COVID-19 Ireland, the Government will have to think through the consequences of decarbonising the vehicle fleet. The programme for government commits to an all-electric car fleet in due course. If this means no more fuel taxes, there will have to be road user charging and if that requires charging for congestion, the bus system will pay far less per passenger and will enjoy a well-deserved advantage over cars.