Passenger transport SMEs fight for survival in the time of COVID-19

Passenger transport SMEs fight for survival in the time of COVID-19

Passenger road transport is the backbone of the global economy. It contributes to the success of numerous sectors, but not limited to, the tourism industry and is essential to business and leisure travel. But as the COVID-19 pandemic containment measures are forcing millions of people to stay at home, passenger transport operations have been condemned to a de facto lockdown, unlike any other in the industry’s history.

Whilst this is a challenging time for everyone, Small and Medium-Sized Enterprises (SMEs) are particularly vulnerable in the transport sector are particularly vulnerable at this time, with reduced passenger numbers and large reductions in financial flows.

This article from the IRU highlights the need to support passenger transport SMEs in this difficult time:

Passenger transport: near a standstill

Passenger transport activity came to a virtual standstill overnight for hundreds of thousands of small and medium-sized entreprises (SMEs) upon the introduction of strict COVID-19 containment measures. Apart from limited urban services, some companies report activity decrease of at least 90% for intercity and 100% for tourism.

A dramatic slowdown in the global taxi industry is also notable. Due to bans on events and the closure of the catering industry as well as of all non-essential shops, customer demand has almost completely stalled. Some taxi operators saw their revenues fall by 80% and a vast majority of their activities have ceased owing to the transport restrictions adopted around the world.

Business re-conversion

To try and adjust to this new, and hopefully temporary, reality, some taxi drivers are taking inventive and dramatic steps. Certain taxi firms are lowering their prices for courier trips in order to make essential services more accessible to as many people as possible in such demanding times. Mobility operators have also converted their usual activities to address the current demand and help fight the pandemic.

Immediate needs

While passenger transport companies remain mobilised to help the world keep moving, SMEs, which represent the majority of companies are on the brink of bankruptcy, with severe cash flow problems being reported.

According to a survey conducted by IRU member FNTV, turnover losses range from 50% to almost 80% for some of the French companies. And with the closure of schools, 1,000 companies have seen their activity reduced to zero, with the subsequent impacts on their 100,000 employees.

To ensure the survival of passenger transport services during COVID-19, immediate financial support measures are therefore needed. The European Commission’s State Aid announced last week is a welcome first step, but EU Member States need to follow this action by unlocking funds at the national level and making them available fast in a non-bureaucratic way, to the SMEs that need them the most in the road transport industry.

While the passenger transport industry continues to give its all in support of the national, regional and international efforts to combat COVID-19, many are concerned about the risks that they are facing to meet the population’s essential transport needs. Concerted and harmonised approaches to safeguarding drivers’ own health are therefore urgently needed.

Looking ahead towards a COVID-19 free future, passenger transport operators will have a vital role to play in meeting the mobility needs of people during the economic recovery phase. Passenger transport is the largest collective mobility mode of transport. Its survival and subsequent recovery should therefore be top priorities.

For an overview of each country's situation for passenger transport SMEs, please see this factsheet from IRU.