2.2.2.3. Transport and communications: emergence of telecommunications and air transport

Besides financial and business services, transport and communications form the third highly dynamic sector in Luxembourg’s economic fabric. In the sector as a whole, employment doubled from 1985 to 2001, from approximately 11 000 in 1985 to over 22 000 in 2001, and its share of total value added in the economy rose from 6 % to nearly 11 %.

Transport and communications from 1985 to 2001 (Growth, employment and productivity) Average annual growth rates

As with other sectors of the economy, examination of aggregated data on transport and communications does not reveal the considerable differences in its component parts. Closer examination tells us that growth in this field is largely due to telecommunications, air transport and road transport.

In the transport sector, we can observe a stagnation in the number of employees in rail transport, i.e. mainly within Luxembourg National Railways (Société nationale des chemins de fer luxembourgeois, or SNCFL), from 1995 onwards. However, this phenomenon must be seen in the light of previous trends marked by a decline in employment. The SNCFL workforce declined from 4 254 in 1980 to 3 237 in 1995.This underlines the difficulties facing rail transport in finding its way in competition with road transport,and also corresponds to the implementation of a rationalisation policy for running the company.The number of passengers fell from 14 million in 1980 to 11.1 million in 1996 and has recovered quite strongly in recent years, reaching 13.6 million passengers in 2001.

The improvement in the integration of Luxembourg’s network with the international network and the quality of rail links with other countries is currently a key concern for the SNCFL and the government. Within this context, the electrification of the Luxembourg-Liège line was completed in May 2000 and, in January 2002, a Franco-Luxembourg agreement relating to the connection of Luxembourg to the East-European high-speed train was signed, involving provisions for financial support from the Luxembourg State. This agreement should enable the travelling time between Luxembourg and Paris to be cut from the present 3.3 hours to 2.15 hours in 2006/2007. During a second phase, the travelling time between Luxembourg and Strasbourg should be reduced from 2.05 to 1.25 hours.

Due to congestion on the Luxembourg road network as a result of the growth in population and employment (particularly cross-border employment), as well as the rise in the number of cars, the authorities are focusing on the development and modernisation of public transport, particularly the rail network. The “Mobilitéit.lu” project should increase the number of passengers using public transport from the present 12 % to 25 % in the medium term.

Overall, rail traffic of goods has remained at the same level as in 1980: 665 million tonne-km in 1980, 683 million tonne-km in 2000 and 634 million tonne-km in 2001. On the other hand, transport of goods by road is booming. Between 1995 and 2001 alone, road transport firms recruited nearly 2 500 additional employees, and over 100 firms were set up in the sector. Moreover, many foreign companies attracted by the competitive social security taxes have set up business in Luxembourg. International traffic (transport of goods outside Luxembourg) by vehicles registered in Luxembourg accounts for a large proportion of the growth.

Transport of goods by road - International traffic abroad (in 1 000 tonnes-km)

The category of river transport, air transport and auxiliary transport services is actually dominated by air transport. As far as river transport is concerned, we note a stagnation in the activities of the port of Mertert on the canalised section of the Moselle. In 1980, 1 706 321 tonnes were transshipped in the river port, while the corresponding figure was 1 591 281 tonnes in 2001.

On the other hand, air transport is growing rapidly. Two large airlines are based at Luxembourg Airport, namely Luxair (passenger transport) and Cargolux (cargo transport). The Luxembourg State and the “Banque et Caisse d’Epargne de l’Etat” hold 26.8 % and 15.6 % respectively of the shares in Luxair, a company which in turn owns a 34.9 % stake in Cargolux.The two companies are among the country’s largest employers. At the end of 2001, Luxair employed 2 260 staff and Cargolux 1 120.

The number of passengers transported by Luxair rose from 320 000 in 1982 to 621 000 in 1992 and 1 142 319 in 2001. Besides scheduled flights, Luxair is also a tour operator, and offers package holidays that have experienced considerable expansion in recent years. The group’s turnover rose from 172.5 million euro in 1994 to 282.8 million euro in 2001.

The air cargo company Cargolux, co-founded in 1970 by Luxair, now serves around 50 destinations with a fleet of 10 Boeing 747 aircraft,and is among the world’s largest air cargo companies. In 1996, a new Cargocenter managed by Luxair, covering an area of 55 000 m2 and with an annual cargo capacity of 500 000 tonnes, was inaugurated at Luxembourg Airport. In 2000, the amount of tonne-km of cargo carried by Cargolux rose to 3 813 million, compared with 2 261 million in 1993. The profit after tax of Cargolux increased from 7.3 million USD in 1996 to 32.9 million USD in 2000.

These developments are reflected in the traffic at Luxembourg Airport. The total number of landings and take-offs rose from 54 604 in 1980 to 69 662 in 1995 and 86 165 in 2001. Cargo transport was characterised by a real boom in the 1990s, rising from 143 667 tonnes in 1990 to 510 965 tonnes in 2001. Likewise, the number of passengers increased considerably from 1 072 264 in 1990 to 1 625 323 in 2001.

Commercial traffic at Luxembourg Airport

It should be pointed out that the spin-off from air transport into the tourism and logistics sectors has been substantial.

Telecommunications have experienced the greatest expansion in the economic sector of transport and communications over recent years. The share of telecommunications in value added in the sector increased from 21 % in 1995 to over 32 % in 2001.Telecommunications represented around 2 % of the total value added of the whole Luxembourg economy in 1990,2.5 % in 1995 and nearly 3 % in 2001.

Following the liberalisation of telecommunications and the postal service from 1992 within the context of the European Union policy on the subject, the Post and Telecommunications company (P&T) now has to contend with competition. At the end of 2001, the public P&T company employed 2 750 staff. The Société Européenne de Communication S.A., the direct competitor of P&T, particularly with its “Tango” network in the field of mobile telephony, reported having 290 employees on the same date.

The sizeable growth in the sector is shown in the statistics of the Post & Telecommunications company. While it is true that the number of lines and the number of telephone calls grew at an exceptional rate from 1990 onwards, the increase in popularity of mobile telephony is the most spectacular. The number of subscribers to the LUXGSM mobile telephony system run by P&T rose from approximately 27 000 in 1995 to 246 482 in 2001.The total number of mobile telephone subscribers was approximately 380 000 at the end of 2000.This figure corresponds to 87 subscribers per 100 inhabitants, while in the Europe of the 15, the average number of mobile phone subscribers per 100 inhabitants was 63.5.

The expansion in telecommunications is not only quantitative, there are also qualitative aspects, as companies operating on the market have to adapt to the emergence of new information and communication technologies, particularly the Internet. The number of digital lines (ISDN or Integrated Services Digital Network) operated by the P&T, which was 6 112 in 1997, reached 155 366 in 2001.The level of penetration of ISDN (share of total lines) was 44.7 % in 2001,one of the highest levels in the world. In June 2001, nearly half Luxembourg’s Internet surfers had ISDN Internet access, compared with an average of 16 % in the European Union. The new ADSL technology (Asymmetric Digital Subscriber Line) giving broadband Internet access was introduced in 1999, and is expected to witness similar expansion. In May 2002, three licences for establishing and operating 3G (3rd generation) mobile telephony services were awarded.The three operators who were offered a UMTS licence (Universal Mobile Telecommunications System) are Tango S.A., Orange Communications Luxembourg S.A. and the Entreprise des Postes and Telecommunications.

Moreover, P&T and Tango are also Internet service providers. The Internet traffic of P&T rose from 26 million minutes in 1997 to 534 million in 2001.

Analogue and digital lines (P&T)

Internet traffic (P&T) (thousands minutes)

In the telecommunications sector, we should also mention satellite transmission. Société Européenne des Satellites (SES) was set up in 1986, based on a concession granted by the Grand Duchy of Luxembourg for broadcasting audiovisual programmes. SES is authorised to operate the ASTRA satellite system in accordance with the procedures for coordinating, notifying and recording geostationary orbit positions and frequencies at the International Frequency Registration Board (IFRB), under the regulations of the International Telecommunications Union (ITU) in Geneva. Originally, the Luxembourg State brought in 20 % of the capital via two Luxembourg public-sector establishments, the present Banque et Caisse d’Epargne de l’Etat and the Société nationale de crédit et d’investissement (SNCI). The remaining 80 % was shared among nine European private-sector companies. In 1993, the concession was renewed and prolonged until 2010, while enabling the scope of SES’ activities to broaden by granting exclusive rights to the orbital position 18.2° East, still within the framework of the procedures laid down for the award of frequency bands by the ITU.

The first satellite was launched in 1988 and the SES-ASTRA system continued to develop throughout the 1990s, becoming Europe’s largest operator of satellite services. The Earth Control Station (satellite operating centre, equipment providing uplinks) is located in Betzdorf. SES employed 350 staff in Luxembourg at the end of 2001, compared with 147 at the end of 1994.

Number of households served by SES-ASTRA

With 12 satellites, SES-ASTRA was reaching 91.3 million households in 30 European countries at the end of 2001, either by cable (57.6 million households), or directly (33.7 million households). Moreover, 80 % of European households with a satellite dish or a cable subscription can receive the audiovisual programmes broadcast by ASTRA. The number of analogue and digital radio and television stations distributed was over 1 100 at the end of 2001. Over recent years, the SES group has expanded its range into the field of digital television broadcasting. In 2001, 14 million European households received digital programmes broadcast by ASTRA. This figure represents a market share of 80 % of the total number of households with digital equipment in Europe.With ASTRA-NET, SES has created a platform providing interactive broadband services, including highspeed Internet, multimedia and distance learning.

Between 1999 and 2001, SES underwent a fundamental change. From a European player, the company became a global player, acquiring stakes in companies that are large operators in Asia (AsiaSat), the Nordic countries and Eastern Europe (Nordic Satellite AB which manages the Sirius satellites) and in South America (Nahuelsat in Argentina, Star One, the operator of the Brasilsat satellites). At the end of 2000, the satellite services of the SES group and its partners were able to reach nearly 80 % of the world’s population.

In 2001, SES-GLOBAL was created from the association of ASTRA and AMERICOM,one of the largest operators of fixed satellite services in the United States. Now, with its own 29 satellites and 13 satellites belonging to partner companies, SES-GLOBAL covers 95 % of the world’s population.The Luxembourg State, and the public-sector companies Banque et Caisse d’Epargne de l’Etat and Société nationale de crédit et d’investissement, jointly hold 16.67 % of the shares in SES-GLOBAL and jointly hold one-third of the voting rights of shareholders.

While the expansion of SES has a direct economic impact with regard to tax, employment and value added, it may also form a magnet for content providers or companies offering multimedia content over the Internet. The company Europe Online, which was set up in 1999 and also has its headquarters in Betzdorf, provides digital content via a hybrid satellite/terrestrial broadband Internet platform.With 110 staff members at the end of 2001, the company uses several complete transponders of the ASTRA satellite system.