Maria Lekakou

• Dr. Maria Lekakou is Professor in Maritime Economics in Department of Shipping, Trade and Transport, and Member of the Council of the University of the Aegean. She has a longstanding experience in shipping and maritime policy, as Advisor to the Minister of Mercantile Marine (1996-2000), member of the National Regulatory Authority for Internal Maritime Transportation (2001-2004) and as a maritime expert in many national or European bodies (2007- ).

  Maria Lekakou is co- author of books examining European Maritime Policy, Greek shipping competitiveness island transports and cruise tourism and she has studied short-sea shipping policy developments, maritime tourism, cruise industry, passenger shipping, labour affairs as well as European policies related to liner shipping, cabotage, maritime competition and regional development. In 2006. European Policies for Shipping, in 2007 Maritime Transport: The Greek Paradigm, Research in Transport Economics and “Transports. Lifelines for the Islands”(in Greek), in (2008). Greek Shipping, Employment, Competitiveness, in 2010 “A critical assessment of the European Commission’s Green Paper on Maritime Policy“.

  She has contributed over 60 peer reviewed papers to international scientific conferences or journals, and has participated in numerous R&D projects.

  Selected Publications:

  • Lekakou, M. B., & Remoundos, G. (2015). Restructuring coastal shipping: a participatory experiment. WMU Journal of Maritime Affairs, 14(1), 109-122.
  • Stefanidaki, E., & Lekakou, M. (2014). Cruise carrying capacity: A conceptual approach. Research in Transportation Business & Management, 13, 43-52.
  • Lekakou, M., B., Vitsounis, T., K., (2011) Market Concentration in Coastal Shipping and Limitations to Islands accessibility. Research in Transportation Business & Management, Vol. 2, p. 74-82.
  • Lagoudis, I., N., Lekakou, M., B., Thanopoulou, H., A., Pantelaros, I. M., (2011) “Evaluating ferry services through an AHP estimated KPI system: A focus on Central Aegean” International Journal of Decision Sciences, Risk and Management Volume 3, No 1-2, pp:  153 – 178
  •  Lekakou M.B., Pallis A.A. and Vaggelas, G.K. (2009). Which Homeport in Europe: The Cruise industry’s selection criteria, Tourismos, 4 (4) pp 215-240

   

  Liberalisation of maritime Markets: The Greek case

   

  Traditionally the exclusive right of the national ship-owners to provide coastal services has reigned legislation on coastal shipping. Following a ‘liberalization wave’, the EU agreed in the early 1990s to the removal of restrictions in the provision of cabotage services (EU Regulation 3577/92). The new European regime put priorities to the provision of regular, affordable sea transport all year round to all inhabited islands and the prevention of destructive competition and predatory pricing. Interestingly, the abolishment of cabotage in the EU creates the need to adjust via fleet renewal and modernisation, even though it has increased pressures for the Greek flag. These adjustment pressures are directed towards both product innovation, which is the improvement of the provided services, and a process innovation, implicating entrepreneurship and reorganisation of the ways coastal services are provided.

  In the last twenty years, significant changes have been observed in the domestic maritime sector. In the context of market liberalization, the European Commission voted EC Regulation 3577/92, for the abolishment of cabotage restrictions among member states.. The question raised is to what extent has the reform of legislative regime impacted the performance of the domestic maritime sector.

  The purpose of this presentation is to evaluate the impact of the liberalization of the maritime cabotage on Greek costal services and cruise services. The presentation is structured as follows: In Section 2 there is an introduction to the objectives of maritime policy and the cabotage regime. Section 3 provides a short historical evolution of the Greek sector and the reform process of the legislative framework. Section 4 presents findings of the relevant research. The last section summarizes the major conclusions.

  In the context of national industrial policies, the authorities develop sectoral policies and strategies for the achievement of specialized goals (Suarez, Rodriguez & Corral, 2009). Different maritime policies are applied according to national laws based on the aims and objectives of each state as well on the historical evolution of the sector.

  The major elements of a maritime policy are protectionism, employment, international maritime affairs, and competition policy.

  The two general methods, subsidies or discrimination, will often be found operating together, or a country may be able to choose between alternative methods to secure a given aim (Sturmey, 1975). State’s intervention is rationalized in order to avoid the potential negative effects of unregulated competition, such as quality, continuity, reliability, safety etc (Kahn, 1991). Intervention from the state is imposed if the state wishes to ensure the necessary services and the users, to safeguard employment and to control the risks generated from transport services.

  Protectionism in coastal shipping is not a new phenomenon. Cabotage laws are the foundation for ensuring control over national transportation infrastructure. On the opposite side there is liberalization. Liberalization is achieved through deregulation with the removal of imposed barriers, especially in entry conditions.

  Currently, most policies are moving from providing a closed protectionist environment towards more liberal regimes. More countries re-evaluated their national policy due to the unavoidable changes of the international environment and trade. (Brooks 2009)

  The policy within the European Union (EU) is a very characteristic example. The EU implemented EC Regulation 3577/92 to create a common market and to establish the conditions of fair competition among the member states and the market players. It should be noted that even before this regulation; many EU countries had repealed their cabotage regime or had applied more liberal frameworks. One year before the enactment of the 1986 Legislative Package on maritime policy, cabotage restrictions were in force in France, Germany, Greece, Italy, Portugal, and Spain. Denmark maintained cabotage restrictions for the trade with the Faroes. At that time, in all of the above Member States, except for Germany, cabotage involved mostly services to islands. Because coastal trade provides vital services of goods and passenger carriage to various parts of their countries, it has national security implications,  thus the Member States defended the maintenance of cabotage restrictions on strategic grounds.

  The Greek coastal passenger market is among the biggest in Europe. With 70 million passengers passing through its ports, Italy was the major seaborne passenger country in Europe in 2015, followed by Greece with close to 66 million passengers. The network of Greek coastal passenger services is a complex one, consisting of a large number of mainland-to-island, island-to-island and mainland-to-mainland connections. The Aegean coastal passenger shipping network is the densest one and constitutes over two-thirds of daily departures from the port of Piraeus, excluding short ferry links.

  The market structure that has evolved is slightly different than the past: The limited number often of just two operators in the main itineraries, in the Aegean market point to an oligopolistic structure.  The major Ferry Shipping Companies are now four (managing 45 ships) and 20 smaller companies managed to survive in the market and increase their fleet (47 ships)

  Regarding the fares, they are imposed and announced by the coastal companies. However, the state intervenes in cases where public interest is “threatened” i.e. in cases of low commerciality where brake even fares would make the transport of certain population groups unaffordable.  Such lines are characterized as thin lines and the state subsidizes the operator given that he will employ a ship of certain characteristics serving the route all year round (10 months minimum).

  However, the main changes in Greek coastal shipping today refer, in essence, only to the regulatory framework. While there have been some changes on the supply side, demand traits remain more or less unaltered. When the institutional barriers to entry were being removed, the protests of Greek coastal ship users about the level of services provided specifically in the Aegean routes excluding those to Crete made the headlines. On the supply side, services are still provided by the same – more or less maritime – companies, pointing eventually to limited firm rivalry in the market. However, in essence only the one year provision stabilizes the market and although this could be expected to create certain monopolistic practices along viable routes, in practice, the market is so unstable and violent that there  no single dominant monopoly has arisen. However the larger shipping firms do seem to operate along the lines of a classic oligopoly due to the capital outlay required.

  The truth of the matter is that for Greece, the move towards a liberalized environment coincided with a downturn in the market – less tourism, a major maritime accident, (Express Samina off the coast of Paros, Sep. 2001), the decline of the Athens  Stock Exchange, the increase  in oil prices, and the general “malaise” since the dot com crash. Perhaps liberalization came just in time to absorb the shocks.

  A large number of the market’s experts and players believe that the law needs to move farther to lift the remaining state-enforced entry barriers. In fact, because the liberalization has so far been half-hearted, since it is being put into practice by an administration that still thinks along the old modes of thought, many of the problems remain.

  On the other hand, evaluating the cruise market liberalization Stakeholders’ views support that, as performed, has not reached the expectations to enhance the strength and the development of the European (and Greek) cruise sector although that Europe (and especially Greece) had become an even more attractive cruise destination. Strong representations, mainly from the labour side, demand to re-establish restricted cabotage because they believe that nowadays the real beneficiaries are the foreign cruise lines who would be able to operate entirely in Greece at the expense of Greek jobs and Greek business.

  As admitted by the participants the shrinkage of the Greek market was not a single parameter result, but a complex process that is attributed to the new regime, the adjustment problem from the side of the entrepreneurs and the intensification of competition. This fact successively affects the national registry and the number of Greek seafarers. The European Regulation has not the expected impacts in the case of Greece. This has not resulted from any malfunction of the Regulation, but from the failure in the implementation process from the side of Greek government. This is justified at a first glance on the basis of results of the cruise market development in other European Mediterranean countries, such as Spain and Italy.

  Regarding, the recent cabotage reform (2010 and 2012) for the non-EU cruise flags, the majority of the respondents consider that the law is in the right direction but in a wrong framework.

  Having only the view of the impact and not the actual data, we conclude that the “unconditional” liberalization, without estimating the potential impacts and monitoring the process, could lead to the exactly opposite direction. This is also the case for ferry market where the liberalization of the Greek coastal market seems to have led to a decline in the number of companies operating suggesting higher levels of concentration, higher fares and a lack of new entrants into the market.