WRITTEN EVIDENCE FROM NORTHLINK FERRIES – 7 MAY 2008

Introduction

NorthLink Ferries welcomes the Committee’s inquiry and the opportunity to contribute to the evidence considered. With an overall 9 years experience of both the tendering processes and the operation of the contracts for service delivery, we believe there is relevant experience which can be used in the processes for the specification, tendering and management of future contracts for the delivery of lifeline ferry services.

This submission covers a number of topics which it is felt may be of interest to the committee.

Background

This submission has been prepared by NorthLink Ferries Ltd (also referred to as NorthLink-2) but also covers the experience of NorthLink Orkney & Shetland Ferries Ltd (also referred to as NorthLink-1).

NorthLink-1 was a 50/50 joint venture between Caledonian MacBrayne and the Royal Bank of Scotland. The tender process took 27 months (against a project plan of 15 months) and concluded with the signing of contracts in December 2000. NorthLink-1 had three large new passenger ro-ro ferries designed, built and commissioned for the contract start date of 1st October 2002.  Despite the short time available all three ships were delivered to specification, on budget and on time.

NorthLink-1 problems

Before starting to trade NorthLink-1 suffered a series of major financial problems that were beyond its control which combined to make the business non-viable. These issues have been documented elsewhere particularly in the Audit Scotland report.

Firstly, the fundamental problem for NorthLink-1 was that it was contracted to deliver a specified service and timetable with all its attendant costs: when the expected revenues dropped significantly (through new competition emerging) or the costs increased, the company had no opportunity to cut services and costs to reflect the change in demand. Secondly, the terms of the contract with government did not permit the granting of additional subsidy without a rerun of the whole EC compliant tender process, but interestingly the contract did include provisions for government to clawback excess profits.

NorthLink-1 was subject to several reviews by external advisers on behalf of different parties including PWC for the Scottish Executive.

NorthLink-1 achievements

The previous operator (P&O Scottish Ferries) had achieved little or no growth over many years, and for their 2002 bid P&O assumed zero growth. The NorthLink-1 team believed that some growth was possible but the levels actually achieved were unexpected. For example, in terms of passengers carried the Aberdeen - Lerwick route saw on increase of 54% in the first three years while the Aberdeen – Kirkwall route had an increase of over 250%

As well as increasing the use of the ferries by islanders, NorthLink-1 targeted the opportunity to grow tourism to the Northern Isles, and achieved substantial growth in both group and independent travellers, through the use of the new ships and brand in NorthLink Cruise Tours and NorthLink Holidays. While good for the ferry company this growth was also very good for the island economies.

Whilst the contract was retendered, a process that took until July 2006, NorthLink-1 delivered the lifeline ferry services with the provision of additional subsidy to square the books under the terms of a MoA. During this period the board and executives of NorthLink-1 sought to deliver a good quality ferry service, to maximise revenues and to minimise costs: in this we were successful and over a 20 month period the company required some £9m less subsidy than had been assessed by the PWC experts.

NorthLink-2 differences

Given the financial problems which NorthLink-1 suffered and was unable to control, for the replacement contract, the Scottish Executive sought to put into place different contractual terms to avoid the need for premature retendering.

These are effectively a “stop loss” mechanism which means that in the event of financial problems the operator loses their profit for the year but thereafter additional subsidy is negotiated to ensure financial stability and the continuity of delivery of the lifeline service.

In the NorthLink-1 contract the level of subsidy required for each year 2002 – 2007 had to be submitted in early 2000 as part of the bid, and was based on 1998/1999 historic data, which has proven to be erroneous. In NorthLink-2 an initial budget and subsidy for each year was part of the bid but the budget is agreed for each successive year and therefore takes account of changes (up and down) in actual costs, traffic and revenues.

As in the NorthLink-1 contract there is a profit clawback mechanism but this bites quickly such that the operator can achieve little real profit growth from operating the service efficiently. This also has the danger of acting as a disincentive to growing revenue or containing costs as the benefits are largely returned to government rather than being shared with the operator, however government now recognise this, such that gains from operator accomplished cost reductions can benefit both.

Fares and the subsidy

Fares are set by Ministers and under the contract are indexed each year by CPI, however costs continue to rise and many well in excess of RPI.  As a consequence the level of subsidy required each year increases but not through inefficiencies of the operator. 

Customer care

From the outset NorthLink has sought to consult with the various groups of customers and where possible address their concerns and requests.  For example, the design of our ships benefited from very valuable input from Disability Shetland.  The design of the new livestock containers followed considerable input from NFU, Crofter and Mart representatives.

Passenger views are collected through a structured Customer Service Questionnaire that encourages comments as well as marking NorthLink staff and services against several key criteria.  All forms are reviewed with comments and suggestions being read by senior managers.  In this way the metrics of customer assessments can be tracked but importantly customer views and suggestions are also collected and acted upon.

Monitoring and flexibility

Under the terms of our contract with Scottish Ministers NorthLink-2 is measured monthly against a series of key performance indicators. Safety and certain other causes are relief events but otherwise failures beyond a threshold result in financial penalties. NorthLink is proud of its performance record and the high quality of customer service provided. However, the penalty regime could result in perverse decisions being made.

Relations with officials in the Scottish Government are excellent but the contract provisions are tight and leave little opportunity for the operator to vary many aspects of the service without seeking prior consent. For customers this can be seen as inflexible and obstructive to dealing with on the day situations.

As above the contract financial regime is restrictive and does not encourage innovation and creativity for the benefit of the paying customers and the taxpayer.

The future

The NorthLink model of vessel financing has been very successful in securing new passenger vessels designed for the routes and on terms that ensured that future contract tendering was a level playing field for all bidders.

Currently there is a case building for the replacement of the two freight ro-ro vessels used by NorthLink but within the terms of the current contract there are no provisions to deal with such changes. Indeed, the basis of the contract tender would discourage a bidder from proposing newer higher capacity freight ro-ro vessels.

In the same way that the NorthLink-1 contract evolved through experience into the MoA and then into the NorthLink-2 contract it is to be hoped that the current contract can be amended to cater for changes of this type which will be needed to ensure the lifeline ferry service provision continues to meet the current and projected requirements of the customers, and not those of a few years ago when the service specification was originally drafted.

Conclusion

While we both operate lifeline ferry services to Scottish islands there are significant difference between NorthLink and our sister company, CalMac Ferries.  Some examples are:

• NorthLink operates 5 vessels over 3 routes against CalMac’s 30 vessels on 24 routes;
• The population served is roughly the same but for NorthLink there are only two island groups, for CalMac there are many islands with very small populations;
• NorthLink’s smallest ship is bigger than CalMac’s largest ship;
• NorthLink operates long routes (12-14hr overnight trips), much longer than the longest CalMac route;
• Over a year, NorthLink’s 5 big ships sailing long distances use more fuel than CalMac’s 30;
• CalMac carries more than 5 million passengers each year, NorthLink carries over  300 thousand;
• CalMac operates some 350 crossings each day, NorthLink operates about 10;
• NorthLink carries high volumes of freight including over 2500 loads of time critical high value salmon;
• Shetland exports a multiple of the freight it imports which is the opposite of most islands – NorthLink’s freight services are therefore vital to the health of the island economy;

While both requiring lifeline ferry services the needs of the passengers, tourists and businesses in the Western Isles and Northern Isles are significantly different and hence CalMac and NorthLink seek to address the specific needs of their local customers and communities.

WRITTEN EVIDENCE FROM PENTLAND FERRIES LTD – 25 MARCH 2008

Pentland Ferries Ltd operate a ferry service from the Gills Bay, Caithness to St Margaret's Hope, Orkney. We would like to put the following points forward for the inquiry into ferry services in Scotland. Pentland Ferries Ltd is a privately owned company started in 1997 by the current managing director Andrew Banks, and has been operating a ferry service since May 2001. The company currently owns two vessels. The MV Claymore operates a daily service between Gill’s Bay and St Margaret’s Hope year round, running 3 trips each way per day in the winter and 4 per day in the summer. Pentland Ferries are currently one of only 2 Scottish ferry companies that receive no subsidy or other financial assistance.

Whilst not designated the ‘lifeline’ service we carry a large percentage of the livestock transported to and from the islands, together with dangerous goods such as aviation fuel, which closed deck vessels cannot carry. Pentland Ferries second vessel, the Pentalina B, is out with Scotland on lease. As well as the two vessels detailed above, we are currently having a RoPax catamaran built in Cebu, in the Philippines by FBMA Marine. This vessel will be launched in April 2008. The new vessel will have 50% increase in capacity and will replace the MV Claymore on the Pentland Firth route as the demand over the summer months has now exceeded the capacity of the Claymore. The Catamarans structure consists of a steel hull with aluminium superstructure, which has a direct effect on economy and is environmentally friendly with the use of efficient turbo charged high speed diesel engines with low emissions. Matching the fuel consumption of the MV Claymore however being a much larger and faster ship. She has four independent engines and propellers for reliability. The increase in the achievable speed will allow Pentland Ferries to put on a service with a crossing time less than one hour to the mainland between the current ports. The new vessel being custom built is also designed with the hope that Pentland Ferries may in the future be allowed access to use Burwick harbour on South Ronaldsay, this would allow us to provide a shuttle service to the mainland, with crossing times in under thirty minutes, six to eight crossings per day undoubtedly a fantastic service to locals and tourists.

The timetable between Gills Bay and St Margaret's Hope has remained the same for most of the operating time. This is set to meet the Northern Isles ferries to allow passengers from the Islands of Orkney to make a connection to mainland Scotland without overnight stays etc. We have just altered the timetable to accommodate a new bus service from Kirkwall to Inverness, this service which has now been named the Norseman Express, operates six days per week, the bus travels on the ferry with the passengers, an attractive alternative as luggage and shopping does not have to be moved until the destination is reached, this service is also free to OAP s and disabled passengers. As all businesses are aware of the continuing rise in fuel prices, Pentland ferries are pleased to inform you we have not increased fares for 6 years in the Winter season and 3 years in the summer season. Having been in operation for nearly seven years, it is clear to see the success of the route with freight companies, locals and tourists, hence the need for a greater capacity vessel and shorter crossing times to provided a better and more attractive service. Pentland Ferries are operating a competitive route to/from Orkney, however the company faces severe competitive pressure from other subsidised ferry companies running to and from Orkney. We feel very strongly that all ferry companies who have proved themselves to be able to compete and offer a reliable and affordable service should be subsidised to allow a more "level playing field" for competition.

Written Evidence from WESTERN Ferries (CLYDE) LTD – 7 May 2008

Submission to the Scottish Parliament’s Transport, Infrastructure and Climate Change Committee:  Inquiry into Ferry Services in Scotland

Introduction

This paper is being submitted in connection with the call for views by the Scottish Parliament’s Transport, Infrastructure and Climate Change Committee (the “Committee”) in relation to its inquiry into ferry services in Scotland.  Whilst the Committee sought submissions on a number of different issues, the intention of this paper is to concentrate on the issue of competition and lessons that can be learnt from the past and the present, which will have implications for the future of ferry services in Scotland. 

The current situation in Dunoon has been subject to much attention and scrutiny over the years but the resolution of the current issues could potentially reshape the future for ferry services throughout Scotland. The choice for policy makers will be how best to meet the current and future expectations of those communities that are dependent on maritime connections. Will these expectations be delivered by the allocation of even greater amounts of subsidy, bolstering CalMac’s almost nationwide monopoly and therein stifling any prospect of competition? Alternatively, can service improvements be achieved through competition, innovation, improved services and efficient use of taxpayers’ money?  If competition is to be encouraged then there are a number of fundamental issues that will need to be addressed.  

Barriers to Competition

In Scotland, there is now an established record of privately owned companies starting new services against subsidised services and failing as a direct result of greater subsidy payments being given to subsidised operators. These include Western Ferries’ (Argyll) service to Islay, Orcargo’s service to Orkney, Taygran Shipping’s service to Stornoway and Norse Island Ferries’ service to Orkney and Shetland. More recently, plans to start operating a non-subsidised service to Arran were undermined by the deployment of a second CalMac vessel, which had the effect of denying the proposed service any access to the berthing facilities in Brodick.

The following is an extract of the conclusions of a 1982 Monopolies and Mergers Commission (now the Competition Commission) Report into Scottish Shipping that in part investigated the demise of Western Ferries’ (Argyll) Ltd service to Islay. 

“7.72. In 1972 the STUCC reported adversely on the David MacBrayne's proposal to withdraw from the Islay route. The Secretary of State and Western Ferries were unable to agree terms for an undertaking which would have met the conclusions and recommendations. David MacBrayne decided to convert the Arran to ro/ro, and undertook to operate the service without subsidy. We believe that this was the first of the two crucial decisions which were to determine the future of competition on the route, the outcome of which was the withdrawal of the Western Ferries service at the end of the 1981 summer season.

7.73. By 1973 Western Ferries had established itself as by far the largest carrier of cars and commercial vehicles on the route, and it had also effectively determined the limits within which David MacBrayne could price independently. We believe that David MacBrayne's belief that it could operate a profitable service was conditioned by unreasonable optimism about the rate of growth of revenue, and the extent to which costs could be reduced. In the first three years after the conversion, up to 1975, David MacBrayne was only able to meet between 38 per cent and 51 per cent of its ship and terminal operating costs.

7.74. The second crucial factor which influenced competition on the Islay route was the decision by the Secretary of State in 1975 to increase the subsidy given to STG's ferry services, and not relate it to operating results on individual routes. In converting the Arran, David MacBrayne was able to offer a level of services to passengers, including car passengers which could not be matched by Western Ferries. It was able to continue to take advantage of the attraction for passengers because the losses on the route were met by subsidy. If David MacBrayne had been required to break even or make a profit on the route we do not believe the company would have continued to operate the service.”

In summary CalMac (then David MacBrayne Limited) was provided with capital and revenue grants to modify an existing vessel and to enable it to operate at a commercial loss despite the existence of a competing ferry service. The operating subsidy further allowed CalMac to price below Western Ferries and to offer long standing discounts to selected haulage companies. 

This methodology therefore set a precedent that would be utilised on each occasion where there was the potential for or appearance of competition on subsidised routes. Any new entrant faced the prospect of competing against a state funded operator who would have access to vast amounts of capital and revenue support to trade through any commercial pressures caused by the appearance of competition.

Private operators currently competing against subsidised routes in Scotland; Western Ferries (Clyde) Limited, Pentland Ferries Limited and Streamline Shipping Group Limited, remain frustrated that their commercial interests and ambitions are being undermined by seemingly unlimited amounts of capital and revenue support.    

Western Ferries’ Gourock-Dunoon Service

For the year ending March 2008, Western Ferries provided almost 31,000 sailings between Hunter’s Quay, Dunoon and McInroy’s Point, Gourock. Western Ferries owns and operates four similar ro-ro vessels and over the last six years has enhanced its services through the introduction of two new purpose-built larger vessels, each costing £2.5m.  Both new vessels were designed and manufactured at Fergusons Shipbuilders, Port Glasgow. This new tonnage, combined with timetable enhancements, has led to a continuous improvement in the level of service provided to our customers.

Western Ferries owns the terminals at Hunter’s Quay and McInroy’s Point and these facilities have recently benefited from a £4m improvement programme. This investment has delivered enlarged marshalling areas and there are now two operational berthing structures at each terminal. As with the new vessels, both new linkspans were designed and manufactured by Fergusons Shipbuilders.  

Western Ferries’ timetable operates from 6.30am to 10.30pm weekdays, and this is extended to midnight at weekends. The core timetable operates on a three vessel basis, with departures from each terminal every 20 minutes.  During peak periods, all four vessels are utilised providing a sailing every 15 minutes. Western Ferries operates every day of the year, including Christmas Day and New Year’s Day. Western Ferries also provides a free emergency call-out that allows critical patients swift passage to Inverclyde, Paisley and Glasgow hospitals.

Western Ferries takes its place in the community very seriously, it re-invests its financial resources through local purchasing and sponsors a large number of local groups, individuals, sports organisations and charities. Western Ferries also supports a wide range of events that spotlight Cowal as a tourist and visitor location.

Western Ferries is a significant local employer and now employs almost 60 employees, of which 90% are Cowal residents.

The aforementioned Monopolies and Mergers Report adjudged Western Ferries’ service to operate in direct competition to CalMac’s vehicle service. Western Ferries’ service is also used by foot passengers who arrive at the terminals by foot, by car or use the integrated bus connections. Therefore, the only distinguishing element of CalMac’s service is its direct connection to the railhead in Gourock.

Western Ferries provides its service on a non-subsidised basis²¹⁴ and operates in direct competition to the vehicle service operated by CalMac. Western Ferries currently has 88% of the car market, 86% of the commercial market and 68% of the passenger market.

Unfair Competition on the Gourock and Dunoon Route

CalMac Ferries Limited (Cowal Ferries Limited) currently receives subsidy in line with an “Undertaking” with the Scottish Government to provide a passenger-only service between Gourock railhead and Dunoon town centre. To satisfy this Undertaking, CalMac operates a ferry capable of transporting not only foot passengers but also vehicles. Over the last five years CalMac have received almost £12m of subsidy from the Scottish Government to provide the Gourock to Dunoon service. 

CalMac’s vehicle service is required to be operated on a non-subsidised commercial basis however, in our opinion, the vehicle service is being inappropriately subsidised. The subsidy requirement of the current service exceeds that of a solely passenger-only service using a passenger-only vessel. Western Ferries has estimated this difference using data obtained through the Commercial Invitation 2005/06 however, this information remains subject data room confidentiality restrictions.

CalMac’s current service is essentially, apart from peak weekday passenger only sailings, restricted to an hourly service. This restriction was put in place by the Scottish administration in recognition of the specific likelihood that CalMac’s decision to use a ferry capable of carrying vehicles could lead to inappropriate cross-subsidisation and unfair competition.

Over and above the realisation that a combined service could result in misuse of taxpayers’ funds, CalMac’s Dunoon service is operationally restricted by the method in which CalMac choose to deliver this service. As is the case for the majority of CalMac’s routes, the Dunoon route is provided by a vessel with on-board crew accommodation. In order to satisfy the working time legislation this effectively means that CalMac’s vessels have to be tied up for approximately 50% of the working day. Western Ferries’ crew all live locally and therefore our vessels could effectively, through shift rotation, provide a service 24 hours a day.    

Despite express guidance given to CalMac that vehicle fares should be set and increased to reflect commercial realities, CalMac has used subsidies to artificially shield vehicle fares from commercial inflationary pressures, for example fuel price increases. There have been occasions when vehicle fares, on the Dunoon route, were not subject to CalMac’s annual price increase. Furthermore, the Scottish administration recently conceded that CalMac had used taxpayers’ monies to offer massive and improper discounts to selected local hauliers in order to compete against Western Ferries.

Western Ferries had evidence that discounts of up to 70%, on published rates, were being given to a local haulier and presented this evidence to the Scottish Government. CalMac however denied all knowledge of these discounts for a period of three years before accepting that this practice was inappropriate and at that point, immediately withdrew them.

The subsidisation of CalMac’s vehicle service exceeds the terms of CalMac’s Undertaking; it contradicts internal guidelines issued by the Scottish administration and contravenes European legislation and regulations. 

CalMac’s vehicle service is not a lifeline service; there is no unmet social need and Western Ferries already provides a superior commercial service on the same route. Local residents therefore have access to an alternative ferry service and full access to the mainland road network.

Future of the Gourock to Dunoon Service

The European Commission has recently announced a formal investigation into whether subsidies given to the David MacBrayne Group have resulted in market distortion and unfair competition. It is assumed that the current administration will not undertake any tender of CalMac’s Dunoon service until the Commission has made a judgement on the status of the current situation. 

However if CalMac is given access to capital funding to procure two new vehicle ferries, with an expected combined cost of approximately £20m, this will substantially increase the need for subsidy support and will significantly undermine Western Ferries’ business. Furthermore, the additional operational costs associated with two new ferries will only reduce the current subsidy requirement if CalMac were to take away a significant amount of market share from Western Ferries. The effect of losing this “significant amount” of market share would be the cessation of Western Ferries’ business. Therefore, Dunoon will in time be left with a two vessel, single operator service, which would be a significant step backwards for the Cowal community.        

Competition and RET

The Scottish Government has recently announced a pilot Road Equivalent Tariff Scheme to the Islands of the Outer Hebrides. If a similar scheme is extended to all subsidised routes and only given to the operators of those subsidised services, as is the case with this current Pilot Scheme, then this will effectively rule out any competition on any routes in Scotland and potentially undermine the non-subsidised operators in Scotland.

Furthermore, if a nationwide RET scheme results in capacity problems because of increased demand for deck space from islanders and tourists, then alternatives for delivering additional capacity should be encouraged and not undermined.    

Future Tendering of Subsidised Ferry Services in Scotland

The recent tender for CalMac’s West Coast ferry services did not generate any bids from other shipping companies or ferry operators, despite their interest. As long as the subsidised services are bundled together and tendered with similar prescriptive conditions, the only bidder will be the state owned company.   The continuation of the status quo will not deliver better services to customers, provide value for money public services nor advance an environment where open and fair competition can flourish. Over and above the issues of the prescriptive nature of the tender and the single bundle, the other factor that acted as a significant deterrent to bidding was the bid costs. CalMac’s costs win or lose, would be paid by the taxpayer, whereas private bidders had to risk their own financial resources.

The structure of the next round of tenders for Clyde, Hebrides and Northern Isles routes will have to be fundamentally changed if other bidders are to be encouraged to take part. Non-subsidised ferry operators have established that there are routes that require no subsidises within the Scottish ferry sector. Furthermore, there are other routes currently operated on a subsidised basis that could be run on a non-subsidised basis. However, the distorted market conditions are such that there is little or no opportunity for third party route development.

Tendering of Ferry Services in British Columbia

By way of suggesting alternatives, the Committee may be interested in how public ferry services have been tendered in British Columbia and how they have managed to find a balance between operating lifeline ferry services and encouraging competition, to the mutual benefit of island communities and the Canadian taxpayer.

The British Columbia Ferry Authority is the owner of the single issued voting share of British Columbia Ferry Services Inc. ("BC Ferries"). BC Ferries’ routes and service levels are defined in the Coastal Ferry Services Contract (“CFSC”) between the Province of British Columbia and BC Ferries. The contract, originally signed in 2003, is a binding sixty year agreement that is reviewed and updated at regular intervals.

In effect, you have a state owned company, providing subsidised lifeline ferry services to remote communities under a contract with the state. Furthermore, this contract covers twenty-five  different routes and is therefore except for the contract period, very similar to CalMac’s current contract with the Scottish Government and the West Coast services.

Over and above the sixty year contract the other significant difference is that BC Ferries are contractually required to seek Alternative Service Providers (“ASPs”) on a route by route basis in an effort to reduce costs of providing those contracted services. The fundamental objective that must guide BC Ferries in developing and implementing its ASP plans is, therefore, to determine if, through third party service providers, BC Ferries can provide a safe, reliable and quality service that fully meets the requirements of the CFSC at a lower cost.

Ensuring a cost effective service is, however just one objective, which must guide BC Ferries in identifying and considering ASP opportunities. It is important to note that under the CFSC, BC Ferries remains fully responsible for the service on all designated routes regardless of whether that service is provided by an ASP under sub-contract or directly by BC Ferries. The determination of who should provide the service is based on consideration of value and risk, rather than price alone. Nonetheless, potential savings from contracting with third-party service providers is a key consideration.

Essentially the ASP mechanism provides third parties, on meeting certain quality conditions and reducing the price to taxpayers, an opportunity to provide a service under a sub-contract/franchise of the main contract. Importantly, BC Ferries maintains overall responsibility and is therefore the equivalent of an “operator of last resort”.

Conclusion

Having had the opportunity to consider and investigate the issues and views raised as part of this study, the Committee will have realised that there is a high expectation level for improved maritime connections in the future. The challenge facing policy makers is therefore how to close this delivery gap and whether this is to be achieved through increased reliance on higher subsidy payments and therein the protection of CalMac’s monopoly status or instead by market liberalisation, competition and innovation.

Finally since 1996 the growth in CalMac’s passenger numbers on its West Coast network (exc Gourock to Dunoon) has been 9.7%. Over the same period, the total Gourock to Dunoon market (Western Ferries and CalMac) has grown by 36.7%. The difference in these growth rates can be succinctly explained by Western Ferries’ swift reaction to changes in customer demand and that these service improvements have themselves generated increased demand. 

13 May (10th Meeting, 2008 (Session 3)) – Supplementary Oral Evidence

Supplementary Written evidence from CalMac Ferries Ltd – 3 June 2008

Please find enclosed a short paper on Company of last Resort which was raised during the Committee meeting held on 13th May 2008.

If you require any clarification please do not hesitate to contact the undersigned.

• Documentation required

In order for any company to operate vessels, the following documentation is required:-

• Document of Compliance (DOC)

Every company must operate a Safety Management System which complies with the requirements of the ISM Code. The company must obtain a DOC (which is awarded on completion of a satisfactory audit by MCA) before any of the company’s vessels can be audited.

Safety Management Certificate (SMC)

Every RO/RO passenger vessel must have a valid SMC. The SMC is awarded on completion of a satisfactory audit of the vessel by MCA.

Operational Scenario

In the event that the operating company withdraws or is removed from the contract and another takes over, the “new” company will require to operate under their own Document of Compliance (DOC) assuming they have one and that it is relevant to the type of vessels to be operated.

Should the “new” vessel have a valid DOC, they can, after implementing their SMS on board vessels, apply to MCA for an SMC for each vessel. The SMC would be issued on satisfactory completion of an audit by MCA Surveyors.

Should they not have a valid DOC then they would require to apply to MCA for an interim DOC. they would also require to apply for an interim SMC for each vessel. this can be done reasonably quickly, however, the period of validity of the interim DOC/SMC’s may depend on the reputation of the company making the application. The company would of course have to comply with all of the relevant legislation subordinate to the Merchant Shipping Act.

Before issuing a full term (5 years) DOC, the company’s SMS would have to be audited by MCA. If the audit is satisfactory, a DOC will be issued. MCA will not audit the vessels until the company has a full term DOC.

Passenger Certificates would have to be re-applied for in the name of the “new” operating company.

Serious disruptions could be caused to the service if the MCA is not satisfied with the competency of the incoming company and with the current shortage of MCA Surveyors that would be required to inspect the vessels and issue interim SMC and to endorse the PCs.

3 June (12th Meeting, 2008 (Session 3)) – Supplementary Oral Evidence

LETTER FROM THE MINISTER FOR TRANSPORT, INFRASTRUCTURE AND CLIMATE CHANGE TO THE COMMITTEE – 13 JUNE 2008

CONSIDERATION OF PETITION PE1035

Thank you for your letter of 4 June 2008 seeking further information about the Scottish Government’s plans for the Gourock-Dunoon route.

I note that the Committee took a decision at its 27 May meeting to close petition PE1035 and to treat the issues raised as evidence in their ongoing ferries inquiry.  The Committee took the opportunity at their 3 June meeting to discuss with the Minister for Transport, Infrastructure and Climate Change, issues raised in PE1035.  The Committee concluded however that it would still be helpful if the Scottish Government could provide written clarification on the timetable for making an announcement of its plans for the Gourock-Dunoon service and, whether the EC investigation is likely to impact on that timing.

A detailed response to the Committee’s questions is set out in the attached annex.

I trust the above information will assist the Transport, Infrastructure and Climate Change Committee in their consideration of this issue.

Yours sincerely

STEWART STEVENSON

ANNEX

TRANSPORT, INFRASTRUCTURE AND CLIMATE CHANGE COMMITTEE – CONSIDERATION OF PETITION PE1035 (MR JOHN ROSE IN RELATION TO THE GOUROCK-DUNOON FERRY SERVICE)

This Annex provides the Committee with background information on PE1035 and as requested written clarification on the following:

• An indicative timetable for the Scottish Government’s announcement of its plans for the Gourock-Dunoon service, and
• An indication as to whether the EC investigation is likely to impact on the timing of the announcement.

Background

Mr Rose’s petition (PE1035) calls for the Scottish Parliament:

a) To urge the Scottish Executive to withdraw direct or indirect financial support for CalMac on the Gourock-Dunoon ferry service and

b) To ensure full transparency in relation to Government subsidy of ferry services.

Following its initial consideration of the petition last August, the Petition’s Committee sought views from the Scottish Government and a number of the other key stakeholders involved.  The Scottish Government’s response of 22 October 2007 and the written responses from the other key stakeholders were made available on the Petition’s Committee’s website.  The petitioner raised further points in relation to the Scottish Government’s 22 October letter and the written submissions presented by other stakeholders.  Following further consideration of the issues at their 15 January meeting, the Committee agreed to seek further comments from the Scottish Government on the further points raised by the petitioner and also to refer the petition to the Transport, Infrastructure and Climate Change Committee (TICCC), as part of their wider inquiry into Scottish ferry services.  The Scottish Government’s 22 February 2008 letter was made available on the Committee’s website.

At its 27 May meeting the TICC Committee members noted that they were not inclined to agree to the terms of PE1035.  The Committee agreed to close the petition and agreed that there may be a need to explore the issues with the Minister for Transport, and that some of the issues may arise in the course of their ferries inquiry.  The Committee took the opportunity at their 3 June meeting to discuss issues raised in the petition with the Minister for Transport.  Following that meeting the Committee agreed to seek from the Scottish Government written clarification about the timetable for an announcement on Gourock – Dunoon, and whether the EC investigation would had an impact on that timing.

An indicative timetable

It is not possible to provide the Committee with a firm date for an announcement being made on the Scottish Government’s plans for Gourock – Dunoon.  Ministers are however aware of the importance of reaching a decision about the way forward.  The Scottish Government acknowledge that the provision of the current Gourock – Dunoon ferry service was not tendered and that Cowal Ferries Ltd was not chosen in a public procurement procedure.

The Committee is aware that the European Commission launched its investigation into Scottish ferry services on 16 April 2008, and that they have indicated that they anticipate making a final decision by the end of the year.  The launch of this investigation has allowed the Scottish Government to re-engage with the Commission about proposals for the way forward.

The Minister has had an initial discussion with the Commission about the way forward for Gourock – Dunoon, and arrangements are in place for a further official level meeting to take place.

The Minister is currently considering appropriate mechanisms to take matters forward.  The Minister is however very aware of the urgency that is required on this issue and will ensure that arrangement for the way forward and further discussion with the European Commission are progressed as quickly as possible.

An announcement on future plans for the service will be made as soon as is practicable.

EC Investigation

The Scottish Government is committed to co-operating fully with the Commission’s investigation and is keen to fully engage with the Commission in developing proposals for a way forward that is in compliance with the Maritime Cabotage Regulation and State aid rules.  A decision and announcement on the way forward for the Gourock – Dunoon ferry service will however not be delayed, or be determined by the timing of the Commission’s investigation.  The Minister is aware of the need to reach and announce a decision on the way forward as quickly as possible.

The Committee will be aware that over the years the European Commission has taken a close interest in subsidy arrangements for Scottish Ferry Services, including Gourock – Dunoon.  The Commission made clear to Scottish Government officials last summer that there would be no further dialogue between the Commission and the Scottish Government until after the launch of their state aid investigation.  That decision left Scottish Government officials and Ministers in a position where they were unable to engage with the Commission on potential ways forward.  The European Commission’s investigation was launched on 16 April 2008, and they have indicated that they anticipate making a final decision by the end of the year.

Vice-President of the European Commission, and Transport Commissioner, M Jacques Barrot visited Scotland on 1 May to meet with the ferry operators and others.  The Minister had a useful exchange with the Vice President and took the opportunity to discuss the Gourock – Dunoon ferry service at that meeting.  It was agreed that further engagement with Commission officials would be helpful.  The Commission indicated that they would be prepared to offer input on this issue and arrangements are in place for a further official level meeting to take place shortly.

A decision and an announcement on the way forward will be made as soon as is possible and practicable thereafter.

Scottish Government

13 June 2008

LETTER FROM THE MINISTER FOR TRANSPORT, INFRASTRUCTURE AND CLIMATE CHANGE TO THE CONVENER – 19 JUNE 2008

As a follow up to my appearance before the Transport, Infrastructure and Climate Change Committee on 3 June 2008 I thought it would be helpful to provide some clarity on the issue of Public Service Contracts (PSCs) and Public Service Obligations (PSOs) in the maritime sector.  This was one of the areas I was questioned on by Rob Gibson MSP.

There have for some time been questions over the use of either or both PSCs and PSOs in delivering subsidised ferry services.  The previous administrations concluded that PSCs best met the needs for lifeline ferry services in Scotland.  Consequently PSCs are in place for the Clyde and Hebrides and Northern Isles ferry services. The Scottish Government considers that these contracts are compliant with the European Commission’s State Aid rules and maritime law.

The European Commission’s Maritime Cabotage Regulation make it absolutely clear that PSCs and PSOs are alternatives and that PSCs have a number of advantages in terms of the wider range of requirements that can be specified (in particular quality issues) and the fact that the contract will deliver a guaranteed service.  A key difference between a PSC and a PSO is that a PSC gives greater certainty that the ferry services will be provided over the prescribed period.  Under a PSO, an operator would be free to walk away from the route at any time.  In addition, a PSC allows Governments to specify a wider range of requirements than is permissible under a PSO.  In particular, a PSC allows the Government to specify matters related to the quality of the service provided whereas a PSO, under the European Regulation, is restricted to “requirements concerning ports to be served, regularity, continuity, frequency, capacity to provide the service, rates to be charged and manning of the vessel”.

A PSC is therefore more suitable to the Scottish Government’s purposes in seeking to secure the lifeline ferry services.  Reflecting on my evidence I suggest that in an attempt to provide greater clarity on this issue my evidence might be open to some misinterpretation.  When discussing PSOs I made mention of protecting the infrastructure – in that context I was referring to “the infrastructure” as the “network of services – the routes and timetables” – as opposed to “infrastructure” in the sense of “hard infrastructure” such as piers and harbours, vessels, linkspans, passenger waiting facilities etc.  I was trying to draw the distinction between the elements that can be included in PSOs as outlined above and contrasting that with the quality elements that can only be specified in a PSC.  My apologies if in my attempt to be helpful I didn’t make that clear.

Prior to my appearance before the Committee on 3 June I had given careful consideration to the applicability of PSOs in the context of the Gourock-Dunoon route as well as Scottish ferry services more generally.  Notwithstanding the reservations expressed above, but knowing the Committee’s interest we will continue to keep the legal position under review.  However the Scottish Government’s view is that PSCs best deliver the Scottish Government’s policy objectives.

To provide some further clarity to the Transport, Infrastructure and Climate Change Committee I also attach at Annex A to this letter, a more detailed note on the use of PSCs and PSOs in the maritime sector.

I make the further point that while the advice received from the European Commission is complicated, before proceeding with a way forward for the Gourock-Dunoon route the Scottish Government wants to be absolutely clear about the correct approach to be taken.

I trust this response is helpful and provides further clarity on these issues that I know are of interest to the Transport, Infrastructure and Climate Change Committee.

Annex A

INQUIRY INTO FERRY SERVICES IN SCOTLAND

PSCs AND PSOs

Article 4.1 of the Maritime Cabotage Regulation says:

“A Member State may conclude public service contracts with or impose public service obligations as a condition for the provision of cabotage services, on shipping companies participating in regular services to, from and between islands.” 

This very clearly states that public service obligations and public service contracts are alternatives.  Article 4.2 of the Regulation says:

“In imposing public service obligations, Member States shall be limited to requirements concerning ports to be served, regularity, continuity, frequency, capacity to provide the service, rates to be charged and manning of the vessel” 

Article 2.3 of the Regulation records that:

“A public service contract may cover notably:

- transport services satisfying fixed standards of continuity, regularity, capacity and quality,

-  additional transport services,

-  transport services at specified rates and subject to specified conditions, in particular for certain categories of passengers or on certain routes’

-  adjustments of services to actual requirements.”

From this, it is evident that a public service contract allows a wider range of factors to be specified, including the critical factor of quality, than a public service obligation.  This is made very clear in the Communication on the interpretation of the Maritime Cabotage Regulation published by the European Commission in December 2003.  Section 5.3.1 of this document says:

“Article 4.2 of the Regulation sets out an exhaustive list of requirements that may be introduced when “public service obligations” are imposed.  Article 2.3 of the Regulation provides only an indication of the scope of public service contracts; Member States may go further.  In practice, quality requirements are often part of “public service contracts”, but cannot be introduced as part of “public service obligations”.”

The Scottish Government wishes to maintain a high quality service, including the binding of operators to the vessels that have been purpose-built for the Clyde and Hebrides services and Northern Isles services, and this is only possible through a public service contract.

There is scope for confusion, given the different senses in which the word ‘obligation’ can be used.  The word can refer to the instrument or regulation used to impose the limited range of requirements permissible under a “public service obligation”.  However, it can also refer to the public service duties and responsibilities that are imposed on a contractor by means of a “public service contract”.  Any contract imposes obligations on the contractor and in the case of a “public service contract” these are the obligations set out in a “public service contract” that will generally include those factors set out in Article 4.2 and additional factors related to the delivery of the public service – such as quality – which are permissible only if a public service contract approach is used.  This point is illustrated well in an Answer given by the European Transport Commissioner in response to a Written Question (P-3802/06) on the subject.  The answer reads:

“Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) allows Member States to impose public service obligations on all operators on a given route to ensure sufficient service on that route where it appears that, if they considered their own commercial interest, operators would not propose an adequate level of services. These obligations may be imposed by regulation or, if this does not suffice to meet essential transport needs in an adequate manner, laid down by way of public service contracts. If necessary, financial compensation may be granted to operators to cover the costs involved in meeting public service obligations.

The imposition of public service obligations is therefore a precondition for any compensation being given.

Such compensation does not constitute State aid if complies with the criteria laid down by the Court of Justice in its judgment in Altmark.”

The key sentence is “These obligations may be imposed by regulation or, if this does not suffice to meet essential transport needs in an adequate manner, laid down by way of public service contracts.”  This clearly maintains the principle that imposing obligations by way of regulation (i.e. proceeding via a Public Service Obligation) and laying the obligations down by way of public service contracts are alternative, not complementary, routes.  For example in the case of the Clyde and Hebrides ferry services, the obligations that the contractor has had to accept were set out in the service specification for the tender and that were subsequently embodied in the contract that was signed with the operator, CalMac Ferries Limited.

There is, therefore no question of two documents or instruments - a Public Service Obligation, imposed by regulation, and a Public Service Contract - being required before subsidy can be offered.  As with any contract, the obligations can be set out in the contract itself.

June 2008

Transport, Infrastructure and Climate Change Committee

 Inquiry into Ferry Services in Scotland 

Note of visit to Gourock and Dunoon

Tuesday 11 March 2008

Background

As part of the Transport, Infrastructure and Climate Change Committee’s inquiry into Ferry Services in Scotland, the Committee agreed to hold three visits to see first-hand how particular ferry services operate.

Two members of the Committee, Shirley-Anne Somerville MSP and David Stewart MSP, visited Gourock and Dunoon on Tuesday 18 March 2008.  The purpose of the visit was to gather views from ferry operators on the provision of services, but also to hear specifically from those local community representatives with a specific interest in ferry services serving Gourock & Dunoon.

Shirley-Anne Somerville MSP and David Stewart MSP would like to thank all those ferry operators and community representatives who met with them.

Meeting with David MacBrayne Ltd. and CalMac ferries Ltd.

The delegation’s first meeting was at the headquarters of CalMac Ferries Ltd. in Gourock.  They met with the following representatives of David MacBrayne Ltd. and CalMac Ferries Ltd.:

• Peter Timms, Chairman, David MacBrayne Ltd.
• Lawrie Sinclair, Managing Director, CalMac Ferries Ltd.
• Phil Preston, Operations Operator, CalMac Ferries Ltd.
• Hugh Dan MacLennan, Communications Director, CalMac Ferries Ltd.
• Alex Lynch, Finance Director, CalMac Ferries Ltd.
• George Taylor, Technical Director, CalMac Ferries Ltd.
• Alan Moffat, Director, David MacBrayne HR (UK) Ltd.

The purpose of the meeting was to allow the representatives of David MacBrayne Ltd. and CalMac Ferries Ltd. to discuss a range of operational and policy issues with the delegation.  The following key points were raised during discussion:

Road Equivalent Tariff

CalMac will need time to get ticketing in place and for the Scottish Government to confirm mileages for each route.

CalMac will be meeting with Scottish Government officials to talk through the detailed arrangements for operation of the pilot.

RET will be an arbitrary amount which will be divorced from operating costs. It will therefore be difficult to develop a business case for new routes which might produce increased revenue.

Vessel replacement

There are difficulties in undertaking a vessel replacement programme, given the available budget.  Current budget is £5m-£10m per annum whereas one major vessel (such as that proposed for Islay) could cost up to £30m. Each major purchase can take up several years’ budget provision.

There are limited numbers of vessels available worldwide for charter.  Chartering of vessels would also have a consequential impact on subsidy.

Caledonian Maritime Assets Ltd (CMAL) is developing a 10-year strategy with CalMac which could involve the replacement of one large vessel and several smaller vessels.

The current CalMac fleet should ideally be replenished with one new vessel a year.

Timetables/routes

Current contract requires CalMac to seek approval from the Scottish Government to change timetables or routes. Any such proposals must undergo full consultation and a fully costed business case presented.

Whilst CalMac gives all timetabling requests serious consideration, they are not always realistic or practical.  CalMac has made significant efforts to “maximise the day” to meet the needs of users.

The Working Time Directive limits the availability of crews to work longer hours to provide more frequent or late evening services.  There is also a lack of suitable lodging facilities on all islands. Some vessels do not themselves have suitable facilities on board.

There is a shortage in the UK of marine staff. CalMac is now recruiting trainee staff itself.

Gourock/Dunoon

Service is currently restricted to one per hour, but is allowed to run two additional passenger-only services in the morning and one in the afternoon.

Subsidy is for passenger traffic only.

Awaiting Scottish Government view on how service will continue in the future. 

Integration with other modes of public transport

Ferry/rail/bus timetables change at different times of the year and are out of synch.

ScotRail franchise does not allow for delays.

There are also different Commissioners for each sector who take different approaches.

An agreed timetable change with ScotRail to provide more co-ordinated services would take around 3 years to introduce in practical terms.

Public engagement

Regret the demise of the Shipping Service Advisory Committees (SSACs) which seemed to work well and were valued by all of those who participated.  The current Tier 1 and Tier 2 arrangements that are managed by the Regional Transport Partnerships (RTPs) appear to be less effective in terms of the level and quality of engagement.  These arrangements do not appear to be fully meeting requirements in terms of community input.  It is early days as only one round of Tier 1 meetings have taken place.  The first Tier 2 meeting takes place on 1 July 2008.

The various communities served by ferries have different demands of the service structure (e.g. Arran users would prefer to see the ferry based on the island, whereas those on Mull would prefer the ferry to be mainland-based).

There can also be differences of opinion between ferry user groups and others representing different parts of an island who may have competing priorities. This can result in difficulties in co-ordinating representation for an island.

Tourism

Co-ordination between transport and tourism is far from ideal. Tourism bodies are regularly involved in reorganisation. CalMac promotes its services to the tourist market, primarily in Scotland, which works well.

40% of CalMac traffic is estimated to come from tourism.

CalMac has formal links with VisitScotland and with other organisations in the tourism sector (e.g. National Trust for Scotland).  CalMac continues to proactively develop these links.

Meeting with community representatives from Gourock & Dunoon

The next meeting was held at the Queen’s Hall, Dunoon with the following representatives of local community groups in the area:

• Anne Gabriel, Chair, Dunoon Community Council
• Norma Murray, Chair, Sandbank Community Council
• Magaret Doaks, Vice-Chair, Gourock Community Council
• Ronnie Smith, Treasurer, Dunoon Community Council & Pier Pressure Group
• Gordon MacInnes, Dunoon Community Council
• Irene Pratt, South Cowal Community Council
• James Donaldson, Pier Pressure Group  

Ferry users in the Cowal area welcome the fact that there is competition on the Gourock-Dunoon route – a monopoly would have a negative impact on prices.

CalMac is at a disadvantage due to the terms of its contract and whilst Western Ferries offers a good service, they don’t have the same operational restraints.

Dunoon needs to be regenerated, and ferries are important component in this.

Essential that a service is available from town centre to town centre.  The alternative would be to put pressure on roads, which are not ideal for HGVs and buses.

The market for leisure and recreation activities will increase in the next 50 years.  The Cowal peninsula has wonderful facilities, but people need to be brought in.  Integrated planning is required between transport and tourism bodies, HIE etc.

Essential that new vessels are provided that are able to make use of the new linkspan.  It is infuriating that local people had to put up with the disruption caused by its construction, but it cannot be used.  The opposite situation applies in Rothesay where they have a suitable vessel but an inadequate linkspan.

Hydrofoils may be a useful addition to the route, but these may not be robust enough and could not be the only link.  Hydrofoils would also not be accessible by those in wheelchairs, families with buggies and those with mobility issues.

Integration with buses and trains is absolutely critical; many users rely on these connections for hospital visits etc.  However, efforts to influence integration via letters to CalMac, Scotrail etc. have failed, with no responses received.

A mechanism needs to be developed to ensure there is effective community engagement.

In Gourock, the trains come in at the farthest point from the ferry terminal – this can be problematic for elderly people and those with young children. The rail operators appear unwilling to resolve this issue. 

CalMac Vessels are past their sell-by date, although they are more robust than those operated by Western Ferries.  CalMac vessels are also more accessible and have better facilities.

Local users are not encouraged by the Minister’s suggestion of a passenger only vessel – the economics of running a Gourock-Dunoon service requires the carriage of vehicles.

A Deloitte Touche report supports this view.  It states that if the CalMac vessel did not carry vehicles, the service would lose £600k in operating costs.  Carrying vehicles provides a surplus of the same amount – a £1.2m difference in total.

Since changes were made in favour of a joint vehicle/passenger service, vehicle traffic has increased beyond Deloitte Touche estimates.  Interest rates have also declined since the report was published, again favouring the carriage of both passengers and vehicles through reduced operating costs.

Concern that CalMac’s operations on the route have been restricted since 1982 and carried on by successive Governments.  The stated purpose for these restrictions at the time was to ensure the profitability of Western Ferries.

The Government should have an obligation to provide a service. Cowal residents feel that they are being ignored and that those who make decisions on the ferry service are unaware of the situation on the ground. Cowal is to all intents and purposes an island.

More advance information is required of ferry cancellations – perhaps using the gantry on the Erskine Bridge, or providing information on trains. A lack of imagination is shown in this regard – other countries appear to have better information systems.

There is a need to look at ways to remove barriers and restrictions caused by the ferry contract and EU law.  The 1982 frequency restrictions were brought into safeguard the position of Western Ferries.  They had nothing to do with EU law or maritime regulations which only came into effect in 1992.

EU law is now used as an argument i.e. that the CalMac subsidy breaches EU law if they extend services and a private operator would be disadvantaged.

Carrying passengers is a “social need” and Government could extend services if legal requirements can be met and any subsidy doesn’t “over-compensate” or undercut commercial rivals.

The restrictions on the current CalMac operation mean that the subsidy results in the service being run in an uneconomic way.

Current timetabling favours Western Ferries, which has almost 85% of vehicle traffic.  Longer operating hours by CalMac would be beneficial.

Correspondence between the EC Commissioner and Alyn Smith MEP suggests the provision of a subsidy for a joint vehicle/passenger service between Gourock-Dunoon would be acceptable. This correspondence also indicates that whilst the Commissioner understands why the current restrictions have been imposed, he can see no requirement under EU law to do so.

PSOs are not in place in Scotland with regard to ferries and perhaps they should be where subsidies exist.

Meeting with Western Ferries Ltd.

Current ferry network

Within CalMac’s current network there are several routes, which could be operated on a non-subsidised basis now; with others which could be improved and made profitable over time.

Acknowledge, however, that there are some routes that will never be able to provided on a non-subsidised basis.

The current bundling of routes acts as a significant barrier to competition and innovation. Furthermore this monopoly is protected by millions of pounds of taxpayers’ subsidy.

Gourock-Dunoon

Western Ferries is a private company, but one which is community focussed. It has been in Dunoon for 36 years, makes almost 32,000 sailings annually and provides spin-off benefits to the local economy.

Western Ferries has no problem with two companies operating services between Dunoon and Gourock on a level playing field. 

Western Ferries genuinely concerned that CalMac’s vehicle service is being subsidised. The cost of providing the combined service exceeds that of a passenger-only service by millions of pounds.

Western Ferries’ can show that CalMac’s current vehicle service is being unfairly subsidised. As far back as 1982, consultants advised of the potential illegality of this situation.

Increasing the frequency of CalMac’s vehicle service could only be achieved by increasing the subsidy requirement which would consequently undermine Western Ferries’ business. Why misuse public money on the Clyde subsidising a service that has to be provided on a non-subsidised basis when it should be used to support genuine lifeline services serving remote island communities.

Road Equivalent Tariff

RET will be difficult to remove after pilot as expectations will have been raised and all ferry users will want the same benefits. It is a good news story but will cost huge amounts of money. RET will shroud the commerciality of any route.

Concern that CalMac fleet may not have the capacity to cope with increased demand from a network wide roll out of RET fares.  Would like to know if the Scottish Government will look to other companies to fill any supply gap – opportunities to provide RET-type services on a long-term basis should be open to any operators.

Integration with other modes of public transport

Western Ferries would be keen to engage in discussions on integrated ticketing, but Transport Scotland has not made an approach. 

Westerns Ferries integrates well with local Dunoon bus company. Recently it arranged emergency buses for stranded foot passengers in Dunoon/Inverclyde. The buses were needed due the suspension of CalMac’s service due to industrial action and adverse weather conditions.

Future development of ferry services

Western Ferries wants to ensure that if it chooses to develop services on other routes will be treated fairly and competition will be on a level playing field.

The current reality is that private operators will find it difficult to start new routes if CalMac/Northlink are given increased subsidies to make up any shortfall in revenue lost to competition. If better services can be provided to islanders, then the market must be opened up. Private ferry operators are astonished that CalMac makes a loss on every route when some routes could and should be making a profit.

Routes where there is no prospect of operating on a non-subsidised basis should be supported to the hilt (e.g. Colonsay), with the non-subsidised and potentially unsubsidised routes opened up to competition.

The current network should be fundamentally reviewed with a view to determining how best to provide services to meet the requirements of communities.

Concern is about the lack of transparency in regards to how tax-payers funds are spent.

Transport, Infrastructure and Climate Change Committee

Inquiry into Ferry Services in Scotland 

Note of visit to Arran

Monday 17 March 2008

Rob Gibson MSP and Charlie Gordon MSP visited Arran on behalf of the Committee and held meetings at the Auchrannie House Hotel with the following representatives of Arran residents with an interest in ferry services:

First meeting

• Councillor Margie Currie

Second meeting

• Ken Thorburn, Chair, Isle of Arran Ferry Committee
• Campbell Laing, Chair, Arran Community Council
• Jim Nichols, Arran Council for Voluntary Services
• Alison Bilsland, Arran Branch Red Cross
• Alastair Dobson, VisitArran
• Colin Turbett, North Ayrshire Council Social Services

Third meeting

• Angus McLeod, North Ayrshire Council, Roads and Waste Management Local Officer
• Liz Robertson, Arran Branch NFUS
• Steve Kirk, Stagecoach
• Donald Bannatyne, Arran Haulage
• Richard Small, Auchrannie House Hotel

The two members met with journalists from the Arran Banner and the Arran Voice newspapers at the conclusion of the meetings. In addition, Kenneth Gibson MSP attended some of the meetings in his capacity as the member for Cunninghame North.

Rob Gibson MSP and Charlie Gordon MSP would like to thank those residents of Arran who met with them, and to North Ayrshire Council for facilitating the meeting.

The service to Arran

Arran is connected with the Scottish mainland by two Caledonian MacBrayne ferries:

• Brodick to Ardrossan, Ayrshire, from the east coast of the island.
• Lochranza to Claonaig, Argyll, from the north of the island (summer only).

The MV Caledonian Isles serves the Brodick to Ardrossan route and has a capacity of 110 cars and 1000 passengers. The crossing takes 55 minutes. Since 2005 the peak summer service has been supplemented by MV Saturn. In adverse weather MV Caledonian Isles can be delayed or diverted to Gourock.

The MV Loch Tarbert serves the Lochranza to Claonaig route and has a capacity of 17 cars and 142 passengers.

For the first time during Winter 2007-08, the Summer timetable for the Brodick to Ardrossan route continued virtually unchanged with 5 sailings a day from Ardrossan to Brodick and back (with an additional Friday evening sailing during the Summer and 4 sailings a day on Sundays).

Points raised during the meetings

At the start of each meeting, the members of the Committee outlined the purpose of the visit to Arran and invited the attendees to provide comments on issues related to the Arran ferry service. The comments made included the following views:

Reliability of service in bad weather

A theme which emerged from the comments of many of the attendees was the problems affecting the service from Ardrossan to Brodick during bad weather. This seems to have been a particular issue during Winter 2007-08 when there were a number of ferry cancellations. One attendee told the members that 31 sailings had been cancelled in December 2007, 21 in January 2008 and 41 in February.

[Offical figures from Caledonian MacBrayne²¹⁵ indicate that 37 sailings were cancelled in December 2007 and 35 in January 2008.]

A number of attendees explained that the majority of bad weather cancellations were due to the inability of the ferry to dock at Ardrossan, rather than because the vessel could not operate in rough seas. ie the problem related to the docking facilities at Ardrossan. It was also noted that in recent months the ferry only infrequently used Gourock (its ‘port in a storm’) when it could not operate from Ardrossan.

Other points raised were:

Timetables and type of vessel

A smaller and more powerful vessel might be able to cope better with the conditions at Ardrossan

Using two ferries on the Ardrossan to Brodick route might increase the flexibility and frequency of services. It might also reduce the need to book ahead to secure a car berth on the ferry.

The extension of the Summer timetable to the Winter was broadly welcomed. It was thought it might allow Arran residents to spend the working day on the mainland.

Infrastructure

The view was expressed that it might be more economic to invest to upgrade Ardrossan harbour rather than to spend money in order to move the port away from Ardrossan.

A new link span is needed in Brodick – the current one is nearing the end of its life (which is approximately 25 years).

A number of attendees felt that the port facilities in Ardrossan should be upgraded by Clydeport.

Integration with other modes of transport

Concern was expressed by a number of attendees that if a ferry was delayed arriving in Ardrossan, the connecting train to Glasgow did not wait. Instances have been reported of trains pulling away from the platform at Ardrossan, even if passengers have reached the platform but had not yet boarded.

There was a lack of a bus service running to the harbour at Ardrossan.

Impact of cancellations of services

VisitArran and other organisations have been struggling with the impact of ferry cancellations. Continuity of service was vital to the success of tourism in Arran. The perception that the ferry service was vulnerable to cancellations was damaging tourism on the island.

Attendees reported that problems with the ship docking at Ardrossan meant that farmers sometimes had difficulties taking their products off the island. The view was expressed that Arran was being held back by the inability to solve problems with the reliability of the service.

Other comments

It was felt that competitors to CalMac were unlikely to materialise on the Ardrossan to Brodick route.

Some attendees suggested that CalMac’s goals for the Ardrossan-Brodick service differed from those of the Arran community: CalMac wished to maximise the number of passengers carried on each service, whilst the community wished a range of services to be run throughout the day.

Lines of communication with CalMac can sometimes be poor, according to some attendees, with instances being reported, for example, of CalMac not responding to correspondence.

The view was expressed that young people on Arran find ferry fares expensive and this affected their ability to go on day trips from the island.

It was suggested by some attendees that CalMac had an inflexible attitude to businesses, for example, in relation to the advertising of local businesses on board the Ardrossan-Brodick ferry.

A lack of reliabilty of service, and capacity on board the boats meant that it was sometimes difficult to bring material to the island for road repairs.

Transport, Infrastructure and Climate Change Committee

Inquiry into Ferry Services in Scotland

Note of video conference with representatives from Tiree

Tuesday 22 April 2008

Background

On Tuesday 22 April 2008, members of the Transport, Infrastructure and Climate Change Committee held a series of video conferences with residents on the Western Isles of Scotland as part of the Committee’s inquiry into ferry services in Scotland.

One of the video conferences was held with representatives of the Tiree Trust, Tiree Community Business and Tiree Rural Development. The Committee spoke to the following representatives:

• Catriona McLennan, Tiree Community Business
• Kirsty MacLean, Tiree Trust
• Alastair McInnes, Tiree Rural Development Ltd

The Committee is grateful to these representatives for taking the time to speak to the Committee.

Points raised during the video conference

Ferry routes

The view of participants was that the services operating during the summer time were far better than the winter timetables which are completely unsuitable. The best route was from Oban to Tiree and Coll. It was suggested that Tiree should be linked to Tobermory, which would also benefit tourism and business interests.

During the winter months the ferry services only run 3 days a week which invariably means there is insufficient capacity and also, if travelling to the mainland, one is away from the Island for 5 days. This also means that school children cannot get home at weekends.

Communication with CalMac

Participants felt that lines of communication with CalMac were poor. It was stated that it had been 5 or 6 years since CalMac had been to the island to meet Tiree ferry users. The feeling was that CalMac were previously reluctant to talk to ferry users because of the tendering process. Currently there is no formal means of communication and it was thought that it would be helpful if a consultative committee could be set up to encourage more effective communication between ferry users and CalMac.

Timetabling and vessels

As previously stated, during the winter months there are only sailings three times a week. Concerns were raised that services are operated to suit the needs of the operators rather than users, an example being where the Clansman relief vessel was taken away and replaced with the Lord of the Isles vessel which was not suitable for island ferry users.

Changes between the summer and winter timetables made it difficult for hauliers as it is a complicated process to change the days of the week in which they travel.

Hauliers would also find it useful to have more facilities on board vessels and to have access to meal vouchers that are available on some other routes.

Capacity

During the summer in peak time there are problems with capacity. This problem is compounded by CalMac’s inadequate booking system. Block bookings are made by hauliers who often do not show up. CalMac do not impose any penalties for unused bookings and therefore there is no incentive to inform CalMac if you no longer intend to travel. Therefore the ferries appear full according to the booking system and passengers are put on a waiting list, but in reality the ferry is not full and passengers wishing to travel could have been allocated a space on the ferry. There are also no statistics to show how many passengers are unable to get on ferries which, if available, might better inform CalMac.

Improving air services versus ferry services

Improvements in both services would be welcomed however the point was made that improved ferry services are vital for the transportation of livestock and foodstuffs in bulk.

Road Equivalent Tariff

It was felt that the introduction RET was not well thought out and the period of the pilot too long. There was also concern that regular ferry users were losing other discounts and, as a result, tourists would benefit more from the scheme rather than islanders. However, that said, Tiree was pleased to be part of the scheme but it could have implications for capacity given that vessels are already at capacity during the main tourist season.

Transport, Infrastructure and Climate Change Committee

Inquiry into Ferry Services in Scotland 

Note of video conference with residents of Barra and Uist

Tuesday 22 April 2008

Background

On Tuesday 22 April 2008 members of the Transport, Infrastructure and Climate Change Committee held a series of video conferences with residents on the Western Isles of Scotland as part of the Committee’s inquiry into ferry services in Scotland.

One of the video conferences was a dual video conference held simultaneously with residents of Uist and Barra. The Committee spoke to the following representatives:

• Hugh Douglas, Barra Community Council
• Hector MacNeil
• Hugh Francis, Uist
• Morag MacKinnon, Uist
• Cllr Martin Taylor, Comhairle nan Eilean Siar, Uist

The Committee is grateful to these representatives for taking the time to speak to the Committee.

Points raised during the video conference

Ferry routes

One of the major issues which emerged during the video conference was the proposed establishment of a ferry route from Lochboisdale in South Uist to Mallaig, rather than the current route to Oban.

Views differed between the residents of Uist and Barra. The view of residents of Uist was that there were significant disadvantages to the current Barra / Lochboisdale to Oban service, including:

• Long journey time (up to 7 hours)
• A lack of suitable facilities onboard the ship for long crossings, which was particularly a problem for families with young children
• Poor onward transportation links in Oban, including lengthy waits for trains with no left luggage facilities at the railway station
• Bad weather sometimes meant lengthened journey times with ferries as a result sometimes arriving very late at night or early in the morning (an issue for young people travelling alone)

The Uist residents felt that the current route with its long journey time was hindering the economic development of their community, and they supported the establishment of a Lochboisdale to Mallaig route. If the current Oban route was to continue then it should be on the basis of a daily service.

The views of the Barra representatives differed. They expressed a strong desire that the current route from Barra to Oban should continue and warned of ‘uproar’ in Barra if the route was moved to Mallaig. They felt that a Mallaig route would be ‘a non-starter’ for the people of Barra. Their preference was for an independent route serving Barra in and out of Oban, although they would be willing to consider the possibility of a service which also stopped at Tiree.

The Barra residents expressed the view that the current joint service with Uist did not serve either communities particularly well. They told the Committee that some services arrived in Oban after 11pm and this could lead to difficulties finding affordable accommodation. Often Bed and Breakfast accommodation in Oban would not accept guest who arrived so late in the evening.

Communication with CalMac

The participants from Barra praised the helpfulness and professionalism of the individual ferry crews, but felt that lines of communication with senior CalMac staff were not as good. The view was expressed that some CalMac staff did not have a particularly good knowledge of the realities of island life. It was felt that if the headquarters of CalMac were moved from Gourock to one of the islands, the organisation might be more responsive to islanders’ needs. The residents of Uist felt that senior CalMac staff had been willing to listen to their concerns, but that there had been no real improvements to the service as a result of their input.

Integrated transport

Instances were reported of both trains and ferries not waiting for passengers on late-running connecting services.

Road Equivalent Tariff

It was felt that the introduction RET might help the residents of both Uist and Barra. Some concern was raised by the Uist participants that RET may cause capacity problems on sailings, but it was argued that these problems could be alleviated by additional sailings. The Barra residents were less concerned about capacity, as it was felt that constraints on the availability of accommodation on the island would restrict any increase in demand caused by RET. It was noted by Barra residents that whilst RET appeared at first glance to be an attractive proposition, current discounts for certain ferry users would be lost when it was introduced, and this might affect whether or not islanders gained under RET.

Transport Scotland

The Barra participants reported positive experiences dealing with Transport Scotland.

Transport, Infrastructure and Climate Change Committee

Inquiry into ferry services in Scotland 

Note of video conference with representatives from Lewis

Tuesday 22 April 2008

Background

On Tuesday 22 April 2008, members of the Transport, Infrastructure and Climate Change Committee held a series of video conferences with residents of the Western Isles of Scotland as part of the Committee’s inquiry into ferry services in Scotland.

One of the video conferences was held with the following representatives from Lewis:

• Mary Ann MacIver, VisitScotland
• Donald Murdie, Scottish Crofting Foundation
• Duncan MacInnes, Western Isles Fishermen’s Association
• Cllr Donald MacSween, Vice-Chair, Transportation Committee, Western Isles Council
• DR Macleod, Haulier

The Committee is grateful to these representatives for taking the time to speak to the Committee.

Points raised during the video conference

Ferry routes

It was suggested that inter-isles services were not particularly well integrated.  Fine tuning was required to allow these links to be used (e.g. between Eriskay and Barra). Tweaking is all that would be required to allow commercial operators to increase efficiency, without leading to increases in costs.

Representatives were not convinced that the use of alternative routes (e.g. through Uig-Tarbert) is ideal due to the poor roads infrastructure, although they would like to see a more regular sailing between Harris and Skye.

There is a need to look afresh at routes and to develop “smarter thinking” about how ferry services are delivered. There was a need to develop innovative ways of connecting with the mainland to ensure that islanders did not feel excluded. A visionary approach was required to help serve islands in the future. However, doubts were expressed about how CalMac would respond to such new thinking.

It was considered essential that the Lochboisdale-Mallaig route was developed as it would bring economic benefits, particularly to the fishing and tourism industries.  The use of Oban was not an option as other islands have to be serviced.

Communication with CalMac/Consultation with ferry users

A suggestion was made that the CalMac HQ should be based on one of the islands, on the basis that this would concentrate minds to an island perspective and would deliver an economic boost to the island chosen.

It was felt by some participants that the new arrangements for consultation with ferry users managed by the Regional Transport Partnerships were not as effective as those that were in place previously. Further thought need to be given as to how consultative mechanisms should operate.  Also, the way in which CalMac responds to demands needs to be examined.

Timetabling and vessels

Where possible, vessels should be island-based as opposed to mainland ports.  This would bring a sense of confidence to island communities.

It was suggested that CalMac should look further afield to identify opportunities to lease suitable vessels.

The current vessel serving Lewis is not fit for purpose in winter months. It would also be prudent to look at how vessels can be designed to suit Scottish weather conditions, taking into account good practice in design elsewhere in the world.

Interest was expressed in procuring smaller, faster vessels. Pentland Ferries’ new catamaran was a good example.  It was suggested that catamarans may not be as weather dependent as may have been believed.  They can be fast, more fuel efficient and greener.

There is a need to acknowledge that there is a need to be more flexible in relation to services in the summer and winter months on some routes.

Integration with other public transport

Participants said that there was a clear need for improved integration with bus and train services and, if this did occur, it would do nothing to convince people to leave their cars behind.

Improved integration would help encourage tourism amongst those who use concessionary travel. It was also opined that there was a strong case for extending concessionary travel to cover ferries. 

Competition

Concern was expressed by one representative that CalMac has a monopoly on the vast majority of routes.

A previous attempt at running a privately operated freight vessel to Lewis worked well, until CalMac responded by putting on their own freight vessel, something they had said they were not prepared to do previously.

Road Equivalent Tariff

RET has been introduced on island-mainland but not on inter-island services.  The view was expressed that this would affect the commercial viability of some island-based producers and would distort the findings of the pilot.

The RET pilot falls short of what Western Isles Council had been looking for in terms of the rates which will apply. All the pilot does is bring the Western Isles closer to parity with Orkney and Shetland.  The Western Isles have been paying more than the Northern Isles in equivalent terms for many years. 

In addition, various discounts are being removed, such as that which applies.  to hay and livestock producers (who don’t currently pay for the empty leg of a return journey) and a 15% volume discount for hauliers.  The understanding is that all such rebates will be removed and, if so, savings will be reduced and it could perhaps be more expensive under RET.

Concern was expressed that such anomalies had not been properly addressed in the development of RET and that there was a need to do so to ensure that commercial operators are not disadvantaged.

There was also concern about capacity issues, given that there are unlikely to be any new vessels for some time and certainly not to address any increases which become evident during the pilot.  It was therefore foreseen that there might be problems in responding to any significant increase in use.

It is, however, hoped that RET will bring similar benefits to those brought by the Air Discount Scheme, which took a year to kick in abut has been hugely successful in terms of economic growth.  The hope was expressed that CalMac would rise to the challenge.

Capacity

On capacity more generally, it was suggested that some issues could be resolved by increasing the number of sailings on certain routes.

The CalMac booking system can also cause problems, with many customers told that a particular service is fully booked when in reality it is not.  Failure to reallocate places that are block booked and then not taken up appears to be part of the cause of these difficulties.  CalMac don’t keep statistics on those who are told in error that the vessel is fully booked which, if they were collected, would assist in identifying the scale of the problem.

Tourism also impacts on capacity, with booth the Ullapool and Uig routes almost always full in the summer months.

RET will also make it more difficult for private operators to introduce services. 

Transport, Infrastructure and Climate Change Committee

Inquiry into Ferry Services in Scotland 

Note of visit to north of Shetland

Tuesday 29 April 2008

Background

On Tuesday 29 April 2008, the day after a committee meeting in Lerwick, Patrick Harvie MSP and Rob Gibson MSP travelled to the north of Shetland to speak with local residents about their experiences of ferry services and to see first hand inter-island ferry services in operation.

The two committee members are grateful for the assistance of Ken Duerden, Transport Development Manager at ZetTrans, for facilitating this visit, and to the local representatives who took the time to meet with them.

Travel to meeting

The two members travelled on a number of ferry services in the north of Shetland, including the ferry from the Shetland mainland to Yell and on the ferry serving Yell, Unst and Fetlar. The members had the opportunity to visit the bridge of each ship and to speak with ferry staff onboard.

The Shetland Island Council website contains useful information about the history of ferries in Shetland, ferry routes, the fleet, timetables and fares.²¹⁶

The members held an informal meeting in Cullivoe Hall in Yell which included a discussion with the following community representatives:

• Dan Thompson, Yell Community Council Chair
• Robert Jamieson, Yell Community Council Vice Chair
• Laurence Robertson, Unst Community Council Chairman
• Pat Burns, Unst Community Council
• Cllr Robert Henderson, Northern Isles Ward, Shetland Islands Council

Points raised onboard ferries and during the meeting

At the start of the meeting in Cullivoe, the Convener outlined the purpose of the visit and invited the attendees to provide comments on issues related to the ferry service in the north of Shetland. The comments made at this meeting, and by staff onboard the ferries, included the following views:

The social dimension to ferry services

A key point which emerged during the discussion was the role which ferries played in supporting the survival of communities in the islands of the north of Shetland. Ferries formed just one part of a package of measures which were necessary to promote the health of communities.

In particular, it was felt it was crucial to retain young people on the islands. It was noted, however, that the costs faced by young people who regularly travelled to and from the Shetland mainland were significant. This was a disincentive for young people to stay on the outerlying islands. It was noted that some young single parents had to move away from the islands for financial reasons. The representatives expressed the view that ferry services should allow island residents to commute easily to the Shetland mainland.

It was felt that there was a need for more qualified workers to move back to the islands in the north of Shetland and this could only happen if a range of different jobs were available for different skills.

Despite concern at the future of more remote communities, there appeared to be a general acknowledgement that the internal ferry services in Shetland were of a generally high standard, with service frequencies and hours of operation that compared favourably with services in the Clyde and Hebrides. One of the issues faced by the local authority was considered to be maintaining the current standard of ferry services in the face of new financial pressures.

Tourism

A second theme which emerged was the need to attract visitors to Shetland, and in particular to the outlying areas of Shetland. The high cost of travelling to Shetland for visitors was noted. The members were told that in some cases it could be cheaper to travel from Glasgow to New York than from Glasgow to Sumburgh.

Other points raised were:

Equity

The Government’s policy of removing tolls from all Scotland’s bridges was noted. Some representatives wondered why this principle could also not apply to ferry fares, and that ferry services should be seen as ‘bridges’ to local communities.

NorthLink

The ‘friends and family discount’ which had been introduced on NorthLink services was welcomed, but it was noted that this did not apply to cabin bookings, which could represent a significant proportion of the overall fare.

In peak times it was felt that there was a shortage of cabins onboard, although it was acknowledged that additional cabins had been made available onboard the ships. The members were told that it could be cheaper to book a 4 berth cabin than a 2 berth cabin, and it was suggested that this anomaly did not help overall capacity on the boats.

Some attendees noted that a situation sometimes arose whereby passengers booked cabins for the Aberdeen to Orkney leg of the journey to Lerwick, but these were unoccupied after Orkney. The attendees suggested that there was not currently a mechanism for reallocating these cabins to other passengers, and it was felt that this would be useful.

There seemed to be a consenus among attendees that Aberdeen was the most suitable destination for NorthLink serves, despite the limitations of its harbour.

Fixed links

Fixed links were seen by many of the representatives as the ultimate solution to the question of how to access more remote islands. Although significant expenditure would be required in the short term, savings would be made in the long run, as ongoing expenditure on ferry services would no longer be required. The establishment of fixed links would provide an economic boost to communities.

The members were told that a study was being undertaken to investigate the possibility of a fixed link to Bressay, and initial findings suggest that over a 60 year period a tunnel or a bridge would both prove more economic than maintaining the current ferry service.

Other comments

The members were told that the bus timetable meant that it was not possible for residents of some of the outerlying islands to catch the first flight of the day out of Sumburgh. An overnight stay in Lerwick is necessary, and this had tourism implications because tourists did not stay an extra night in Unst.

 Transport, Infrastructure and Climate Change Committee

Inquiry into ferry services in Scotland 

Meeting with Trade Union representatives in Shetland

Tuesday 29 April 2008

Background

On behalf of the Committee, Cathy Peattie MSP and David Stewart MSP held a meeting with the following representatives of Trade Unions with an interest in ferry services at the Islesburgh Centre, Lerwick:

UNITE (TGWU section)- Shetland Isles Council ferries representatives

• Ian Nicholson, Yell Sound
• Calum Smedley, Whalsay
• John Polson, Out Skerries

RMT Western Isles – CalMac Ferries Ltd. workers’ representative 

• George Lonie

RMT – NorthLink Ferries Ltd. workers’ representative

• Andy Gordon

The purpose of this meeting was to allow the trade unions representing workers on NorthLink, CalMac and Shetland Isles ferries to raise issues related to the inquiry with Committee members.  This note records the key points raised by the trade union representatives.

Cathy Peattie MSP and David Stewart MSP would like to thank these Trade Union representatives who met with them.

Points raised during the meeting

NorthLink services

The representative of NorthLink workers pointed out that for the Aberdeen – Orkney leg of the service, 4 engines are used at full speed (25 knots) with an arrival time of 11.45pm. It was suggested that it would be better to depart earlier and arrive earlier which would allow a reduction in the fuel used.  The current timetable is an issue of concern for the workforce – resulting in a lack of rest time, fragmented sleep patterns etc.

The tender contract stipulates the timetable and hauliers have a big say in timetabling. It was claimed that the terms of contract limits flexibility.  By way of an example, it was said that there have been occasions where there has been a refusal to put the vessel gangway back for passengers who arrive late and that there was more flexibility under P&O in such circumstances.

NorthLink services are often not cost-effective in winter e.g. picking up one car and a few passengers in Orkney. 

It was also claimed that NorthLink has created an additional tier of management at a cost of £500k, at the same time as there is a requirement for more operational staff on its vessels.

On additional service activity, it was stated that there had been an attempt to run a service Shetland-Orkney-Norway but the representative was unsure as to whether it was viewed as being commercially viable.  P&O also used to run mini-cruises but these have now gone.

It was suggested that there is a need to look at improvements to Aberdeen harbour to ensure access in bad weather.  Surveys are currently being undertaken. The Harbour Board take the decision to close the harbour to avoid the risk of a vessel grounding at the harbour entrance. Rosyth is available as a back up. 

CalMac services

The representative of CalMac workers made several comments in relation to the Stornoway-Ullapool service specifically and CalMac services more generally.  He said that there were also concerns about timetabling and there was a need for greater integration with public transport

He stated that the tendering process had been a cause for concern, involving high and unnecessary costs and providing uncertainty for the workforce.  He indicated that an unpublished KPMG report in the 1980s had concluded that a private operator could not provide the services on a value for money basis.

The view was expressed that although Compulsory Competitive Tendering process had been removed for local government, there were similarities with regard to the tendering process for ferries, in that it had to be carried out even if there was little commercial interest.  If successful in tendering, private operators would be forced to reduce wages, offer poorer working conditions etc. to make routes profitable.  This would have a significant impact on the economy of the Western Isles as 70% of the workforce of CalMac is from that area. It was suggested that routes can only be run with a subsidy and it would be impossible to do so without this.

CalMac could be more realistic in its approach, tweaking timetables on winter routs to make them more economical e.g. 2 sailings a day to Stornoway.  There was a need to look at timetables afresh to achieve best value.

On RET, it was stated that anything that can be done to reduce costs for islanders is to be welcomed.

Regardless of who provides the service it’s important to make the subsidy work.  Ferries are important to and impact on the whole of Scotland.

Inter-island ferries

The Shetland Isles representatives advised members that one new vessel had been added to the fleet which had increased capacity and made a big difference, particularly in relation to tourism.

The view was expressed that the vessel replacement programme is not co-ordinated e.g. the Yell ferry has been upgraded but others have not, which can lead to bottlenecks where users have to travel on more than one ferry to complete their journey.

Populations of the small islands are declining because of costs.  There is a cost premium on everything – travel, fuel, food etc. An example was given of a typical ferry user, with one of the smallest, most economical cars, who pays £180 per month on ferry fares.  This is a major problem for those on low wages.

The costs of running the ferry services are huge.  Of the alternatives, the view was expressed that a bridge to Bressay would be closed more than it would be open; a tunnel would be workable but expensive.

It was opined that RET wouldn’t work with regard to Shetland or Orkney inter-island services, therefore an alternative would need to be considered to provide parity with ferry services elsewhere. A flat rate discount would be an alternative.

The ferries in Orkney are more expensive, but seem to run at a profit and with less commuter traffic

Transport, Infrastructure and Climate Change Committee

Inquiry into ferry services in Scotland

Meeting with Community Council representatives of the Small Isles, Shetland 

Tuesday 29 April 2008

Background

On behalf of the Committee, Cathy Peattie MSP and David Stewart MSP held a meeting with the following Small Isles, Shetland Community Council representatives with an interest in ferry services at the Islesburgh Centre, Lerwick:

• Donald Robertson, Dunrossness Community Council
• Frank Miller, Bressay Community Council

The purpose of this meeting was to allow community representatives from the Small Isles to make members aware of their views about the internal and external ferries serving Shetland. This note records the key points that were raised.

Cathy Peattie MSP and David Stewart MSP would like to thank these Community Council representatives who met with them.

Points raised during the meeting

Bressay service

The Bressay Community Council representative stated that the Bressay service is adequate.  It is commuter-based and the view was expressed that links with Lerwick are so close and journeys so regular that it should be regarded as being part of the roads system.  The proposed tunnel system would, however, be preferable.

The Bressay vessel is nearing the end of its lifespan and the Lerwick terminal need