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Ferries: A fresh approach

February 22, 2015 9:09 PM
David Goodall with Russell Kew (Left) and John Burrows (right)

David Goodall with Russell Kew (Left) and John Burrows (right)

Last Friday I met the management of Wightlink, Chief Executive Russell Kew and the Chief Operating Officer John Burrows. My aim was to understand their business better, so that if I were fortunate enough to be elected MP in May, I could help improve the ferry service offering to Islanders.

The Business

My 35 years in industry has taught me that the key to understanding any business is to get a handle on the accounts and the motivation of the company's management. The aspect of motivation was particularly interesting, as Wightlink's owners had just changed from one investment management firm to another, i.e. from Macquarie European Infrastructure Fund to Balfour Beatty Infrastructure Partners LLP.

Judging by the first announcements the approach of the new owners will be similar to the previous ones. They will invest in the business because they believe it has the potential for growth that will increase the value of that investment. The running of Wightlink itself remains unchanged because the operation management remains the same.

With regards to the accounts, to some this is boring stuff, others like me find it interesting; then again, one of my grandfathers was a bank manager. However, in case you are the former type I will keep it brief:-

  • The summer months generate income
  • The winter months make a loss
  • About 65% of the income comes from mainland to Island returns, rather than Island to mainland returns
  • There are about 300 sailings a day across all three Wightlink routes
  • About 5 million passengers a year across all three Wightlink routes
  • Yet about 500 sailings per year cross the Solent completely empty
  • About 180,000 coaches and freight vehicles a year across all three Wightlink routes
  • Peak season employment about is 600 people a third of whom are Island residents

The main thing that struck me was that the key to keeping prices down is to reduce the losses in the winter. Essential to this is getting more mainland people to travel to the Island, because Islanders travel to the mainland is at more constant level. However, it is not the price of the ferry ticket that attracts people to travel to the Island, it is the attractions on the Island.

The Issues

The first question is what attractions are required to increase travel across the Solent in the winter? Because increase in travel volume will:-

  • Help keep prices down - greater volume means any company can charge a lower unit price.
  • Increase the frequency of ferries - so making it easier for to Islanders to travel to the mainland and for businesses to operate on the Island.
  • Boost the economy on the Island - leading to greater employment and more steady employment reducing the seasonal nature of the tourist sector.

The main issues that people have with the ferries are the price, frequency and the economic effect. Therefore, the second question is what is the best approach to take?

The Current Approach

The approach of the current and past MPs has been to try to get some form of subsidy to help reduce prices and increase the frequency. Currently some people have even suggested that public ownership is the way to obtain a subsidised service.

There has not been the appetite for this in the past under different Governments of all political colours, even when times have been more prosperous. In addition, I don't believe that given the present financial climate of deficit and large national debt that there is willingness at a national level for central government to directly help with subsidies. There is certainly not the cash to buy all the ferry companies and then subsidise their offerings.

The current MP has even gone down the legal route with Office of Fair Trading (OFT) enquires, which did not produce any real result but did generate a lot of hot air and cost for all sides. His latest election push is a speech in the Commons talking of roundtable meetings with the ferry companies, ministers etc. My tip Andrew, if you really wish to find out what the issues are, ring up Red Funnel, Wightlink and Hovertravel, arrange meetings and listen, don't just talk at them. Then follow it up with action.

However, all this talk masks the basic economic fact that the price and frequency of ferry sailings depends of the volume of traffic crossing the Solent.

A Fresh Approach

I believe that a fresh approach is required, one that concentrates on the issue of improving the attractiveness of the Island to people on the mainland, thus increasing the volume of ferry customers. This new focus should also be combined with being a critically constructive friend of the ferry companies and pointing out ways in which to improve the quality of their service offering.

If I were elected MP, I would take this approach because I believe it would have a real chance of succeeding whereas the approaches of the past have not.

New Ideas

To improve the winter attraction of the Island, what is required? Well, the letters to the County Press regularly have ideas to improve things and the recent "Your great ideas to improve the Isle of Wight" survey at OnTheWight also had a number of ideas. Here are a few more suggestions:-

  • Increase the number of Island hotels offering large quality spa facilities, particularly ones that are 4 or 5 star rated.
  • Try to attract to the Island an operator like Center Parcs with their all year round appeal.
  • Try to attract to the Island quality international hotel operators like Hilton Hotels, with their international reach.
  • Have an Island conference centre, attached to one of the above new attractions.
  • Make sure that all the current seaside resorts are kept in good order and that planning permissions to improve matters are swiftly processed.

How to realise ideas

I believe the answer to realise these ideas and others will come from better interworking between the three Unitary Authorities of Southampton, Portsmouth and the Isle of Wight.

This is where central government does help in the form of city-deals. In these deals, local government gets new powers and budget to enable local people to drive local economic growth. In return, local government can decide to improve transport links and develop other infrastructure that would help attract further investment into the area. This is all with the aim of improving economic performance.

This has already started in a small way with the £15 million improvements planned for Red Funnel terminals, as part of a £400 million redevelopment scheme in Southampton and East Cowes.

As Chair of the PUSH overview and scrutiny panel, I have very much supported these ideas to get Hampshire and the Isle of Wight working closer together. This is why the partnership of the councils in the southern part of Hampshire (PUSH) now includes the Isle of Wight.

As the Island's MP, I would use my position as MP to encourage businesses that are required to improve the Island's winter offering to invest in the Island. I would work with councils, ferry companies and other local businesses to improve the existing offering in the winter.

My Experience

Finally, what was my experience last Friday, well as a critical friend I would say:-

  • Having blocked and out of action Gents and Disabled toilets on the way over, not good.
  • No WiFi on the boats, not good.
  • The return boats being delayed by up to 40 minutes, not good.
  • Being able to catch the 8pm at 8:20pm, when I was booked on the 8:30pm boat thereby getting home earlier than planned, good.
  • Finding that I was on a newly refurbished boat with only ten other cars and three HGVs, good. However, the reason for the almost empty late 8pm boat was that the 7pm boat was so late it actually carried most of the 8pm bookings in addition to its scheduled ones.

Verdict: there is still some room for improvement.