Why ‘fixing the ferries’ won’t work

There is currently a small movement to ‘fix the ferries’.

How can this work?

How is it possible to ‘fix’ the relationship two private companies, dedicated to returning best value for their corporate shareholders and the Isle of Wight?

Unfortunately no matter how many meetings are held with the directors of the ferry companies and the Isle of Wight’s MP and the Isle of Wight Council (IWC) there will remain two polar opposite objectives for the two groups:

  • The people and businesses on the Isle of Wight want to have the best, lowest cost transport links with the mainland.
  • The ferry companies want to run the most profitable services, which return the best value to their shareholders.

Ferry services are not run for the convenience of the people of the Isle of Wight.  They are run for profit.  Unless this link is broken, the transport to the Isle of Wight, by ferry will never be run for the convenience of the people using the service.

There have been attempts to create competition on the cross-Solent routes before and these have not been successful.  Why is this?

Wightlink and Red Funnel run a duopoly. If a new contender is introduced into the market, the pair of them will drop their prices for the short-to-medium term until the new (and thus likely weaker) player is put out of business.  Precisely this happened on the Cowes-Southampton route in the mid-1990s with Cowes Express.

An alternative to the Red Jet service was created and provided an equivalent service, just as effective, with earlier and later sailings.  Unfortunately this was in the time that Red Funnel was owned by ABP, who happened to be the Southampton Port operator.

Somehow the landing fees for Cowes Express became very high, the situation escalated and suddenly the Cowes Express service was suspended for more than 24hrs.  This broke the public’s confidence in the service and made the relationship with ABP very difficult; the ferry service lost the 50% of business it had acquired from Red Funnel and folded.  Red Funnel and Wightlink were able to get back to the serious business of charging what they wanted for the Solent crossing.  More about the story is related here.

In 2009 the Office of Fair Trading (OFT) conducted a full Market Investigation Reference (MIR).  In this study the OFT noted that the existing vehicle ferry routes were there for historic reasons, not using logistically the best transit routes.  It also observed that Red Funnel and Wightlink had control of existing docking facilities, that there were no available alternative suitable docking facilities which made the likelihood of a new competitor extremely unlikely.

Hovertravel operates without competing much with the two main companies.  Their crossing is low volume and does not have a significant impact on the two larger operators.  It does not have convenient onward transport links, is very sensitive to disruption by the weather and when it is disrupted, Wightlink benefits as those who were planning on travelling by Hovertravel can switch to Wightlink Fastcat easily.

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