3 Phases

1
3 Phases

• Phase 1 Desk based exercise
• Phase 2 Monitoring the pilot study
• Phase 3 Evaluation of the pilot

2
Phase 1 stage 1

• Review approaches to fare setting for public
  service ferries in other countries, including the
  RET approach

3
Phase 1 stage 2

• Offer definitions of RET that could be applied to
  all categories of passenger and vehicular traffic
  in the context of ferry fares for the Clyde and
  Hebrides and Northern Isles routes which are
  subsidised by the Scottish Government

4
Phase 1 - stage 3

• Provide an initial analysis of the potential
  impacts (especially in economic and social terms)
  of the introduction of the RET approach

5
Phase 1 stage 4

• Make recommendations on the design and
  implementation of a pilot study applying RET
  probably on one or more of the routes connecting
  the Scottish mainland and the Western Isles,
  including the choice of route(s), anticipated
  costs, start date, length of the pilot,
  operational constraints and any capacity
  constraints that may emerge

6
Phase 1 stage 5

• Carry out any baseline information gathering in
  advance of the pilot that is considered necessary
  for subsequent monitoring and evaluation purposes

7
Scottish Ferry Network

• Clyde and Hebrides Ferry services serves 22
  islands and 4 peninsulas on Scotlands west
  coast
  
• Caledonian MacBrayne has recently undergone a
  restructuring
  
• For the first time CHFS was put out to tender
• Fare levels are a consequence of historical
  reasons and tend to increase in line with
  inflation
  
• Fares for cars range from 17.70 for the
  Colintraive Rhubodach route to 201.10 on the
  Oban Castlebay/Lochboisdale route
  
• Fares per mile for cars range from 14.42 on the
  Colintraive to Rhubodach route to 1.12 per mile
  on the Oban to Castlebay/Lochboisdale route

8
Scottish Ferry Network

• Northlink Ferries Limited operate ferry services
  between the Scottish mainland to and from Orkney
  and Shetland
  
• Similarly to CHFS the services are tendered to
  comply with European legislation
  
• Fare levels are set in the tender specification
  and have been arrived at through historical
  reasons from commercial fares set by P O,
  through to todays Public Service Contract
• Fares for cars range from 120.80 on the
  Scrabster Stromness route to 291.20 on the
  Aberdeen Lerwick route
  
• Fares per mile for cars range from 0.66 on
  Aberdeen - Lerwick to 2.02 on the Scrabster
  Stromness route.

9
Denmark

• The Danish National Rail Authority is the
  regulating body for rail and ferry services in
  Denmark.
  
• There are a variety of internal ferry services
• The majority attract some degree of subsidy from
  national, regional or local Government.
  
• Some are also provided on a purely commercial
  basis.
  
• There are 54 routes varying from 0.06 miles to
  106 miles in length.
  
• The responsible body determines a maximum
  acceptable fare for a route under consideration
  and the performance of the route is examined to
  determine if a subsidy is required.
• The maximum acceptable fare is based on historic
  fares combined with political motives
  initiatives such as promoting regional
  development and changes to operating costs.

10
Denmark

• On lifeline routes resident islanders do not pay
  a passenger fare to use the ferry or to transport
  a bicycle or to take a car if they are registered
  disabled.
• Many of the subsidised routes are considered
  socially substantiated or lifeline services and
  regulated by national or local government.
  
• All of the routes which are subsidised are
  tendered services.
  
• In many cases services are tendered by the same
  organisation which ultimately operates the
  service.
  
• Similar to Scotland, there is an inverse
  correlation between route distance and fare/mile
  but on shorter routes fares are lower than in
  Scotland
• The fare per mile on the Danish network for cars
  is similar to Scotland and varies by route,
  ranging from 0.32/mile up to 19. 60/mile on
  tendered routes.
• Total fares for commercial vehicles can be as
  high as 96.6/mile compared to 40.25/mile in
  Scotland.
  

11
Sweden

• There are three different types of ferry
  operation in Sweden.
  
• Services to Gotland operated by a private
  shipping company under a Public Service Contract.
  The Swedish Government meets any shortfall
  between revenue and operating costs and also sets
  the timetable and fare levels.
• Small road ferries a network of 38 services
  operate across rivers and estuaries to provide a
  service to connect a network of roads rather than
  bridges. All services are operated by
  Farjerederiet, an organisation of the Public
  Roads Department of Sweden, 37 of the 38 routes
  are free of charge with costs off-set by general
  taxation.
• Coastal vessels commercial coastal shipping
  routes which are privately operated and
  considered fully commercial in nature.
  

12
Sweden

• Ferry services have become a part of the road
  network
  
• Principle in Swedish roads legislation that roads
  should be taken care of on a national basis if
  the road is required for common purpose
  
• Small road ferries are therefore free of charge

13
Norway

• There are 124 ferry routes in Norway which vary
  in length from 0.4 miles to 70 miles. The routes
  are operated by 18 different companies and, with
  the exception of three, are all privately owned.
  
• There are three classifications of ferries
• The Hurtigruten Coastal Ferry the coastal ferry
  between Bergen and Kirkenes.
  
• Fast ferries designed as commuter ferries
  which are only capable of taking passengers and
  light freight.
  
• Car ferries integral part of the road network
  within Norway and used to cross fjords and
  provide access to the many islands off the
  mainland.
• All ferry services are tendered as bundles
  which are geographically based and contain both
  profitable and unprofitable routes. Ferry
  companies are required to sign a contract
  outlining the frequency, fares and minimum level
  of service for a licensing period of 10 years.

14
Norway

• The national pricing structure for every ferry
  company consists of the following
  
• The length of the connection
• The cost of the alternative road route vehicles
  would have taken if there were no ferry (if
  applicable) and
  
• The length of the vehicle.
• The fare levels for routes of similar length can
  vary significantly.
  
• The fares reflect the political decision that it
  should not cost more to travel by ferries than it
  costs to drive to the destination by car.
  
• In most cases the revenues from the ferry fares
  do not cover the cost of their operation so
  subsidies are essential.
  

15
Norway

• The Norwegian Government are currently
  researching alternatives to the existing fare
  structure
  
• One pilot has been carried out to trial a free
  ferry service based on the Swedish principles.
  
• The introduction of on and off-peak fares are
  also being investigated as a means of managing
  capacity issues.
  
• In both Scotland and Norway the fares per mile
  are higher for shorter routes, although in
  Scotland the fares on short crossings are much
  higher than routes of similar length in Norway.
• For the majority of routes of similar distance
  the fares in Norway are lower in comparison to
  Scotland, ranging from 0.69 per mile to 7.00
  per mile for cars.
• Fares for commercial vehicles range from 1.77
  per mile to 44.70 per mile.
  

16
Canada

• There are a large number of private sector ferry
  operators in Canada providing subsidised services
  on behalf of the government.
  
• Of particular interest to this study are the 7
  services operated in Newfoundland and Labrador.
  
  
• The Government of Newfoundland and Labrador is
  responsible for the management of ferry
  operations. They are also responsible for the
  operation of some services while other routes are
  tendered.
• In 2006 a system of RET was introduced on
  ferries
  
• Since 2006 fares are now set with reference to
  the Canadian Automobile Association Set Cost of
  Driving.
  
• Fares are calculated using fixed and variable
  costs for a medium sized vehicle in line with
  changing fuel prices. This figure is then
  applied to the distance of the route to calculate
  the fare.

17
Canada

• The introduction of this RET based approach
  resulted only in a decrease in fares, where an
  increase in price would have arisen there was no
  change to the particular fare
• Vehicle rates are 101.27 cents (0.56) per mile
  in all cases.  Any case where this varies is due
  to the fact that no fares were allowed to
  increase above the previous years rate. 
• Passenger rates have been set to 1/3 of RET in
  the new rate schedule.
  
• A review to consider the application of this
  approach to fares for heavy goods and commercial
  vehicles is to be undertaken in due course.
  

18
Ireland

• There are currently 16 subsidised ferry services
  in Ireland, ranging from 1 to 25 miles in
  length.
  
• The services are provided by 15 different
  operators.
  
• Tenders are awarded for individual services, with
  the exception of the Aran Islands where the three
  services are tendered as a bundle.
  
• The contract for the provision of a service
  usually specifies the minimum number of sailings
  and the maximum return passenger fare which may
  be charged to islanders currently 8 (5.40)
  per passenger . Many operators charge less than
  this and the Government reimburses the operator
  the difference between the standard and
  discounted fare charged.
• Similar to Scotland, car fares are higher for
  shorter routes and range from 6.10 per mile to
  12.50 per mile for relatively short crossings.
  

19
Spain

• In Spain there are three bundles of services
  which are defined as being services of Public
  Interest and link the Spanish mainland to the
  
• Balearic Islands
• Canary Islands and
• Spanish cities of Ceuta and Melilla in North
  Africa.
  
• There are 22 routes in total which range in
  distance from 19 to 534 miles.
  
• Services are either provided by
• Public Service Lines operators are free to
  decide on the schedule capacity route and fares
  which permit a commercial operation. There is a
  requirement for reduced fares to be offered to
  islanders with the shortfall off-set by
  Government subsidy.
• Public Interest Service Contracts awarded by
  tender for a 5 year period and subject to an
  agreed specification in terms of route fares
  forecast demand and Government subsidy.
• Fares for cars range from 0.97 per mile up to
  8.67 per mile on the shortest route.
  

20
Germany

• There is a requirement for services to be
  provided to the islands all year round.
  
• There are 15 services in total, ranging from 2
  miles to 26 miles in length.
  
• Most of the services are passenger only.
• Fares are higher per mile for routes of similar
  length in Scotland.
  
• Fare for cars range from 2.47 per mile to 9.41
  per mile.
  

21
New Zealand

• Ferry services in New Zealand are provided by
  commercial operators on a mix of tendered and
  commercially viable routes.
  
• Some internal ferry services are considered an
  essential element of the public transport network
  and receive operational or financial support.
  These services are generally put out to tender.
  The fares are set by the relevant public
  authority on the basis of the existing fare
  schedule which relates to the journey distance.
• On commercially viable routes operators generally
  determine the fares they expect the market to
  accommodate and apply for top up funding where
  the revenue collected is insufficient.
• Fare levels for cars are around 9.00 per mile

22
Ferry Fares Comparison
Highest Fare per mile (car)
23
Ferry Fares Comparison
Lowest Fare per mile (car)
24
Phase 1 Stage 2

• Offer definitions of RET that could be applied to
  all categories of passenger and vehicular traffic
  in the context of ferry fares for the Clyde and
  Hebrides and Northern Isles which are subsidised
  by the Scottish Government

25
Factors Influencing Vehicle Running Costs

• Size of the engine
• Depreciation
• The age of the vehicle
• Fuel efficiency
• The weight or size of the vehicle
• The cost of fuel
• Petrol or diesel
• Mileage

26
Her Majestys Revenue and Customs
Approved Mileage Allowance Payments
27
RAC Factors included in running costs

• Engine size
• Fuel consumption
• Depreciation
• Financing charges
• Fuel cost
• Servicing and maintenance
• Tyres and replacement parts
• Insurance premium

28
RAC
RAC Estimated Vehicle Running Costs Petrol
Engines
29
AA
AA Estimated Vehicle Running Costs (in pence)
Petrol Engine per mile
30
Road Haulage Association (RHA)
RHA Estimated commercial vehicle running costs
(in pence) per mile
31
Freight Transport Association (FTA)
FTA - Estimated commercial vehicle running costs
(in pence) per mile
Costs per mile are for a selection of
commercial vehicle types
32
First Scotrail
First Scotrail Estimated passenger cost per
mile ()
33
Citylink
Citylink Buses Estimated passenger cost per
mile ()
34
CalMac
CalMac - Estimated passenger cost per mile ()
35
Phase 1 Stage 2

• Offer definitions of RET that could be applied to
  all categories of passenger and vehicular traffic
  in the context of ferry fares for the Clyde and
  Hebrides and Northern Isles which are subsidised
  by the Scottish Government

36
Phase 1 Stage 3

• Provide an initial analysis of the potential
  impacts (especially in economic and social terms)
  of the introduction of the RET approach

37
Phase 1 Stage 4

• Make recommendations on the design and
  implementation of a pilot study applying RET
  probably on one or more of the routes connecting
  the Scottish mainland and the Western Isles,
  including the choice of route(s), anticipated
  costs, start date, length of the pilot,
  operational constraints and any capacity
  constraints that may emerge

38
Phase 1 Stage 5

• Carry out any baseline information gathering in
  advance of the pilot that is considered necessary
  for subsequent monitoring and evaluation
  purposes

39
Phase 2

• Will involve the monitoring of the pilot study
• Gathering of traffic statistics and information
• Consultation with ferry users and local
  employers, including freight and tourist sectors
  
  
• Designed to allow the impact of the pilot to be
  assessed especially in economic and social terms

40
Phase 3

• Involve an evaluation of the pilot
• Making use of the information gathered through
  the baseline and monitoring exercise
  
• Quantify the costs and benefits which could arise
  should RET be applied on a permanent basis and
  rolled out across the CHFS and Northern Isles
  networks
• Identify any capacity constraints that may emerge
  from a permanent roll out
  
• Quantify the costs of increasing the capacity to
  meet demand through additional or larger vessels,
  and new shore infrastructure

41
RET Presentation

• Open Discussion