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NORTHERN ISLES FERRY SERVICES (Proposed) EFFICIENCY SAVING OPTIONS

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NORTHERN ISLES FERRY SERVICES (Proposed) EFFICIENCY SAVING OPTIONS NORTHERN ISLES FERRY SERVICES (proposed) EFFICIENCY SAVING OPTIONS O. PREAMBLE This document is an updated version of that initially submitted to the Scottish Government on the 31 August 2010. The deadline for making comment on the Northern Isles Ferry Services (proposed) efficiency saving options was originally set for Tuesday, 31 August 2010; however, an extension was granted to Shetland Islands Council (and following initial submission, subsequently to Orkney Islands Council). Orkney Islands Council acted in good faith in evaluating the 8 proposed options and in forwarding through its initial response on 31 August 2010. However, within 30 minutes of submitting this reply, the Scottish Government announced that it was extending the Road Equivalent Tariff (RET) pilot in the Western Isles. This extension comes at a ‘cost’ of around £6.5 million per annum. Given the irony of the timing of this announcement (during the same hour when the Scottish Government were seeking to identify ‘savings’ in the Northern Isles on their ferry routes) and in general, the inequalities of operating the RET scheme in one specific community of Scotland, Orkney Islands Council made the decision to withdraw its response and review the previous decisions made. This document conveys the amended response from Orkney Islands Council; wherein, it now clearly identifies that it does not support any of the 8 options initially proposed. However, rather than submitting a brief document that conveys this; Orkney Islands Council is prepared to identify its reasoning against each option suggested. 1 This approach is taken for the following reasons: • Orkney Islands Council wishes, despite recent events and announcements (i.e. concerning RET) to work with the Scottish Government for the benefit of the entire Scottish nation. • Orkney Islands Council is aware that the Northern Isles Ferry service routes are to be retendered in 2012 and would advocate that it would not wish to see the implementation of such proposed options in a new contract. For these primary reasons Orkney Islands Council has responded in such a manner so as to identify many of the pit-falls associated with the proposals. These include cursory concerns and factors in respect to both the social and economic impact of such. i. INTRODUCTION i.1. This introduction details the background relating to a proposal for efficiency saving options on the current Northern Isles Ferry services provided by NorthLink Ferries Ltd., which is a subsidiary of David MacBrayne Ltd. The contract period is from 2006 until 5 July, 2012. i.2. The company operates the following ferry services in the Northern Isles between; (a) Stromness - Scrabster (b) Aberdeen – Kirkwall Hatston (Orkney) – Lerwick (Shetland) i.3. The routes are served by three roll on/roll off ferries (Ro-Ro) which carry passengers, cars and freight. The vessels are; • MV Hamnovoe – which mainly provides a ferry service across the Pentland Firth on the Stromness to Scrabster route • MV Hjaltland and MV Hrossey – which mainly provide a ferry service on the Aberdeen, Kirkwall and Lerwick route. i.4. In addition NorthLink Ferries Ltd., operates an integrated ferry service which is predominately a freight carrying service between Aberdeen Kirkwall and Lerwick. This is served by two further vessels, MV Clare and MV Hildasay. 2 i.5. Scottish Government are currently running two Consultations simultaneously in respect to reviews of ferry service in Scotland, namely; • Scottish Government Ferries Review Consultation – document published 10 June 2010 • The Northern Isles Ferry Services retendering Consultation – published June 2010. i.6. Both of these public Consultations run until 30 September 2010. i.7. However; this response concerns a third Consultation study which had as the primary objective the intention of identifying (and implementing) cost reduction measures on the Northern Isles ferry services currently provided by NorthLink Ferries under the present operating contract. i.8. This document responds to the above study1; wherein the intention was to identify savings, of one million pounds, during each remaining year of the current contract. 1. COST REDUCTION MEASURES PROPOSED OPTIONS There were 8 options identified in the study2: 1.1. Reduce fuel consumption by slowing the vessels down (2 engine running) on the Lerwick-Kirkwall-Aberdeen route all year round Or Only during ‘low season’ (late October to mid-March) 1.2. Tie-up MV Hjaltland or MV Hrossey for the “low season” and run 3 North (Tuesday, Thursday and Sunday) and 3 South (Monday, Wednesday and Friday) sailings per week on the Lerwick-Kirkwall-Aberdeen service. 1.3. As 2, but using the single passenger vessel more intensively on the Lerwick-Kirkwall-Aberdeen route, operating 5 north bound and 5 south bound sailings per week maintaining the Friday and Sunday calls at Kirkwall. 1.4. Extend sailing time on freight ship between Aberdeen and Lerwick (northbound only) to reduce fuel all year. Departure time would remain as 18.00 with the arrival time extended to 12.00 noon the following day. 1 As at i.7. 2 These were initially numbered A1-A8 in the proposal. 3 1.5. Extend the crossing time to save fuel on direct services between Aberdeen and Lerwick (both directions) all year. Once out of port, Hjaltland and Hrossey can regularly operate for much of the voyage on a single engine in order to maximise fuel efficiency. Increasing the potential for using this fuel efficient mode of operation for longer would mean direct services between Aberdeen and Lerwick would now depart at 17.00 instead of 19.00 to maintain the current arrival times. (The additional engines would still be available in case of delays or when sea and weather conditions require them.) 1.6. Remove 11.00 sailing from Stromness and the 13.15 sailing from Scrabster during the low season (late October to mid- March). 1.7. Withdraw some Kirkwall calls from the Lerwick-Kirkwall- Aberdeen route. 1.8. Review potential to apply different levels of fare increases to different user groups i.e. differentiate between Island residents and visitors and set different rates for cars, cabins, freight, high/mid/low season etc. Historically fare increases have been a fixed percentage applied to all fares. If more revenue is received from users of the services, then the pressure for service changes to be made can be reduced. 1.9. In this respect it should be noted that no other options have been added to those initially proposed and the intention is to consider each suggestion as a cursory means to identify the social and economic impact to the community. 1.10. Appendices have been attached to this document wherein there are 3 details on the estimated costs against each option proposed. (These also summarised below for ease of reading in respect to each of the 8 identified options.) 3 Appendix A. Data supplied by NorthLink Ferries 4 NorthLink Cost Saving Options - August 2010 Cost Savings £ (2) Options (1) Fuel Staff Harbours Other Total A1 - Full 418,934 None None None 418,934 A1 - Low 155,595 None None None 155,595 A2 1,313,343 None 73,468 -28,180 1,358,630 A3 688,168 None -18,452 -28,180 641,536 A4 84,367 None None None 84,367 A5 233,392 None None None 233,392 A6 101,952 None None 101,000 202,952 A7 230,127 None None None 230,127 A8 None None None None 0 Notes - 1. Some options are mutually exclusive thus these cannot be "grand totalled" 2 . Savings shown "Net" where additional costs are incurred 2. ORKNEY ISLANDS COUNCIL RESPONSE 2.1. Orkney Islands Council would reiterate that it submitted its initial response in good faith and welcomed the opportunity to respond to the 8 options that have been proposed and identified by Scottish Government as possible means that could be implemented as cost cutting measures on the current NorthLink Ferry Services. 2.2. In this resubmitted response Orkney Islands Council feels it is particularly pertinent to remind the Scottish Government of the comments made by the Transport Minister, Stewart Stevenson, in which he acknowledged that: "It is vital that the Orkney and Shetland communities are able to play their part in contributing to long term sustainable economic growth for Scotland. These lifeline services provide a vital transport link ….." In Mr Stevenson’s more recent announcement, on the 31 August 2010, in relation to the extension of the RET pilot in the Western Isles, he echoed similar sentiments when he said ‘we [presumed the Scottish Government] want to do all we can to protect and support our remote and fragile island communities.’ 5 2.3. Orkney Islands Council provides its response accordingly; and in the hope that the Scottish Government has the intention of respecting and treating all island communities equally and in a manner that does not discriminate depending upon a compass bearing. 2.3.1. The Council would identify firstly, that it does not consider the two NorthLink services to be interchangeable and that there is a need to retain a high level of service on both, as each serve different needs within the community; with one service operating directly into a city and thus providing good onward transport links almost immediately; or, the convenience of a city straight off the ferry and on the travellers’ door-step. 2.3.2. It should also be identified and indeed stressed that, as a Community, Orkney residents are heavily reliant upon many of the services that are only available in a large city, such as Aberdeen; for example in relation to health and hospital facilities; education – and the Universities in Aberdeen. 2.3.3. Whilst, the Stromness to Scrabster route is more heavily dependant upon a connection enabling the traveller to continue onto their destination, be it by means of a vehicle (such as a car) which has also travelled on the ferry; or a bus or a train into a city/town.
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