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Appraisal of Options for Specification of 2018 Northern Isles Ferry Services

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Appraisal of Options for Specification of 2018 Northern Isles Ferry Services transport.gov.scot Appraisal of Options for the Specification of the 2018 Northern Isles Ferry Services Final Report Redacted Version Appraisal of Options for the Specification of the 2018 NIFS – Final Report Transport Scotland Contents [tables and figures reflect non-redacted report] 1. Introduction ................................................................................................................................. 4 2. NIFS Fares .................................................................................................................................... 8 3. Demand & Capacity Impacts .................................................................................................... 15 4. Potential Supply-Side Responses ........................................................................................... 28 5. Summary & Conclusions .......................................................................................................... 64 List of Figures Figure 3.1: Northbound sailing-legs by passenger utilisation level (2014/15). Figure 3.2: Northbound sailings-legs by vehicle deck utilisation level (2014/15) Figure 3.3: Northbound sailing-legs by cabin utilisation level (2014/15) Figure 3.4: Southbound sailing-legs by passenger utilisation level (2014/15) Figure 3.5: Southbound sailing-legs by vehicle deck utilisation level (2014/15) Figure 3.6: Southbound sailing-legs by cabin utilisation level (2014/15) Figure 3.7: Pentland Firth sailings-legs by passenger utilisation level (2014/15) Figure 3.8: Pentland Firth sailing-legs by vehicle deck utilisation level (2014/15) Figure 3.9: Average Change in Fare Paid – per Travelling Party, by Route Figure 3.10: Forecast Increase in Carryings, North Sea – Northbound Figure 3.11: Forecast Increase in Carryings, North Sea - Southbound Figure 3.12: Forecast Increase in Carryings, Scrabster-Stromness Figure 3.13: North Sea – Northbound Sailings by Passenger Load Factor Figure 3.14: North Sea – Northbound Sailings by Vehicle Deck Load Factor Figure 3.15: North Sea – Northbound Sailings by Cabins Load Factor . Figure 3.16: North Sea – Southbound Sailings by Passenger Load Factor Figure 3.17: North Sea – Southbound Sailings by Vehicle Deck Load Factor Figure 3.18: North Sea – Southbound Sailings by Cabins Load Factor Figure 3.19: Average Summer Monthly Load factors, Current & RET Fares Figure 3.20: Scrabster-Stromness –Sailings by Passenger Load Factor Figure 3.21: Scrabster-Stromness –Sailings by Vehicle Deck Load Factor Figure 3.22: North Sea: Number & % of sailings at >100% Utilisation, Base and RET, Vehicle Deck Figure 3.23: North Sea: Number & % of sailings at >100% Utilisation, Base and RET, Cabins Figure 3.24: Scrabster-Stromness: Number & % of sailings at >100% Utilisation, Base and RET, Vehicle Deck Figure 4.1: Current NorthLink Timetable Figure 4.2: Northern Isles Ferry Routes, passengers & cars, 2015 Figure 4.3: North Sea Ferry Routes, CVs by direction, 2014 Appraisal of Options for the Specification of the 2018 NIFS – Final Report Transport Scotland List of Tables Table 2.1: Islander Passenger Fares, Aberdeen – Kirkwall – Lerwick – RET with 50% Discount on Variable Element Table 2.2: Islander Vehicle Fares, Aberdeen – Kirkwall – Lerwick – RET with 50% Discount on Variable Element Table 2.3: Standard Passenger Fares, Aberdeen – Kirkwall – Lerwick – RET with 50% Discount on Variable Element Table 2.4: Standard Vehicle Fares, Aberdeen – Kirkwall – Lerwick – RET with 50% Discount on Variable Element Table 2.5: Scrabster – Stromness Fares with the introduction of RET Table 3.1: Forecast Demand Uplifts by Origin Destination Table 3.2: North Sea Routes – Sailings by Load Factor, All Sailings Across the Year Table 3.3: Scrabster-Stromness Route – Sailings by Load Factor, All Sailings Across the Year Table 4.1: Timetable Options Emerging from Part 1 Appraisal Table 4.2: Current Travel Times and Speeds Table 4.3: Implied Steaming Speeds Table 4.4: Sample Timetable, 19:00 departures from Lerwick and Aberdeen Table 4.5: Sample Timetable, Lerwick-Kirkwall-Lerwick (Aberdeen direct) Table 4.6: Sample Timetables – Direct Service Rotation Table 4.7: Sample Timetables – Combined Call Service Rotation Table 4.8 Sample 3-Sailing in 48-hour Timetable Table 4.9: Example Timetable Incorporating a Daytime Aberdeen-Kirkwall-Aberdeen Service Table 4.10: Sample Rota Incorporating a daytime Aberdeen-Kirkwall-Aberdeen Service Table 4.11: Summary if North Sea Options Table 5.1 Overall Summary of NorthLink Options Considered in Appraisal Appraisal of Options for the Specification of the 2018 NIFS – Final Report Transport Scotland 1. Introduction Overview Passenger and freight ferry services between the Northern Isles and the Scottish mainland are essential to the economies and sustainability of both the Orkney and Shetland Islands. The Scottish Ferries Plan established commitments to strengthening and improving the ferry services provided to island communities and more generally the policy of the Scottish Government is that all communities should be treated on an equal footing. However, the Ferries Plan does not make specific reference to what the provision for the Northern Isles Ferry Services (NIFS) should be beyond the duration of the current contract and it made clear that further work was necessary to achieve this. In light of the above, Transport Scotland commissioned Peter Brett Associates LLP, together with partners Pro Versa and WSMD Associates, to undertake a comprehensive transport appraisal, in line with the Scottish Transport Appraisal Guidance (STAG), which involves exploring and assessing potential options for the specification of the next NIFS contract. An Evolving Scope The STAG Pre-Appraisal and Part 1 reports were completed in June 2016. These reports identified the problems and opportunities with the NIFS services currently and generated a long-list of options which were developed and appraised at Part 1 stage. The options covered: vessels ports & routes timetables capacity public transport integration The outcomes of the Pre-Appraisal and STAG Part 1 options appraisal was reported to the project Working Group1 in June 2016. At this stage, it was anticipated that the study would proceed to a STAG Part 2 appraisal of the shortlisted options, intended to be completed in October / November 2016. Fares Review At the outset of this study in December 2015, it was agreed that the means by which fares are set and their absolute level would be assumed to fixed for the purposes of the analysis although some sensitivity analysis would be undertaken. However, the SNP manifesto for the May 2016 Scottish Parliamentary Elections contained a 1 The Working Group consists of Transport Scotland, Highlands & Islands Enterprise, HITRANS, Orkney Islands Council, Shetland Islands Council and ZetTrans. Appraisal of Options for the Specification of the 2018 NIFS – Final Report Transport Scotland commitment to reduce ferry fares on routes to / from the Northern Isles. Given the importance of fares to the wider appraisal of options, the study was paused at the end of the STAG Part 1 stage to allow for consideration of fares options. A fares consultation was undertaken by PBA with stakeholders and the local communities in Orkney and Shetland throughout the autumn and was reported in November 2016. In the period between November 2016 and May 2017, Transport Scotland developed and tested a number of potential fares options in-house. In May 2017, a paper on future fares options to be tested in this study was put to the Minister and approved for the purposes of the study. It is important to note at this stage that the fares options approved by the Minister were for the purposes of testing options in this study – it does not imply a commitment from Scottish Ministers to introduce the fares reduction in this precise form. Note that future policy for freight fares is being considered separately, and for the purposes of this work, freight fares are assumed to remain at present day levels in real terms. Other Developments During the fares-related pause in the study, there were a number of other developments in the wider context which have had a material impact on the study. These developments are explained in more detail below, with the implications for the study set out at page 6. Review of Tendering The purpose of this STAG appraisal was to inform the specification of the next NIFS contract, which was due to commence on 25th April 2018. However, on 2nd February 2017, the Minister announced a policy review into the future of tendering for Scottish Government ferry contracts, and this is anticipated to run for 9-12 months. Specifically, the review will advise on whether ferry services can be awarded to an ‘in-house’ operator without the need for tendering within the framework of European legislation. The Transport Scotland website states that ‘The Policy Review’s primary purpose is to ensure the continued provision of safe, efficient and effective ferry services to meet the needs of island and remote rural communities and which provide value for money to the taxpayer.’ Vessels There were three key uncertainties in relation to the future vessel fleet at the completion of the Part 1 stage of the appraisal: the two freight vessels, MV Helliar and MV Hildasay, were leased directly by Serco NorthLink, with their charter due to expire at the end of the current contract. The early study research identified a key risk surrounding the availability of these vessels in the next contract period.
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