Cheaper fares for ferry users

Ferry fares are being cut by up to half on all Western Isles to mainland routes from today as the 'Road Equivalent Tariff' (RET) pilot gets underway.

The Scottish Government is using this pilot to consider how the current ferry fares system can be improved by introducing a fairer RET scheme which would bring cheaper travel for islanders, tourists and businesses across the country.

The pilot will operate until the spring of 2011.

Welcoming the launch of the scheme Transport Minister Stewart Stevenson said:

"For years, our remote and fragile communities have been expressing concerns about the affordability of ferry travel and the impact this has on islanders.

"Expensive ferry fares can be damaging, not only to our local economies, but to our national economy. We want to take action to address this.

"This is the first pilot which has sought to overhaul the way fares are calculated and the aim is to establish a cheaper and fairer system for ferry users right across the country.

"While initially focussing on a pilot on routes to the Western Isles, we want this test case to pave the way for cheaper fares for all our island communities. The final phase of the study will involve a full evaluation of the pilot exercise and offer options for rolling the scheme out to our other island communities.

"RET is a vision for the future of ferry fares, and this pilot could open the door to a fairer, cheaper system for every ferry user in Scotland. "

Alex Paterson, HIE's regional director said:

"We welcome the development of this pilot which will test the impact of Road Equivalent Tariff as a fare paying mechanism. This pilot is part of a range of work on reviewing transport options which contribute to the goal of establishing mainland equivalence for Scotland's islands.

"We look forward to the outcome of the pilot and evaluating the social and economic change arising from Road Equivalent Tariff fares being applied to these ferry routes."

Road Equivalent Tariff (RET) involves setting ferry fares on the basis of the cost of travelling an equivalent distance by road.

High ferry fares have been seen by many as a barrier to economic growth on the islands. Lowering the fares to a level analogous to mainland traffic costs could act as a boost to island economies by reducing freight costs to local businesses, lowering the cost of living for island residents and making the islands more attractive to tourists.

The routes for the pilot study will be: Ullapool - Stornoway, Uig - Tarbert (Harris)/Lochmaddy (North Uist) and Oban - Castlebay (Barra), Lochboisdale (South Uist) and Oban to Coll and Tiree.

The pilot commences on Sunday 19th October 2008, the start of CalMac's winter timetable, and will run until spring 2011. This will allow it to be fully assessed on its effectiveness, and to identify both positive and any possible negative implications of a RET scheme. This will include the gathering of traffic statistics and information from, for example, ferry users and local employers (including the freight and tourist sectors) designed to allow the impact of the pilot (especially in economic and social terms) to be assessed.

The study to develop the pilot was carried out by experienced consultants specialising in transport and economics. The consultants will also monitor the pilot and provide a final evaluation. The fares will include a core cost plus an RET rate as set out below:

Passengers

Core rate: £2

RET rate: 10p per mile

Cars

Core rate: £5

RET rate: 60p per mile

Commercial Vehicles (CVs)

Core rate: £20

RET rate: 18p per lane metre per mile.

The findings from the independent research study to establish the most effective structure for an RET pilot confirmed that:

• The pilot will operate on all the Western Isles to mainland routes.

A formula has been determined for the road equivalent tariff system as follows:

• Cars and small vehicles will be based on a flat fee of £5 plus 60p per mile, rather than the current fare
• Passengers will be based at £2 plus 10p per mile
• Goods vehicles will be based on a flat fare of £20 plus 18p per lane metre per mile
• The new formula will result in up to 50% off fares
• All ferry users will benefit from the reduction in fares - islanders, businesses and tourists
• The pilot will run for 30 months to ensure it can be properly assessed and the policy subsequently developed to ensure it delivers maximum benefits for all

The 60p per mile rate suggested by the consultants was broadly comparable with the cost of running an average family car as identified by both the AA and RAC. Consultants also considered long-standing HMRC rates.

To further simplify matters the fares structure will be based on the cost of a single fare. The proposed costs of the single tickets will be significantly less than, or at least the same as, those currently available when all discounts have been applied, including multi journey tickets. This means that passengers do not need to purchase multi journey tickets to benefit from reduced fares.

The pilot study will be closely monitored and the key stakeholder group, made up of senior representatives of the local authorities, regional transport partnerships and ferry operators, will be closely involved in the monitoring of the pilot with regular updates. Areas not included in the pilot will also be monitored to ensure that there is no negative impact from the pilot on other areas.

The third phase of the study will involve an evaluation of the pilot, making use of the information gathered through the baseline and monitoring exercises. In addition to assessing the impact of the pilot, the evaluation will attempt to quantify both the costs and benefits which would arise should RET be applied on a permanent basis and rolled out to other ferry routes in the Clyde and Hebrides and Northern Isles networks and the likely longer-term impacts of such a roll out. This stage will seek to identify any capacity constraints that would emerge from a permanent roll out and quantify the cost of increasing the capacity to meet demand (e.g. through additional or larger vessels and new shore infrastructure).