Steam Packet - Oft Petition

[Lost Login]

What dicates the service is the User Agreement. Provided the IOMSP sticks to the minimum levels of service their profits are protected.

No they are not, if demand and usage of the boats fell then SP profits would fall. If usage could be met by a lower of level of service than detailed in the user agreement then the higher level of service would have to be provided. Remember the agreement was put in place to secure a guaranteed minimum level of service even if the demand did not warrant it. OK it may fallen in SP's favour but it need not and we have had Moffat, Karran etc preaching doom & gloom for years.

 

It wouldn't matter if there was a market of 1,000 people wanting to go to Liverpool everyday in the winter - if they don't want to offer the service they don't have to.

You are arguing against yourself here that the owners are only in it for profit. If there was a profit to be made on those 1,000 people the SP would provid the service. If you argument is that wether or not 1,000 turns a profit the SP should provide a service if 1,000 want it where do you draw the line. I am sure you would agree not 1 or 10, but 100, 500, 1,000. If 1,00 then why not for 999?

 

In the "real world" if the IOMSP pull out or reduced a service/route another provider could assess the potential and step in. We have seen this in practise at the airport, Aer Arran pull out of Luton flights as not viable but the route is taken up by Flybe, Emerald go bust on the Liverpool route but the capacity is taken up by Euromanx.

Sea Links are different, because of the User agreement WE as the "market" can't influence the service WE want. Effectively the IOMSP dicates what service (subject to the minimum) they want to provide and at what cost and WE can take it or leave it - Market Forces are powerless in this case.

I will reiterate my previous point - our Government got us into this mess and they need to get us out of it!!!

 

Yes but from what I understand we "the IoM" built and own the airport and the airlines pay a charge to use. If Flybe built and owned the airport they could impose what restrictions they liked on other users. In effect as I understand it the SP built and own at least one of the link spans and have exclusive rights to. That may not be legally correct but in effect they financed and are treated as if they have sole rights. I presume that there is no restriction on an other party building another landing stage at their expense and using it. Market forces currently do not make this an attractive option

 

I will reiterate my previous point - our Government got us into this mess and they need to get us out of it!!!

I would not describe it as a mess although the balance would appear to be in favour of SP. When it was built I thought it was believed it was a fairly fair deal. The SP would exclusivity in return for investing in the link spans and guaranteeing a level of service & fares . Nobody else at that point was fighting over the route. It is not unique and much of the rail franchising in the UK etc is on a similar basis. They require a guarantee of contract in return they will invest in new trains etc.

 

The only option is to renegotiate the terms or buy out the link span but history has shown that there is not sufficient demand for competing boats. If there was competition with no control would it be better in the long term? I doubt it as if one pulled out you would be left with a monoply and no minimum standards etc.

 

 

I presume the user agreement was put in place so that it would serve the Island in the good & the bad times. Presently we have the good times wether it is true or not people are arguing that consequently the SP is coining it in. Would we be arguing similarly if there had been a decline and the SP was bleating the user requiremet was uneconomic and they wanted out. No we would say tough you signed it so stick to it.

 

I am not arguing that the user agreement or SP are the best thing since sliced bread, merely that they are there and when put in place it was and is not totally one sided. Yes they may need to be renegotiated but to do so a carrott and a stick may be required. The IoM Govt will also have to offer something else in exchange. All I read so far is suggestions that it should be cancelled which will not reflect well on our government or give confidence to any party dealing with the IoM Govt in the future on any other matter if they are seen as cancelling contracts when it does not suit them. We have to be sure that it will result in a better service and I remain to be convinced that will be the case unless we go for a fullly nationalised or very heavily subsidised service

[manxman8180]

Really mad with the steam packet. If I go on a day trip I will be off island for 26 hours!

Don't shout too loud, they will charge you extra for that couple of hours.

 

How can anyone be surprised that 'Pension Funds' are involved. Many financial institutions are held up by such significant investors as pension funds. Not much news to find out that MacQuarie are the same.

[homarus]

Can somebody please clarify here ?

 

The reason given by the Macquarrie Group for cutting back on winter services to Liverpool is ,lack of Demand and usage?.

 

If that is the case , has anybody got any facts and figures they can supply to substantiate?

[manxman8180]

I thought they said it was to provide a more reliable service.

[homarus]

not lack of demand then?

[manxman8180]

That may have been trotted out at some point, but I'm sure they used the 'reliability' tag first.

[triskelion]

I posted the annual figures some pages back:

 

Passengers arriving from Liverpool:

 

2001 - 274,009

2002 - 319,232

2003 - 323,146

2004 - 300,407

2005 - 279,196

2006 - 264,958

2007 - 112,880 (Partial number skewed by Centenary TT and SeaExpressOne Accident) (Only inculdes months feb-june)

 

The problem with these, of course, is that they don't show winter passenger numbers (though a considerable downward trend is apparent)

 

I'll see if I can find winter figures...

[homarus]

Thanks for that!, it would still be nice to see some facts and figures that back up the 'lack of demand and usage' side of the arguement though?

[triskelion]

December 2003 - 11,251

December 2004 - 8,356 (A drop of 25%)

December 2005 - 8,288 (A drop of 1%)

December 2006 - 4,873 (A drop of 41%)

 

Assuming there we no sailings on Christmas Day or Boxing Day, this represents a decline from an average 388 passengers a day in Dec 2003 to one of 286 a day in Dec 2005 (I will give the Harbour the benefit of the doubt that 2006 was an exceptionally rough year).

 

The comment on the 2006 page states "Allowing for the day trips that did not operate during 2006, passenger traffic was overall on a par with 2005," which suggests that reliability was a considerable factor.

 

The initial reaction therefore is that they need a more reliable boat. The Lady of Mann (held up on these pages as the kind of ship we need) was, however, still operating in December 2004 (being sold in 2005). So we must assume that passenger numbers decline significantly also.

["V"]

The figures are good but not the whole story.

They need to be read in conjunction with the service offered so you can compare like with like.

The October 2007 figures for Liverpool show a 8% increase over 2006 (DoT) so one could assum the demand is there. The weather in October is just as bad (for fast craft) as November. But if we look at November 2007 figures there will be a big drop compared to 2006 - we know why bercause of the reduced timetable but in a couple of years time will the figures just show decline without any reason?

 

For Lost Login: The IOMSP own the old link span, it was obtained as part of the merger between ManxLine and IOMSP.

THe new link span is owned by IOM Government as is the rest of the port and sea terminal so its just like the airport.

 

The way forward is to scrap the user agreement and francise the routes.

The government can then put out to tender the services that the manx public want.

The tender can dicate levels of service, pricing policy and financial penalties for not performing to contract.

 

I have been upset and inconvenienced by the timetable changes but that isn't my main fear. My big problem is this:

At the moment the User Agreement is all one way. If the IOMSP don't comply with minimum service levels or invest in new boats the only penalty is the termination of the agreement.

Bearing in mind that the current owners paid £225 m for the IOMSP I believe that they will very quickly recupe their capital outlay by selling assests (Imperial Building and other land) and from trading profits. There is every likelihood that they have already done this.

Why then bother to invest in new boats? If the Government tear up the User Agreement then the company value might fall but they have already had their capital back plus.

They can then sell the business to the highest bidder. What ever happens these guys won't be in it for the long haul especially if they have to invest £18m by 2011 to maintain the agreement

[AlexMcC]

Can I just point out, again, that for Oct-Dec 2003, Daily services were provided to Liverpool, to test the water.....

 

Second, Although the Linkspan on the Victoria Pier is owned by the SPC, a new one will be needed soon, and that will be Government owned, as the own the harbour and the land it's situated on.

 

I'm also pretty sure that the SPC will comply with the user agreement, it is in their interests to do so, as in the end, it is more profit. The £18 mil investment would also be easily re-cooperated over the period of the user agreement. The only realistic way for them to make back their money in the long run, is to stay within in the user agreement. The Steam Packet won't make back £225 mil in 2 years, maybe 12-15, but not 2......

 

Of course, if there was a strong regular service to Liverpool like there was with the King Orry in the early 1990s, then I'm sure it will happen, but it won't with the Ben because she isn't suitable. A suitable ship will have to be sourced/built, and until then, were stuck as it is, MacQuarie arn't going to splash out millions on a ship that will only do a few hundred sailings in a 4-5 year period just because of some discontent, that makes no financial sense either!

[triskelion]

The figures are good but not the whole story.

They need to be read in conjunction with the service offered so you can compare like with like.

The October 2007 figures for Liverpool show a 8% increase over 2006 (DoT) so one could assum the demand is there. The weather in October is just as bad (for fast craft) as November. But if we look at November 2007 figures there will be a big drop compared to 2006 - we know why bercause of the reduced timetable but in a couple of years time will the figures just show decline without any reason?

 

October does not qualify as part of the winter service, and I would like to see you information stating the weather is as bad in October as it is in November.

 

So if we compare Novembers:

 

2003 - 11694

2004 - 6497

2005 - 6232

2006 - 6082

As the service dropped to zero in November 2007, there is obviously going to be a very steep drop. It seems that after 2003 the Steam Packet dropped to a weekends-only service for the Liverpool route during the winter(which explains the 44% drop for Novembers and 41% for Decembers). I don't know why this is specifically, but it would seem as though passengers were weighted to the weekends by 20%. This would then suggest then that passenger numbers were insufficient, given that most people here maintain that the Lady of Mann was very reliable (and I have no reason to doubt this)

 

Bearing in mind that the current owners paid £225 m for the IOMSP I believe that they will very quickly recupe their capital outlay by selling assests (Imperial Building and other land) and from trading profits. There is every likelihood that they have already done this.

Why then bother to invest in new boats? If the Government tear up the User Agreement then the company value might fall but they have already had their capital back plus.

They can then sell the business to the highest bidder. What ever happens these guys won't be in it for the long haul especially if they have to invest £18m by 2011 to maintain the agreement

 

Do you any evidence at all to back this up? What would be the point of buying a monopoly if only to strip it of its assests? Surely the value of one is in the long term?

[Lost Login]

The way forward is to scrap the user agreement and francise the routes.

 

If the Government tear up the User Agreement then the company value might fall but they have already had their capital back plus.

 

These I presume are legally binding agreements. If they are broken then I presume there are penalties etc to deal with such breaches on either side. If one side unilaterally decides to scrap, i.e. IoM Govt they will get their arses sued are loose unless it is done in accodance with the contract. To be honest the owners of the SP might like the govt to tear up the contract as they would probably walk away with a big compensation payment from the caughts.

 

Such an action would also ruin the reputation and confidence in the IoM and the Govt in a stoke internationally. Why would anyone have any confidence in any other future or current government contract on any subject if it was seen the IoM govt could artbitarily tear up a contract.

 

I have read some poor comments in this thread but to suggests that contracts can just be scrapped with no consequence comes pretty near the top. If that is the level of individuals understanding of the situation then I am not surprised we get some ill thought through suggestions.

 

Alternatively would you agree to lend me say £10,000 for a couple of years and I will agree to pay you 50% interest which we will document anenter into by way of a contract. After one year I will then decide I do not like it and tear up/scrap the contract and you can whistle for the £10,000. I presume you would not agree and if I tried you would scream that there was a contract in place despite me saying I had scrapped it. Or could I not just do that?

[Lost Login]

So if we compare Novembers:

 

2003 - 11694

2004 - 6497

2005 - 6232

2006 - 6082

As the service dropped to zero in November 2007, there is obviously going to be a very steep drop. It seems that after 2003 the Steam Packet dropped to a weekends-only service for the Liverpool route during the winter(which explains the 44% drop for Novembers and 41% for Decembers). I don't know why this is specifically, but it would seem as though passengers were weighted to the weekends by 20%.

 

I would also like to see comparisons for flights to Liverpool. One of the advantages of fast craft was at the time they were introduced said to be competition for the airlines on the Lpool route and I think prices consequently were reduced. It would be interesting if the boat figures were effected by cheap flight offers.

 

Ultimately there are many variables and it will be hard to factor all in

[homarus]

Two points if I may?

 

1. 2003 passengers figures may well be unusually high, when you factor in the amount of large scale Capital projects underway at that time also the buoyant financial sector ,many workers were residing in Temporary accomodation and going home weekends .

Passenger figures after 2003 ,for winter months appear to be pretty constant?

2. I think the actual figure Macquarrie paid was $225million not pounds,although I do stand to be corrected!