Oft Probe Into Steam Packet Fuel Surcharges

[manshimajin]

What MW says sounds suspiciously like 'accountant-speak' to me.

I'm pretty sure Tinker Airlines will stay in business throughout this recession because of their aggressive fare structuring. The amount of profit loading on winter sailings is readily available to Woodward et al so you would think they could price down deals to fill the hold if they had to. So why don't they?

 

Because, of course, they have a monopoly so they don't have to.

 

They must be operating at a profit as the business was sold as a going concern. So let's see just how much of a profit they are making.

PK I think it goes beyond profit and Winter (Spring/Autumn/Summer) sailings.

 

What the IOMG needs in it role as surrogate for the citizens of the IOM are transport links that deliver significant growth in tourist numbers to the island - which boost business opportunities here and generate greater income for individuals and businesses and revenue for the Government to be able to make improvements.

 

Being strategically positioned between countries that between them have nearly 70 million people should be an opportunity to profitably generate this significant increase in business - provided those 70 million are seen as the target market, not the 84,000 on the Island.

 

The IOMSPC seem to be more concerned with defending their pricing structure than with growing market share of UK/Ireland outbound tourists - in fact MW's comments seem to be quite negative on this latter point as if it may not be possible.

[lfc84]

Jan 1995 Aug 2005 Sept 2008 Feb 2009

Average weighted cost of Marine Fuel (per tonne) £100 £315 £597 £512

£100 inflated by Manx RPI £100 £133 £150 £147*

Typical footpassenger fare (ex fuel surcharge) £25 £15 £15 £15

Typical footpassenger fare (inc fuel surcharge) £25 £17 £20 £20

£25 footpax fare inflated by Manx RPI £25 £33.25 £37.50 £36.75*

*Latest RPI data available is to December 2008

 

We have consistently lowered the cost of passenger fares despite also having to deal with record fuel prices in recent years. The table below details actual fuel costs over the last three years:

 

Year Fuel Costs Amount recovered by Surcharge Amount absorbed by Steam Packet Proportion absorbed by Steam Packet

2006 £3.4m £1.8m £1.6m 47%

2007 £4.8m £2.1m £2.7m 56%

2008 £9.4m £3.3m £6.1m 65%

 

In one, end of thread.

 

Seriously though, there should be a thread for moaning foot passengers. And another thread for complaints about vehicle and freight charges.

 

As a foot passenger I fail to see what people are complaining about in relation to foot passenger fares.

 

Service levels have improved. Standards are improving: new vessel on the way, improvements at Liverpool (longoverdue) and some decoration at Heysham. They've also introduced fast ferries and hopefully journey time will reduce with the new vessel. I just wish they would leave the island on Fridays at about 4.30pm so I could travel after work.

 

If you dont like it, there's a plane in the morning. Oh wait, Euromanx went bust, Loganair sold out to Flybe, Manx2 are under pressure from Flybe, Eastern have suffered 38% drops and ceased Southampton. You only have to look at the airport to see what happens in a free for all.

 

Be careful what you wish for.

[Frances]

Heysham is a pain for foot passengers - a sandbank at the end of the road from nowhere - the train service has now deteriorated with long waits built in.

It is completely useless for anything other than the day sailings. Coming by car the road link to the motorway at midday can have very long delays due to the link via Lancaster town centre.

[lfc84]

Heysham is a pain for foot passengers - a sandbank at the end of the road from nowhere - the train service has now deteriorated with long waits built in.

It is completely useless for anything other than the day sailings. Coming by car the road link to the motorway at midday can have very long delays due to the link via Lancaster town centre.

 

agreed

[cheesemonster2005]

Agreed too. A few years ago I complained to the SPC about the fact that they had very few sailings from Liverpool compared to Heysham (during the winter). Their reply said that most people prefer to travel to/from Heysham. I can't imagine why. For foot passengers it's awful and adds an extra few hours onto onwards journeys to Manchester, Liverpool and beyond. Surely for car users it can't be much better unless you want to visit Scotland or Lakeland?

 

The ferries to/from Liverpool and Dublin should be the priorities.

[Sebrof]

But I also think you are right to be impressed about the talent on this forum. Not so long ago someone posted that you should put your wedge in gold. Of course, in pure ignorance a lot scoffed at this idea. But I found out today that against a basket of currencies over the last three months the value of gold has risen by a massive 20%! What a fantastic return isn't it Mr Sebrof? A TWENTY PERCENT rise in ONLY THREE MONTHS when interest rates are at their lowest for decades. All those detractors must feel really stupid now, wouldn't you agree Mr Sebrof?

 

In talking about graphs, of course a curve can be straight. Good grief.

 

PK, I know that you have been crouching in your hole watching the price of gold and waiting for the moment when it had temporarily produced a better return, and you could leap out and shout: "Yah-boo, sucks to you" in a rather puerile manner.

 

Gold is always a short term investment (over the last half century the FTSE has out-performed gold hugely) because it doesn't produce a return. For that reason, you HAVE to sell it within a relatively short time of acquiring it, and getting the timing right can be very difficult to do, even for experienced metal traders.

 

For you or me, gold is a mug's game. Had you actually bought some, you would now be agonising over whether to take a profit and run, or keep holding on.

 

And tell me, oh gold expert, weren't you the one who thought it was a base metal?

 

S

(Trying not to laugh)

[Frances]

Their reply said that most people prefer to travel to/from Heysham. I can't imagine why.

depends on how you phrase the question - the Heysham link is much more reliable as the Ben will sail in more than a stiff breeze whereas the Liverpool sailings are cancelled whenever the wind gets up - thus if you need to travel you had to choose Heysham (as I did during winter when there was a nominal Liverpool service) - there is also a minor problem with the Sea Cats leaving too early for a bus from Peel, a taxi adds too much to cost for a single traveller - not all have family or friends willing to do a 6.30am journey.

 

Last month there was a survey at the Sea Terminal asking similar questions - I asked just who preferred Heysham - apparently students based at Lancaster and Preston!

[manshimajin]

What MW actually wrote was: "Offering in excess of 2,500 passenger spaces per day during this period, I do not believe that any amount of .........."

 

In other words, he was suggesting that they make a loss during the winter, not all year round.

 

And that is understandable. I am sure if he lowered prices in the summer, he would get more passengers. But he gets plenty then, and he doesn't want to lower prices because that is the time he makes his profits.

Sebrof you are sounding like an accountant not a business manager. Are you saying that the IOMSP runs full at all times other than the Winter? I am a regular user of the service like yourself and can vouch that it does not. There is plenty of spare capacity on many (probably most) of the occasions that I travel outside of Winter.

 

From what MW is saying the IOMSPC is having to 'subsidise' its unacceptable Winter load factors from the profits made at other times of the year. The higher the load factor that can be achieved on non-Winter sailings the more this 'subsidy' can be spread on a per passenger basis. This is why I am interested that MW refers dismissively to "clever marketing or demand from an island population of 80,000..." rather than to the major opportunities to increase inbound passenger uptake from the huge market in the UK and Ireland. You may be aware that a smaller percentage profit on a larger number produces a bigger return than a large percentage profit on a smaller number.

 

I think that you are one of the few people who have raised the issue of a straight line price/demand curve. But in very competitive travel markets (ie UK and Ireland) there is clearly some relationship between price and demand which is why Ryanair is worth more as a company than British Airways.

 

I shall return on deck to enjoy the sunshine and my Bacardi.

[P.K.]

In talking about graphs, of course a curve can be straight. Good grief.

 

PK, I know that you have been crouching in your hole watching the price of gold and waiting for the moment when it had temporarily produced a better return, and you could leap out and shout: "Yah-boo, sucks to you" in a rather puerile manner.

 

Gold is always a short term investment (over the last half century the FTSE has out-performed gold hugely) because it doesn't produce a return. For that reason, you HAVE to sell it within a relatively short time of acquiring it, and getting the timing right can be very difficult to do, even for experienced metal traders.

 

For you or me, gold is a mug's game. Had you actually bought some, you would now be agonising over whether to take a profit and run, or keep holding on.

 

And tell me, oh gold expert, weren't you the one who thought it was a base metal?

 

S

(Trying not to laugh)

Yep, that was me who posted "base metal", I meant it as opposed to an alloy. Glad you're getting a laugh as I am. Of course you're right, when to take the money and run is the critical bit. Strangely back at HQ the boss is talking about me investing in gold for her tomorrow. But as it's Friday 13th today it's just too unlucky! By the way font of all knowledge, how does one shout "Yah-boo, sucks to you" in a mature way?

 

Always happy to help - cheers PK

[Major Tom]

Boats full on next Friday no more vehicles being booked so what facilities are there at Heysham to pick up a hire car?

[Sebrof]

Sebrof you are sounding like an accountant not a business manager. Are you saying that the IOMSP runs full at all times other than the Winter? I am a regular user of the service like yourself and can vouch that it does not. There is plenty of spare capacity on many (probably most) of the occasions that I travel outside of Winter.

 

I am saying what I said. The Racket makes a loss on Winter sailings (according to MW), and I have no reason to disbelieve him.

 

As for the summer, I think that despite what you say, the SP might be better off being not full at high prices than full with low prices. I am not privy to the numbers in this case, and therefore not qualified to judge, but I think there is a reasonable case to be made for this approach.

 

.......I am interested that MW refers dismissively to "clever marketing or demand from an island population of 80,000..." rather than to the major opportunities to increase inbound passenger uptake from the huge market in the UK and Ireland.

 

I don't agree with you here. Nobody is going to come here just just because fares are low. There has to be a much more compelling case than that, and it's not the Steam Packet's job to make the case in isolation. There needs to be a proper government-led marketing effort, carefully targeted, and ideally packaging travel and accomodation together. This is where a subsidy could be helpful, to make the IOM competitive with, say, North Wales or the Lakes. Or the Scotish golfing circuit, if that is a target market.

 

I think that you are one of the few people who have raised the issue of a straight line price/demand curve. But in very competitive travel markets (ie UK and Ireland) there is clearly some relationship between price and demand which is why Ryanair is worth more as a company than British Airways.

 

I think the island has limited appeal as a tourist destination in this day and age. It's certainly got little to offer the mass market (and thank God for that). Price is very much a determinant in mass travel, but less so for the island, unless the target market is wrinklies in charabancs. And there's not much money in that.

 

But whatever, I think we have to accept that a good ferry service, winter and summer, is expensive to operate, and that the opportunities for persuading people to come here off-season are limited - unless government comes up with some attractions that outdo what's available across. However, other than cannabis cafes and licensed brothels, I'm not sure that there are many possibilities.

 

I shall return on deck to enjoy the sunshine and my Bacardi.

 

Enjoy it while you can!

 

S

[Sebrof]

Boats full on next Friday no more vehicles being booked so what facilities are there at Heysham to pick up a hire car?

 

http://www.1car1.com/branch/lancaster-p220...CFQulQwodQCgLdg

 

S

[monasqueen]

Jan 1995 Aug 2005 Sept 2008 Feb 2009

Average weighted cost of Marine Fuel (per tonne) £100 £315 £597 £512

£100 inflated by Manx RPI £100 £133 £150 £147*

Typical footpassenger fare (ex fuel surcharge) £25 £15 £15 £15

Typical footpassenger fare (inc fuel surcharge) £25 £17 £20 £20

£25 footpax fare inflated by Manx RPI £25 £33.25 £37.50 £36.75*

*Latest RPI data available is to December 2008

 

We have consistently lowered the cost of passenger fares despite also having to deal with record fuel prices in recent years. The table below details actual fuel costs over the last three years:

 

Year Fuel Costs Amount recovered by Surcharge Amount absorbed by Steam Packet Proportion absorbed by Steam Packet

2006 £3.4m £1.8m £1.6m 47%

2007 £4.8m £2.1m £2.7m 56%

2008 £9.4m £3.3m £6.1m 65%

 

As a foot passenger I fail to see what people are complaining about in relation to foot passenger fares.

 

Service levels have improved. Standards are improving: new vessel on the way, improvements at Liverpool (longoverdue) and some decoration at Heysham. They've also introduced fast ferries and hopefully journey time will reduce with the new vessel. I just wish they would leave the island on Fridays at about 4.30pm so I could travel after work.

 

But foot passengers are suffering the fuel surcharges well into the future, like everyone else. This has nothing to do with the facilities on board or at the ports. The "improvements" at Liverpool will need to be experienced before they can be called improvements - for instance, it would appear that foot passengers will need to transport their luggage up from the landing stage in future, rather than collect it at the top, and as you know, at low tides there can be quite a climb.

 

The "new" vessel, again, will need to be experienced before this can be called an improvement. We already know that it will be unable to set sail when here's a bit of wind blowing, with the same restriction as the old seacat.

 

Agreed, the Friday afternoon departure from the Island was excellent for getting away at the weekend, and seemed very popular. Sad that this cannot be fitted into the schedules.

 

And those fuel costs in the schedule above......Does the 2008 figure include the alleged £1million it cost in fuel to bring the "new" vessel half way round the world? Is this what the supplements are now trying to recover? (Like MEA recovering extra-ordinary costs from their surcharges)

[monasqueen]

Boats full on next Friday no more vehicles being booked so what facilities are there at Heysham to pick up a hire car?

 

http://www.1car1.com/branch/lancaster-p220...CFQulQwodQCgLdg

 

 

Hire car firms in the Lancaster area used to be willing to meet the morning boat at Heysham. They used to advertise in the Courier, or if you Google Heysham car hire and ring round, you'll probably find one that will help.

 

You'll need to return the car (probably to their depot, with lift being given to the port) in plenty of time for the lunchtime sailing back.

 

Alternatively, if you have to go by foot, price up the air alternatives - airports all have hire car facilities.

[manshimajin]

I am saying what I said. The Racket makes a loss on Winter sailings (according to MW), and I have no reason to disbelieve him.

As for the summer, I think that despite what you say, the SP might be better off being not full at high prices than full with low prices. I am not privy to the numbers in this case, and therefore not qualified to judge, but I think there is a reasonable case to be made for this approach.

 

My argument is that the year does not comprise two seasons, Winter and Summer. The IOMSPC is sailing all year round. If you look at the figures we have a peak in TT season but our Spring/Summer/Autumn tourism seasons are very short compared to other destinations. Shouldn't the IOMSPC be trying to build up numbers through 3 seasons?

 

I don't agree with you here. Nobody is going to come here just just because fares are low. There has to be a much more compelling case than that, and it's not the Steam Packet's job to make the case in isolation. There needs to be a proper government-led marketing effort, carefully targeted, and ideally packaging travel and accomodation together. This is where a subsidy could be helpful, to make the IOM competitive with, say, North Wales or the Lakes. Or the Scotish golfing circuit, if that is a target market.

 

We almost agree - marketing is not just about price but does includes price. I read over and over again that the Island's marketing and tourism 'offer' is not done well. To increase inbound tourism numbers and to improve on the 60% empty boat loadings things need to be done. Being dismissive about marketing is frankly not good management when on average you are less than 40% full - it won't happen by itself. The IOMSPC (and airlines too) are part of the solution as well as part of the problem. Incidentally I still have not heard any 2009 seson promotion for the IOM and the IOMSPC in Ireland and people are well down the road of deciding about summer holidays (Maybe someone has?). Hope this is not another example of non-marketing.

 

I think the island has limited appeal as a tourist destination in this day and age. It's certainly got little to offer the mass market (and thank God for that). Price is very much a determinant in mass travel, but less so for the island, unless the target market is wrinklies in charabancs. And there's not much money in that.

 

Well your opinion is certainly borne out by the fact that we only have half the visitors we used to get. So there is another business and employment sector cut in half. The DTL and IOMSPC seem to primarily target North and Midland England and the former doesn't even have a multi-lingual site when most of our competitors do.

 

But whatever, I think we have to accept that a good ferry service, winter and summer, is expensive to operate, and that the opportunities for persuading people to come here off-season are limited - unless government comes up with some attractions that outdo what's available across. However, other than cannabis cafes and licensed brothels, I'm not sure that there are many possibilities.

 

Oh ye of little faith!!! maybe the start point as discussed on another thread is to use a commercial tourism promotion company rather than a government department. But again the IOMSPC has a role to play.

 

I shall return on deck to enjoy the sunshine and my Bacardi.

 

Enjoy it while you can!

 

Thank goodness I told the captain to put off sailing to Antigua for a few days.