Guidance Note – Ferry Operators Scrutiny

Introduction

The ferry operators have been invited to attend to give information within certain parameters. There is no legal requirement for them to attend and answer the questions put to them. The session is for councillors to ask questions in an impartial way to gather evidence. Councillors are asked to stay within the agreed terms of reference set out below and to avoid making statements which could be interpreted as supporting or criticising one or all operators.

In addition, please note there are some questions the operators will refuse to answer because of commercial sensitivity and/or the Competition Act. It is important that all present at the meeting (councillors, press and public) understand the reasons for them not being able to answer these questions.

Terms of reference (agreed at meeting of Cross Solent Services Scrutiny Task and Finish Group Thursday 5th December 2013)

To take evidence from the following:-

• Relevant users groups • Island MP • Representatives of relevant Island organisations including the Chamber of

Commerce, IW Federation of Small Businesses, Visit Wight, IW Trades Council and the Quality Transport Partnership

• The operators – Wightlink; Red Funnel and Hovertravel

All meetings will be open to the public and press.

The Task and Finish Group will ascertain what arrangements could be put in place to ensure more effective liaison between the cross Solent ferry operators and the Island community on key aspects such as fares, frequency and timetabling together with facilitating a better understanding of the economic impact of service provision.

Competition Act

This prohibits agreements between businesses which prevent, restrict or distort competition or are intended to do so and which affect trade in the UK and/or EU. Decisions of associations of businesses are also covered, as is cooperation which falls short of an agreement or decision.

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The OFT has a wide range of powers to investigate businesses suspected of breaching these laws. Businesses that break the law can be fined up to 10 per cent of their worldwide turnover and an individual found to be involved in an cartel can be fined and imprisoned for up to five years and directors of companies that breach the prohibitions can be disqualified for up to 15 years.

Questions to avoid

It is a decision for the ferry operators themselves to determine whether or not they are at risk of breaching the law on competition. The ferry operators are at the meeting voluntarily and the Council has no formal scrutiny remit, so members must accept that the operators decisions on what questions they will answer are final.

The Cross Solent Operators are not able to discuss certain matters in an open forum due to commercial sensitivity and the need not to infringe competition law. These are:

a) Future timetable plans b) Future pricing strategy c) Financial structure of the business d) Future ownership plans e) Future product plans f) Collaboration from a competition law perspective.

Please note that any questions asked on these matters will not be answered. Davina Fiore Deputy Director of Resources and Monitoring Officer

January 2014

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Cross Solent Travel Information for Scrutiny Task and Finish Group

Passengers Year

2008 2009 2010 2011 2012 2013

Foot 4,148,732 4,123,445 4,108,006 4,006,639 3,854,241 3,880,956

Car 4,445,278 4,536,340 4,572,003 4,700,287 4,603,867 4,329,128

Coach 456,899 451,273 424,602 405,274 369,845 359,622

Total 9,050,909 9,111,058 9,104,611 9,112,200 8,827,953 8,569,706

Market Share Year

2008 2009 2010 2011 2012 2013

Hovertravel 8.83 9.35 9.35 10.12 9.63 9.76

Red Funnel 33.09 34.00 34.01 35.57 35.26 36.04

Wightlink 58.08 56.65 56.64 54.31 55.12 54.20

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CROSS SOLENT SERVICES SCRUTINY TASK AND FINISH GROUP QUESTIONS TO FERRY OPERATORS ISSUES RELATING TO THE OFT REPORT 1. In the OFT report in October 2009 paragraph 3.38 indicated “The ferry

companies have told us that they recognise the essential nature of the services they provide and that they need to manage a special responsibility to the Island alongside the commercial pressures they face.” Do the operators still believe that this is the case? RED FUNNEL RESPONSE : Although Red Funnel is a private commercial company which receives no subsidy, it is acutely aware that its services help underpin the Isle of Wight’s economy and provide a lifeline to residents and their visiting friends and family. The future size and shape of the business is largely dependent on the level of economic activity on the Island and the attractiveness of the visitor offer. Red Funnel is the only cross-Solent operator who runs 365 days a year. Although many of the 30,000 departures per annum are loss making due to low utilisation, the importance to Islanders and Island based businesses is understood. Vehicle revenue from visitors to the Island between Easter and September helps fund services in Q4 & Q1 and evening and overnight sailings throughout the year.

From a pricing perspective, Red Funnel strives to offer affordable year round fares from the Island by working with users to ensure the number of sailings provided is only what is needed or valued. Clearly users should not be asked to pay for services they don’t want. The Company believes it is providing the right timetable to meet this need but is always willing to listen and consult.

2. Regarding complaints and customer satisfaction paragraph 6.89 of the

OFT report stated “two of the three operators have not carried out any substantive customer satisfaction surveys for three years. This may suggest that cross Solent operators have had more of a ‘take it or leave it’ attitude to their customers…”. Paragraph 6.92 also indicates “All of the ferry operators have indicated to us that they will be undertaking regular customer satisfaction surveys and reporting the results.” Can you list what surveys have been undertaken since 2009, the outcomes from these and where these have been reported? RED FUNNEL RESPONSE : Red Funnel has carried out monthly customer satisfaction surveys since January 2010 and published the results at : http://www.redfunnel.co.uk/corporate-information/performance-monitoring/customer-satisfaction/

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The results are as shown below

Customer satisfaction ex Mainland 2010 2011 2012 2013

Excellent/good 91.5% 91.8% 93.3% 94.7%

Average 7.1% 6.6% 5.7% 4.0%

Poor 1.4% 1.6% 1.0% 1.3%

Customer satisfaction ex Isle of Wight 2010 2011 2012 2013

Excellent/good 75.2% 78.7% 81.2% 87.1%

Average 20.7% 17.2% 16.0% 11.0%

Poor 4.1% 4.1% 2.8% 1.9%

A positive trend in customer satisfaction is evident, especially for those travelling from the Isle of Wight.:

The Company has held regular meet the manager and focus group sessions since 2009 and operates ‘you said we did’ boards at the terminals. Regular mystery shopping exercises are also conducted across the business. A large cross-Solent passenger survey was commissioned by Red Funnel in 2013. For 2014, Red Funnel will supplement these activities with a ‘Users Forum’ which will ensure a regular open dialogue with customers regarding our services.

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3. Also in paragraph 6.92 in providing evidence of customer satisfaction

surveys by Wightlink the OFT noted that the company had also established local customer forums on the Island. Can Wightlink give additional information as to these forums and if they are still in existence? RED FUNNEL RESPONSE : Not Applicable

4. On punctuality of services the 2009 OFT report believed that the

percentage of scheduled departures which are not completed appeared to be low and stable. The Wightlink figures did show that there had been some decline in punctuality in recent years. Can the information provided in table 6.11 (Wightlink), table 6.12 (Red Funnel) and table 6.13 (Hovertravel) be provided so that there is updated information on punctuality and cancellations since 2009? http://www.redfunnel.co.uk/corporate-information/performance-monitoring/service-reliability/ Reliability 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Total Sailings 38126 37794 37454 37514 35852 35494 34965 31135 30434 30458

Cancelled sailings 314 161 426 343 260 493 557 175 306 637

Sailings operated 99.2% 99.6% 98.9% 99.1% 99.3% 98.6% 98.4% 99.4% 99.0% 97.9% Note: A large proportion of cancellations are weather related http://www.redfunnel.co.uk/corporate-information/performance-monitoring/service-punctuality/ Punctuality 2011 2012 2013

Total sailings operated 31135 30128 29821

Sailings departing >5 mins late 3026 1384 2037

% departing within 5 mins 90.3% 95.4% 93.2%

5. Paragraph 7.18 of the OFT report of 2009 indicated that whilst there had been some decline in frequency this did not appear to be a long term trend. Can the level of services for each year since 2009 be given? RED FUNNEL RESPONSE : Please see (4) above. The majority of sailings removed from the timetable stem from the restructuring of the daytime Red Jet Hi-Speed schedule in 2012. Due to the massive increase in fuel costs, the old timetable was no longer affordable for users so in consultation a new day time schedule with departures every 60 minutes during the middle part of the day Monday-Friday was devised. This saw utilisation increase from 19% to 30% with no loss of traffic. A super off-peak day return fare was introduced from the Island to offset any inconvenience. The start and finish times of the service have remained generally constant. The Red Jet timetable and the current vehicle ferry timetable (largely unchanged for several years’ and on sale to September 2015), are both optimised to balance demand with social responsibility, cost of provision

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(how much the user is prepared to pay) and the need to maintain and upgrade vessels each year. Schedules are occasionally supplemented to cope with spikes in demand e.g. festivals, Cowes Week, football matches etc. This may include chartering additional capacity as was the case for Bestival in 2013. Islanders benefit from having far more sailings than could be justified by Island demand alone, and if they have any flexibility on timing, they can pick the cheaper sailings.

6. The OFT report in 2009 did find that the concerns expressed around the

high acquisition prices of both Wightlink and Red Funnel appeared to have merit. It concluded that it was too early to say what the consequences of this would be. The OFT also stated that it was too early to tell what repercussions there would be for service levels and fares as the result of the acquisition prices. Can Wightlink and Red Funnel comment on whether they believe that service levels and fares have not been affected by the acquisition costs? RED FUNNEL RESPONSE : Red Funnel operates like most privately owned, non-subsidised ferry operators by offering a service which meets the requirements of the vast majority of prospective customers at affordable price points. Prices are moving broadly in line with inflation. Revenue growth is more likely to come from volume growth to and from the Island, not from (above inflation) price increases. The Isle of Wight as a visitor destination faces fierce competition from destinations in the UK and abroad so it is not in the Company’s interest to price beyond the reach of any of its market segments. Red Funnel does not believe that acquisition costs or debt levels have had or will have any bearing on its timetables or prices.

7. In 2002 the Isle of Wight Quality Partnership (QTP) was established as

an independent organisation. This comprised of transport operators, business representatives, local interest, environment and transport user groups. Within the aims and objectives of the QTP are the following :-

a. Work together with other partners to ensure that the island has

high quality transportation services which are available to all users and at a reasonable cost.

b. To encourage the improvement of cross Solent ferry links.

Given this should the involvement of the operators in the QTP be reviewed to ensure that this does provide a constructive forum for both them and users? RED FUNNEL RESPONSE : Although management resources are limited, Red Funnel is happy to engage with the QTP (or similar) if the

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topics under discussion are relevant to the business and are not commercially sensitive. Red Funnel already plays an active role with the following groups and organisations: -

Solent LEP Visit Isle of Wight Ltd

Main Board Marketing sub-group Exhibition sub-group

Isle of Wight Chamber of Commerce Main Board Tourism Development Board Investment & Planning Strategic Infrastructure

Cowes Harbour Commission Advisory Committee Southampton & Fareham Chamber of Commerce Marketing Southampton Airport Transport Forum (Southampton Airport) SW Trains Stakeholder Forum Hampshire Top Attractions Group Cowes Business Association Southampton Port Users Association Chamber of Shipping

8. What would be the impact at this time of any OFT investigation into

cross Solent ferry services? RED FUNNEL RESPONSE : In Red Funnel’s opinion another OFT investigation would reach the same conclusions as before, particularly as in both parts of our business, prices are moving broadly in line with inflation. Since 2005 Red Funnel has become more competitive and as a consequence has seen steady growth in its market share.

A new enquiry would be hugely expensive for the organisations involved and would impact on the Isle of Wight’s visitor economy by creating adverse publicity and by diverting management resources that otherwise would be spent promoting the Island.

Other issues 9. What dialogue takes place with other public transport providers,

such as Islandline, Southern Vectis and South West Trains, regarding timetables and connecting services? RED FUNNEL RESPONSE : Red Funnel recognises the benefits of integrated transport and maintains a close and regular dialogue with both SVOC and South West Trains (SWT). The Red Jet timetable is designed around the needs of commuters and in particular connectivity with SWT’s London Waterloo service. To enable this Red Funnel continues to

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provide a significant subsidy for the free CityLink bus service between Southampton Central and Town Quay, despite the threat of the removal of some public funding for this service.

10. What arrangements are in place to assist Island businesses to obtain the most effective fares? RED FUNNEL RESPONSE : Negotiated rates are in place with hundreds of Island businesses. Island firms without rates (and their mainland suppliers) are advised to discuss their travel requirements with the Red Funnel Sales team.

11. What incentives are given to increase traffic on off peak sailings?

RED FUNNEL RESPONSE : Vehicle pricing is based on actual and anticipated demand together with the length of stay; sailings with lower expected demand would be available at lower prices (up to half as much as a peak sailing price). Prices also go up in small increments as a sailing becomes full, which means that busier sailings will increase in price while quieter sailings will remain at the initial price. Day returns are always cheaper than short-breaks or longer stays. Foot passenger pricing is based on duration of stay and time of travel (peak, off-peak and super off-peak). For example an adult Red Jet day return from the Island travelling at peak times is £21.00, falling to £15.20 if travelling from 0915 hrs. and £8.90 (min 2) if travelling from 1115 hrs. Various volume/loyalty discounts are available and tactical offers are used on both services from time to time to promote travel on sailings with low utilisation, such as the recent campaigns that have provided discount vouchers to all Island households.

12. Is there any evidence of there being unmet demand at peak periods? RED FUNNEL RESPONSE : Only a relatively small proportion of Red Funnel’s total sailings reach capacity and the majority of these are on peak weekends or due to major events. At these times sailings can sell out in advance of the departure date which could indicate the potential for additional demand. When we do see demand in excess of our own capacity we seek to provide extra sailings by chartered vessels. (e.g. additional sailings for Bestival)

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13. What is the current process and charge for students and those travelling for medical appointments? Can a standard process and charge be introduced for these categories? RED FUNNEL RESPONSE : Students Student season tickets are heavily discounted and offer unlimited travel on both routes during the validity period. They are available for 12 or 6 months and for 30 or 7 days duration. Season tickets can be purchased online with a valid university/college registration letter. Student saver day return tickets are available for the current academic year in books of 20 and are valid for travel on either route and on any sailing, subject to availability. They expire on 31 July each year and can be purchased online with a valid university/college registration letter. Healthcare travel Red Funnel's scheme provides discounted foot passenger travel to eligible Isle of Wight residents who have an NHS medical appointment in Southampton. A special return passenger ferry fare of £8.90 per person is available for the patient and one person travelling with them. Where the patient is a child, the discounted fare is available for up to 2 adults travelling with the child. The fare generally applies to sailings from East or West Cowes after 8:45am although exceptions can be made for earlier appointments. Where vehicle travel is required, special fare and booking arrangements are put in place in consultation with the customer to meet their requirements.

Competition regulations may preclude uniform pricing.

14. Can you provide some specific information on the volume of

customers and vehicles on your route(s) with a breakdown of how much is business/commercial traffic and how much is private/passenger traffic for the past three years?

Traffic Volumes 2011 2012 2013

Hi-Speed Passengers 1,182,848 1,144,216 1,125,506

RoRo Passengers 2,058,383 1,968,088 1,963,167

Cars 628,655 604,346 618,837

Commercial 122,218 122,155 123,493

Coach 5,278 5,208 5,140

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15. What investment has been made by the company in its services and

infrastructure since 2009 and what is proposed in the future? Red Funnel has invested in excess of £20m since 2009 in its services and the supporting infrastructure. These investments include new vessels, upgrades to the current fleet, improvements in the terminals and walkways at East Cowes, West Cowes and Southampton. In addition we have significantly improved the customer experience for easier online bookings, made vehicle check-in quicker using automatic number plate recognition technology, improved customer information in the terminals and by the provision of free Wi-Fi on our vessels.

Future Projects (public domain only)

In response to customer feedback we will be starting a

programme of accommodation upgrades on our RoRo vessels starting this year with the Red Falcon

We are actively engaged in plans for the upgrading of our facilities in East Cowes

Red Funnel is also a strong supporter of the Southampton Master Plan which would see us relocate to a new terminal with better traffic flow and improved customer facilities.

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WIGHTLINK FERRIES

WRITTEN EVIDENCE TO CROSS SOLENT SERVICES SCRUTINY TASK AND FINISH GROUP

Wightlink has a long and proud history of serving the Isle of Wight. As we sail from and to

the Island 364 days a year, we never forget the privilege of working in one of the most

beautiful environments in the world.

Our 600 members of staff are amongst the most hardworking and dedicated you will ever

wish to meet. Almost a third of them are Islanders, and, like all Wightlink staff, they enjoy

excellent terms and conditions of employment in recognition of their high levels of training

and their responsibilities for customer safety and security. As a result, they contribute

positively to the Island economy through their household expenditure and leisure pursuits.

As well as operating a safe and reliable service today, we need to secure the future of our

services across all three routes, and investment is critical to this. That is why we have

invested almost £70m over the last six years, replacing our fleet and improving our port

and on-board facilities.

We’re faced with rising costs – for example our fuel bills more than tripled between 2009

and 2012 – and increased regulation and pension costs have also added to our outgoings.

But by running our business efficiently, we’ve been able to make sure that our average

ticket prices have risen more slowly than inflation over the last twenty years1.

Tourism, which accounts for around a third of the Island’s economy, is a highly seasonal

business. But nevertheless we run a year-round comprehensive timetable of almost

50,000 sailings across our three routes. Sometimes, and particularly in the last few years,

we have had to make the difficult decision to withdraw sailings from our timetables.

During the early 2000s, there was a very significant over-supply in the market and this was

unsustainable in the long term. Nevertheless, our commitment to providing a lifeline

service to the Island is evidenced by the fact that we provide more sailings than any other

operator and at times often run empty vessels or vessels where crew outnumber

passengers. There are more sailings today than when our routes were in public ownership2

and, despite receiving no public subsidy, our comprehensive timetable of off-peak sailings

means that 1 in 3 of our sailings are unprofitable. We are often the only cross-Solent

service which continues when bad weather occurs.

Maintaining as many off-peak services as possible to support family and business life is

just one way in which we’re Part Of Island Life. We’re significant supporters of the local

Isle of Wight economy, seeking to attract inward investment as well as being the single

biggest private sector financial contributor to Visit Wight (the Destination Management

Organisation). We offer a broad range of discounted fares and subsidise the fares of

hundreds of talented athletes, musicians, charity groups and community organisations.

We welcome all opportunities to engage with our customers, whether at our regular

‘Meet The Managers’ events, via User Groups, through our increasingly active social media

channels, letters and emails, in port and on board, or via official channels such as this

Scrutiny Process.

1 In 2013 a day return averaged around £43, representing a 32% increase since 1992. Over that time RPI has increased by 81%. 2 Timetable comparison 1974 & 2013, Portsmouth to Fishbourne car ferry

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However, we operate in a mature and therefore flat market so, without an overall

increase in traffic numbers, any changes which can be effected by such consultation,

including processes such as the current Isle of Wight Council Scrutiny Task and Finish

Group, will be marginal.

We therefore encourage the Council to work with us and others on increasing the overall

market. Since we know that the cost and convenience of ferry travel is no disincentive to

visiting the Isle of Wight3, other factors must be considered. In particular:

• Growth in the overall tourism market would support an enhanced ferry service. There

is a need to increase the overall bed stock and its quality such as by bringing redundant

and decaying hotels back into use and redeveloping abandoned holiday villages. We

note that the Isle of Wight Council has resisted many development plans and refused

planning permission for a number of schemes which would have contributed to this

tourism offer (for example Wight City, The Grand and The Savoy).

• Spreading tourism demand across the week would support across-the-week

comprehensive timetable. Many Island hotels still demand fixed days for guest arrivals

and departures and this drives high demand into Friday and Saturday through the

summer, with second home owners adding to the Friday peak.

• Spreading tourism demand across the year would support year-round comprehensive

timetables. The Island needs to develop a year-round tourism offer. Many hotels close

for between 3 and 6 months due to the lack of consumer demand. This is partly

because many Island activities are weather dependant and there are few attractions

that are weatherproof and therefore provide year round appeal.

It is also important to understand that, although overall visitor numbers have held up, this

has masked a steady consumer change from long breaks to short breaks and that this

impacts on ferry services. Short breaks tend to be focused around already-busy weekend

periods. Typically, people booking longer breaks book further ahead, allowing services to

be planned. Lead times on short stays (and day trips) are much shorter. In 2013, more

than half of Wightlink bookings were made within 3 weeks of travel.

Other factors which affect the market include:

• The need to develop the Island’s strategic housing plan. We note that the Island MP

and some Council members want to reduce the overall number of housing units in the

Island Plan Core Strategy. This will impact on population growth, particularly amongst

the economically active, and therefore impact overall volumes (for example Penny

Feathers and Blanchard Fields).

• The number of commuters will be impacted by reduced employment in Portsmouth

(following recent decisions regarding ship building and council cuts).

• Reduced levels of construction on the Island and a resulting drop in freight traffic.

• The need to plan a new fleet for Fishbourne~Portsmouth in light of increasing car sizes

and the increased use of double deck trailers by freight companies. Wightlink deferred

early investment in vessels to help deal with this issue, due to the current uncertainty.

Wightlink balances a complex range of factors when making decisions about pricing and

services – whilst always aware of the important lifeline services we provide. The

challenges which the market faces are similarly complex, and we look forward to

discussing both of these topics in more detail with Councillors.

3 Visit England research found that holiday makers rated the Isle of Wight as no more expensive to get to than other parts of the country and the Island was rated more highly than other destinations in terms of ease to reach by public transport.

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1. In the OFT report in October 2009 paragraph 3.38 indicated “The ferry companies have told us that they recognise the essential nature of the services they provide and that they need to manage a special responsibility to the Island alongside the commercial pressures they face.” Do the operators still believe that this is the case?

Wightlink recognises that it is the operator of a lifeline transport system. Our

commitment to the Island goes far beyond a commercial operation. As a result, we run a

timetable which is so comprehensive that one in three of our sailings (rising to over 40%

of sailings in winter) are loss-making. On some days, every sailing on our

Yarmouth~Lymington route loses money. That in itself is remarkable as we are a private

operator and receive no subsidy. However, we recognise our role as an operator of

lifeline services and are committed to the Island and its inhabitants.

Wightlink operates more sailings on more routes than any other operator.

���� Our foot passenger service starts earlier than Hovertravel4.

���� Our foot passenger service finishes later than Hovertravel5.

���� Our car ferry between Fishbourne and Portsmouth operates nearly 70% more

sailings a week than Red Funnel’s equivalent service between East Cowes and

Southampton6.

���� We run almost 50% more overnight car ferry sailings a week than Red Funnel7.

���� We make strenuous efforts to continue to operate, so long as it is safe to do so,

even in the most inclement weather.

���� When weather or other factors threaten to leave our customers stranded, wherever

possible we put on extra sailings or charter extra vessels, even if there is a negative

financial impact on our business.

We also offer an unrivalled travel discount scheme (more details of which are provided in

our response to question 13) and are active participants in, as well as generous

contributors to, the Island’s inward investment and tourism bodies. We are one of the

biggest charitable donors, supporting over 100 charities, athletes, arts groups and

individuals with over £350,000 of support.

We do all of this despite receiving no public subsidy and in the absence of any regulatory

intervention. We believe this demonstrates our commitment to the Island and that

Islanders are well served by a competitive market.

The tables overleaf provide more detailed analysis of overall cross-Solent ferry service

levels.

4 0547 from Ryde Pier v 0615 from Ryde 5 2215 from Portsmouth Harbour v 2100 from Southsea 6 Based on current winter timetable 7 Based on sailings which operate between 2300 - 0600

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The Isle of Wight enjoys a very high level of service from three operators.

Analysis of the current winter timetable demonstrates that there are more than 275

sailings a day to and from the Island with, at peak times, as many as 21 sailings an hour.

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

00:00 to 00:59

01:00 to 01:59

02:00 to 02:59

03:00 to 03:59

04:00 to 04:59

05:00 to 05:59

06:00 to 06:59

07:00 to 07:59

08:00 to 08:59

09:00 to 09:59

10:00 to 10:59

11:00 to 11:59

12:00 to 12:59

13:00 to 13:59

14:00 to 14:59

15:00 to 15:59

16:00 to 16:59

17:00 to 17:59

18:00 to 18:59

19:00 to 19:59

20:00 to 20:59

21:00 to 21:59

22:00 to 22:59

23:00 to 23:59

SAILINGS TO AND FROM ISLE OF WIGHTincludes all 3 ferry operators

WINTER TIMETABLE - FRIDAY

No. of Vehicle Ferries No. of Passenger Ferries

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Even the quietest timetable of the year, a Sunday in winter, offers Islanders almost 200

sailings a day.

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

00:00 to 00:59

01:00 to 01:59

02:00 to 02:59

03:00 to 03:59

04:00 to 04:59

05:00 to 05:59

06:00 to 06:59

07:00 to 07:59

08:00 to 08:59

09:00 to 09:59

10:00 to 10:59

11:00 to 11:59

12:00 to 12:59

13:00 to 13:59

14:00 to 14:59

15:00 to 15:59

16:00 to 16:59

17:00 to 17:59

18:00 to 18:59

19:00 to 19:59

20:00 to 20:59

21:00 to 21:59

22:00 to 22:59

23:00 to 23:59

Sailings to and from Isle of Wightincludes all 3 ferry operators

WINTER TIMETABLE - SUNDAY

No. of Vehicle Ferries No. of Passenger Ferries

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The forthcoming Summer timetable is considerably expanded with more than 300

sailings a day and as many as 25 an hour.

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

00:00 to 00:59

01:00 to 01:59

02:00 to 02:59

03:00 to 03:59

04:00 to 04:59

05:00 to 05:59

06:00 to 06:59

07:00 to 07:59

08:00 to 08:59

09:00 to 09:59

10:00 to 10:59

11:00 to 11:59

12:00 to 12:59

13:00 to 13:59

14:00 to 14:59

15:00 to 15:59

16:00 to 16:59

17:00 to 17:59

18:00 to 18:59

19:00 to 19:59

20:00 to 20:59

21:00 to 21:59

22:00 to 22:59

23:00 to 23:59

SAILINGS TO AND FROM ISLE OF WIGHTincludes all 3 ferry operators

SUMMER 2014 TIMETABLE - FRIDAY

No. of Vehicle Ferries No. of Passenger Ferries

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2. Regarding complaints and customer satisfaction paragraph 6.89 of the OFT report stated “two of the three operators have not carried out any substantive customer satisfaction surveys for three years. This may suggest that cross Solent operators have had more of a ‘take it or leave it’ attitude to their customers…”. Paragraph 6.92 also indicates “All of the ferry operators have indicated to us that they will be undertaking regular customer satisfaction surveys and reporting the results.” Can you list what surveys have been undertaken since 2009, the outcomes from these and where these have been reported?

At the time of the OFT report Wightlink was the only operator to conduct customer surveys

and we have continued doing so, and improved how we do that. Conducted since 2009 by

independent firm, Anne Hahlo Research and Marketing Solutions, the research tracked

customer satisfaction levels via on-line surveys and, more recently, via on-board research.

The data gathered via on-line surveys was analysed based on the following periods and

samples:

• April to June 2009 (1880 respondents)

• August 2009 to February 2010 (1122 respondents)

• April to July 2010 (2032 respondents)

• July to December 2010 (624 respondents)

• January to July 2011 (679 respondents)

• August to December 2011 (840 respondents)

• January to December 2012 (545 respondents8)

In each case, results were weighted to take account of demographic profile before being

analysed and published on Wightlink’s website. The previous five sets of data were also

made available for customer comparison. We plan to continue with this approach to data

publication.

In 2013, the decision was taken to increase investment and undertake onboard surveys.

The key reason for this change was to gather more contemporaneous data (and it has also

increased the response rate). Customers completed a questionnaire whilst travelling, with

independent researchers available to answer any questions. Results were again weighted

to take account of demographic profile.

Although the same questions were asked, care must be taken when drawing direct

comparisons, particularly on specific issues, because of the difference in methodology.

The onboard survey (total sample size 2812) was conducted in two waves and the key

findings were:

���� Over a third of customers rated Wightlink’s service as excellent and 80% rated it as

excellent or good

���� Almost two thirds rated Wightlink as excellent, good or acceptable value for money

���� Around 70% of those who expressed a preference said Wightlink was their favourite

cross-Solent operator

���� Only 5% of customers said they would not recommend Wightlink to a friend.

8 The sample sizes are independently verified as statistically robust for the market being analysed.

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8

Analysing the results enables Wightlink to track customer satisfaction over time.

More detailed information about individual routes and aspects of the service is available to

inform planning, training and investment decisions. For example, the results have led to

changes being made to the onboard offer and toilet refurbishments.

Wightlink is committed to continuing and improving its customer research over time and

will continue to make the results available on its website.

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3. Also in paragraph 6.92 in providing evidence of customer satisfaction surveys by Wightlink the OFT noted that the company had also established local customer forums on the Island. Can Wightlink give additional information as to these forums and if they are still in existence?

Wightlink made a number of commitments to enhance customer service as part of the

OFT Market Study in 2009. Wightlink has honoured all of these and has gone much

further in improving its customer care.

Wightlink’s commitments to the OFT were:

���� Publication of regular reliability and punctuality information – Wightlink publishes this

data every month for each route. Information is displayed in each port and online.

���� Development of customer satisfaction survey – As noted in the previous response,

Wightlink has invested significantly in customer research.

���� Customer charter – Wightlink produced a Customer Charter in October 2009. This was

published online and is available in port and onboard. It is currently being updated to

reflect the company’s recent focus on further improving customer care and

information.

���� Customer contact magazine – Island Link has been published on a quarterly basis since

2009.

���� Pricing information – Details of fares are available on the company’s website which is

updated regularly to enable customers to understand the full range of discounts

available.

���� Customer forums – Wightlink has welcomed the opportunity to support the

establishment of ferry user groups including the Yarmouth Ferry Users Group (YFUG).

We recognise that Islanders, as well as other users, rely on our services and we are

committed to continue to improve wherever we can. Following feedback from YFUG as

well as Island and mainland customers, Wightlink has extended its services between

Yarmouth and Lymington to trial extra late sailings on 24 evenings during summer

2014. The retiming of sailings to dovetail with train times was a direct result of YFUG

input. We are keen to establish an Eastern Ferry Users Group, or perhaps a whole-

Island group. With this is mind, our Directors have used recent Meet the Managers

events to try to identify interested parties and work is progressing in this area.

���� Subsidised travel – Full details of Wightlink’s unrivalled subsidised travel programme

are included in the response to question 13.

There is a myriad of other ways in which we keep in touch with and hear from the local

Island community. These include:

���� Isle of Wight Council meetings – since his appointment, Chief Executive Russell Kew

has organised quarterly meetings to update Councillors and senior officers of the

Council. Representatives of Wightlink have also taken part in the Council’s budget

consultation meetings.

���� Meetings with the Island’s MP – similarly the company has initiated regular meetings

with Andrew Turner MP

���� Meetings with local Councillors, town and parish Councillors in those parishes where

our ports are situated.

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���� Participation in a range of Island and local boards including:

o Isle of Wight Chamber of Commerce

o Solent LEP

o Visit Wight Destination Management Organisation

���� Hearing directly from customers. The number of customer communications in 2013

was considerably higher than in 2012. Despite this, the proportion of communications

which were complaints fell from 82% in 2012 to 68% in 2013. Some of the changes we

made as a result of customer input include

o Improving the flexibility of Multilink fares for Islanders (by creating a new

category for vehicles 5-6m in length)

o Improving signage onboard our ships

o Upgrading toilet facilities on ships and in terminals

o Improving the range of information available on our website

o Small vans are now able to access tourist rates

���� ‘Meet the Manager’ events such as the ones held at Ryde Pier and onboard St Faith,

allow passengers to meet the company’s Chief Executive, Russell Kew, and senior

managers.

���� Our uniforms invite customers to provide feedback and the company invests in

Mystery Shoppers to ensure levels of customer service are constantly improving.

���� Social media – Wightlink engages with customers on a daily basis via social media

platforms including Facebook and Twitter. Recent investment in this area resulted in

the company being ranked alongside John Lewis, Santander and Honda as one of the

UK Twitter Top 100 Customer Care Leaders.

The ‘Performance In People’ customer services blog recently praised Wightlink’s customer

care during the pre-Christmas storms saying ‘Wightlink performed well under these

pressing circumstances’.

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4. On punctuality of services the 2009 OFT report believed that the percentage of scheduled departures which are not completed appeared to be low and stable. The Wightlink figures did show that there had been some decline in punctuality in recent years. Can the information provided in table 6.11 (Wightlink), table 6.12 (Red Funnel) and table 6.13 (Hovertravel) be provided so that there is updated information on punctuality and cancellations since 2009?

Wightlink’s services continue to run to a high level of reliability with punctuality

performance (against exacting targets) also very good. Performance against both

measures has improved since 2009.

Wightlink Cancelled

On-Time

Sailings Services Reliability Departures Punctuality

YEAR

each way each way % each way %

2009

59,926 663 98.9% 51,435 85.3%

2010

61,519 669 98.9% 53,723 87.3%

2011 59,800 484 99.2% 54,634 91.4%

2012 56,300 324 99.4% 51,026 90.6%

2013 47,900 250 99.5% 43,200 90.2%

As set out in the response to question 3, this information is displayed at terminals and on

our website.

It is worth noting that Wightlink sets itself exacting punctuality standards, reporting

punctuality against a ‘within 5 minutes of departure’ target, whereas a 15 minute target is

a more typical industry standard. In addition, it is often possible to make up time during

the crossing, so it is not necessarily true that a late departure means a late arrival.

Councillors may be aware that the Yarmouth~Lymington timetable has recently been

redesigned. Two objectives drove this process: improving punctuality and improving train

connections, and the input of the Yarmouth Ferry User Group was valuable in assisting

planning.

The timetable now has a ‘core’ service which remains in place year-round and is

supplemented in the summer. We anticipate that this will make planning easier for

businesses and leisure customers alike.

This new timetable involves slightly fewer sailings (although not at a reduced cost, because

of the crewing patterns involved) but, because of the punctuality and timetable

predictability issues noted above, we believe it offers a better overall service to customers.

This is just one example of where a simple sailing count is too blunt an instrument with

which to measure the effectiveness of a ferry service.

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5. Paragraph 7.18 of the OFT report of 2009 indicated that whilst there had been some decline in frequency this did not appear to be a long term trend. Can the level of services for each year since 2009 be given?

At Wightlink we take a rounded approach to planning our services, and measuring their

success. We know that frequency is important, but it is not the only measure which

matters to our stakeholders such as customers and staff.

As a private business, which operates with no public subsidy, yet is subject to increased

regulation and legislation as well as rising costs, we must balance the interests of all

stakeholders including shareholders.

We monitor closely how customers are using our services and align our timetables to

match with when the overwhelming majority are travelling. Nevertheless, we run

thousands of loss-making sailings and last year ran almost 600 sailings which were

completely empty. Our customers appreciate our focus on safety and recognise our

obligations towards the environment.

By taking all of these factors into account, we can secure the future of our services for the

benefit of Island and mainland customers, staff and investors.

The table below shows how the overall market has changed since 2009 and how Wightlink

has adapted its timetables whilst maintaining a level of capacity significantly in excess of

what the market requires.

Passenger Market Vehicle Market

Wightlink

Total

Wightlink Total

Wightlink

Sailings Growth Market Growth Capacity Market Growth Capacity

YEAR each way % millions % millions CEU % millions

2009 64,600 9.1 24.4 2.6 3.4

2010 63,800 (1.2%) 9.1 (0.4%) 24.1 2.7 1.1% 3.4

2011 59,800 (6.3%) 9.1 0.8% 22.6 2.7 1.3% 3.2

2012 56,300 (5.9%) 8.8 (3.6%) 21.3 2.6 (3.0%) 3.0

2013 47,900 (14.9%) 8.6 (2.9%) 18.1 2.6 (1.6%) 2.5

As Councillors will be aware, the changes implemented on 1 January 2013 represented a

particular notable realignment of timetables in light of customer demand. With costs

rising, and a flat market, the company took a number of measures to secure the future of

its services. This included a review of sailings.

In response to low passenger numbers overnight, we decided that we should no longer

operate those few sailings (8 roundtrips in total) where demand was particularly low and

where staff often outnumbered passengers. The affected sailings operated at particularly

low levels of utilisation – on average 93% empty for passengers and with vehicle decks 80%

empty. The affected catamaran sailings were, on average, 94% empty.

Whilst it is always regrettable when any sailings have to be removed, these changes

affected just 2% of Wightlink customers, the majority of whom have been able to find

other sailings to suit their needs.

Nevertheless, and as we noted earlier, one in three of our sailings is loss-making, which

proportion rises to more than 40% in the winter.

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It is notable from the data above that Wightlink currently provides two and a half times the

passenger capacity of the total market and almost enough vehicle capacity to satisfy the

entire market.

We note a growing realism amongst many customers that the over-supply of the early

2000s was unsustainable and that timetables must match when the overwhelming majority

of customers want to travel.

For example, in giving evidence to the Isle of Wight Council Cross Solent Ferry Services

Scrutiny Task and Finish Group on 5 December, local haulier Steve Porter said “I’ve been

travelling on the ferries for a job for 36 / 37 years, and there was a time clearly when you

could almost guarantee to turn up at that time at Fishbourne and get a ferry on the hour,

every hour virtually throughout the day and every night. I personally don’t think that was

ever sustainable, and we’ve all had experiences when we’ve been on those boats late at

night or early in the morning, when there’s one of my trucks, two men and a dog and a

three-wheeler, and that clearly cannot go on, any more than we can go on sending 38-

tonne trucks away with two pallets on it.”

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6. The OFT report in 2009 did find that the concerns expressed around the high acquisition prices of both Wightlink and Red Funnel appeared to have merit. It concluded that it was too early to say what the consequences of this would be. The OFT also stated that it was too early to tell what repercussions there would be for service levels and fares as the result of the acquisition prices. Can Wightlink and Red Funnel comment on whether they believe that service levels and fares have not been affected by the acquisition costs?

The acquisition cost does not affect the decisions we make about our service to and from

the Isle of Wight. We also note that, in its 2009 study, the OFT accepted the contention

that “debt levels may not be the main driver behind a firm’s fares or service strategy9”.

There is no need to recapitalise our business nor to repay any of the debt at this stage; our

‘fixed term mortgage’ has many years to run and we are meeting our interest payments

comfortably.

As you will appreciate, in this open forum in front of competitors, there are risks that

discussing the details of our financing arrangements might fall foul of Article 101 of the EC

Treaty and the Competition Act 1998. However, it is important to state that the recent

speculation about our capital structure and interest payments is substantially inaccurate

and the conclusions which some parties have drawn from them are misleading.

Wightlink is a profitable business. Shareholders typically use a profit to pay themselves

dividends. They sometimes choose to use the surplus generated by a profit to pay down

any debt which a business may have. Our shareholders have done neither. Instead they

have invested almost £70m in the last six years to improve our ships and facilities to the

benefit of our customers and to secure the future of our services to and from the Isle of

Wight.

9 OFT Market Study Findings October 2009

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7. In 2002 the Isle of Wight Quality Partnership (QTP) was established as an independent organisation. This comprised of transport operators, business representatives, local interest, environment and transport user groups. Within the aims and objectives of the QTP are the following :-

a. Work together with other partners to ensure that the island has high

quality transportation services which are available to all users and at a reasonable cost.

b. To encourage the improvement of cross Solent ferry links.

Given this should the involvement of the operators in the QTP be reviewed to ensure that this does provide a constructive forum for both them and users?

Wightlink would welcome the reinvigoration of the Isle of Wight Quality Transport

Partnership’s role in working with all partners with a stake in transportation services. We

believe this would strongly complement the work which we undertake in liaising with rail

and bus operators over timetables and marketing promotions.

Wightlink has consistently supported the QTP, however in recent years it has lost its

leadership role and its purpose has become unclear.

We would be happy to participate in reviewing the QTP’s constitution and terms of

reference particularly if it were to include operators and users of all island transport

services.

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8. What would be the impact at this time of any OFT investigation into cross Solent ferry services?

Wightlink would welcome the objective analysis and evidence based approach which an

OFT investigation would bring. However, like the current Isle of Wight Council Cross

Solent Ferry Services Task and Finish Group, such processes are extremely time-

consuming.

An OFT investigation is likely to cause the ferry operators to incur particularly significant

legal and other costs. However, it would also place a cost and time burden on other

interested parties such as the Isle of Wight Council. As such, it would be a significant

distraction from the core focus of our business and, we would suggest, that of the Council.

Wightlink has unfortunate recent experience of similar business disruption, as a result of

the ongoing vexatious legal action which is being taken by the Lymington River Association

(LRA). The LRA’s repeated challenges to DCLG’s decisions and Wightlink’s operations, both

of which have already been subject to rigorous legal scrutiny, have so far cost Wightlink in

the region of £3.5m. Substantial costs have also been incurred in terms of staff time and

resources.

The practical consequences are not only lost management time that would otherwise be

spent improving the service and responding to customer needs, but also the very real and

tangible impact of reducing the amounts of money we would otherwise invest in the

business. A full OFT process would cost a six-figure sum and that would increase if the

matter was then investigated by the Competition Commission (soon to be replaced by the

Competition & Markets Authority). Those are sums that we would prefer to invest in the

business, from which Islanders would benefit far more than from an OFT inquiry.

It is worth remembering that the OFT looked at the market relatively recently and found it

to be competitive. Nothing has fundamentally changed and an OFT inquiry would not be

an efficient use of taxpayer money. In response to a question from Andrew Turner MP, the

Minister For Transport, Stephen Hammond, recently said “This is a competitive market, and

it is for the ferry operators to decide the level of fares and services based on market

conditions. There are more than 200 sailings to and from the island each day, so there is no

apparent market failure.”

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9. What dialogue takes place with other public transport providers, such as Islandline, Southern Vectis and South West Trains, regarding timetables and connecting services?

Wightlink has regular dialogue with other public transport providers to ensure timetables

are integrated wherever possible, and to co-ordinate commercial activities. The parties

also collaborate in attracting tourism to the Isle of Wight, such as via investment in and

support for Visit Wight.

Timetable management

Since South West Trains and Islandline are part of the same rail franchise, and require

connectivity at both ends of Wightlink’s Ryde~ Portsmouth Harbour catamaran service,

timetable meetings are combined. These take place twice a year in line with the December

to May and May to December National Rail timetable and fare reviews.

Timetable changes are discussed and take into account factors such as improving

connections, forthcoming engineering works and key fare changes.

Wightlink may also choose to make unilateral timetable changes to improve public

transport connections. For example, customer feedback had increasingly told us of the

importance of making good train connections on our Yarmouth~Lymington service and so

we initiated timetable adjustments to meet this need.

Wightlink is part of the Isle of Wight Community Rail partnership, encouraging seamless

and sustainable transport as well as seeking to improve overall quality of transport on the

Island.

Marketing activity

Additional meetings are held to co-ordinate marketing activity including any combined

ticketing covering the catamaran and train service. Examples of this include the Island

Express ticket, Railcards and Group savings.

Regular dialogue also takes place with Southern Vectis to ensure that the key combined

tickets are updated and working effectively this includes a Wight Rover for the Island and

Triple link covering Mainland to Island bus connectivity.

Promoting tourism

Wightlink is the single biggest private sector funding partner of Visit Wight, the Island’s

Destination Management Organisation (DMO). Here we work with both partners of the

DMO and external bodies such as Visit England and Tourism South East to develop and

implement joint activity to encourage increased visitors to the Island as well as to improve

the overall travel experience. As Simon Dabell, Chairman of Visit Isle of Wight recently

wrote “[the ferry companies] play a vital role, not just in providing lifeline services and

continually investing in their facilities, but also by supporting tourism marketing and their

sponsorship of Island community causes”.

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10. What arrangements are in place to assist Island businesses to obtain the most effective fares?

Wightlink supports Island business with a range of services including credit accounts,

books of tickets, discounts and dedicated sales staff. However, just as important is

offering a good service and fair prices to mainland businesses which supply the Island

with critical goods and services.

All trade customers spending more than £1000 per annum can apply for a credit account.

Volume-based discounts are offered for larger customers, with smaller business able to

access books of tickets, which are also discounted.

To help customers understand the products best suited to their needs, Wightlink has a

dedicated trade service through the call centre along with an account management team

to help with enquiries. Bookings can also be made on-line.

Businesses which use small vehicles (shorter than 2.24m in height and 5m in length) are

eligible to travel as ‘tourist’ vehicles if they wish, thereby giving access to a still wider range

of fares.

All special offers are also available to trade customers and multilink holders, so Island

residents are able to pick and choose from the widest possible range of fares to access the

greatest saving.

We have an excellent track record of coming to arrangements which meet the needs of our

individual customers. We note that evidence given to the Scrutiny Group in December

supported this. For example Kevin Smith stated “I talk to many businesses about the

services they get, they’ve all got individual grievances with the ferry operators, if there are

issues with the pricing they talk to them and on the whole those issues are resolved.”

Local haulier Steve Porter commented “with regard to the cost of travel we’ve also ensured

we’ve have proper commercial arrangements based on the volume of traffic that we do and

also the times and days that we travel .... I still think that, if you’re only travelling once a

week or once a fortnight, you should at least take the trouble to make that approach and

see if you can do a deal”.

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11. What incentives are given to increase traffic on off peak sailings? Lower prices are used to incentivise traffic on off-peak sailings

Wightlink recently introduced a new simpler and fairer pricing structure. This coincided

with the company’s investment in a new booking system – CarRes – which has improved

the reliability of booking and will, in due course, enable the company to offer customers an

improved experience including a mobile-friendly booking site, loyalty schemes and greater

access to special offers.

The pricing structure is based on two principles: the space a vehicle takes up on board10

,

and the level of demand for a particular sailing.

Demand-led pricing (or ‘revenue management’ as it is often called) is used almost

universally across the transport system including by airlines and by rail companies which

access public subsidies. It is also employed by hotels (for example, the Priory Bay Hotel11

)

and leisure facilities.

As the OFT pointed out, revenue management has “the advantage of making it less likely

that the [popular] sailing will be fully booked. However, it will also mean that the [popular

sailing] becomes more expensive”. One can argue whether Islanders benefit more from

availability for last-minute travel or from lower fares on the most popular sailings.

However, we would argue that, because Islanders can always secure a fixed price booking

on any available sailing, via Multilink tickets, revenue management offers the most

effective way of managing demand.

We would also comment that, not only is a ‘turn up and go’ service virtually impossible to

manage from an operational perspective, but it would also lead to significant traffic

congestion at Fishbourne, Yarmouth and Portsmouth which would impact dramatically on

the local communities.

The importance of such demand management was highlighted by The Cross Solent

Movement Study prepared by MVA for the Isle of Wight Council in 2006 which

recommended price differentiation to promote travel at off peak times of the day during

peak periods12

.

Wightlink’s revenue management system offers lower prices for booking in advance,

thereby allowing the company to match its service to demand and is supported by a

seasonal calendar which sets overall lower prices for the quieter periods of the year.

To encourage off peak travel further, Wightlink also runs promotional activity to stimulate

demand. Examples have included late night and night sailing discounts, evening

discounted foot passenger travel and targeted destination activity such as Shopping

Specials.

10 Like the IOW Council chain ferry, which has higher charges for lorries and vans than for cars and motorcycles. 11 A 2-night midweek stay in February in a Superior Double Room costs £280, whereas the same room for a 2 night midweek stay in August costs £430 (prices correct at 15 January 2014 from www.booking.com) 12 OFT Market Study Findings October 2009

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12. Is there any evidence of there being unmet demand at peak periods? There is no evidence of significant or regularly unmet demand at peak periods; Wightlink

timetables are designed to match the times when the overwhelming majority of

customers want to travel. Despite the extra cost involved, we often charter ships to

provide additional capacity for special events or to protect our timetabled service for

customers when our ships are temporarily out of service.

Wightlink operates nine ships across three routes. At times of peak demand, all available

vessels are in operation on all routes on their maximum rotation. During busy holiday

weekends, a proportion of our sailings are fully booked, however 83% of sailings across

2013 had space available.

On vehicle routes the number of car bookings we take has reduced due to the increasing

size of vehicles. This means that we now book 430 cars in a two hour block on our

Portsmouth ~Fishbourne route, whereas when the ships were new (and cars were both

narrower and shorter) we would have booked 565 cars.

The only way to add capacity at peak times would be to build larger vessels (which would

inevitably result in fewer sailings at off peak times).

Inevitably there are times when all space on a given sailing is booked, but if passengers

book early and are flexible about the time of day they travel it is extremely rare that space

is not available. When sailings are full, customers who are, for whatever reason, unable to

book ahead, are offered a stand by service on a first come first served basis.

For the IOW Festival and Bestival periods we charter in additional foot passenger vessels on

the Portsmouth~Ryde route, even though we have ample passenger capacity available on

our car ferry routes. Despite the extra cost involved, we do this because we recognise that

passengers find the high speed catamaran more convenient, particularly for connecting to

onwards travel. We operated more than one hundred such charter sailings in 2013.

We also use charters to replace foot passenger vessels which are out of service due to

routine maintenance. Our commitment to operating our timetabled service means that,

despite the extra cost, we charter a vessel from Cowes based firm Solent and Wightline

Cruises to ensure our customers can travel when they have planned.

Wightlink is also unusual in chartering vessels to provide additional capacity when

unplanned repairs or maintenance is required. The relationship we have built with Solent

and Wightline Cruises means that we can maintain our foot passenger commuter service

even when problems occur at short notice. For example, in November 2013, when Wight

Ryder 1 needed an urgent repair, we immediately chartered a ship for 3 days to cover the

commuter periods and maintain frequency of service. Whilst we are not obliged to do so,

we do because we are committed to the Island and recognise the lifeline service we

provide.

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13. What is the current process and charge for students and those travelling for medical appointments? Can a standard process and charge be introduced for these categories?

Wightlink offers an unrivalled set of discounted fares for Islanders, special groups and

vulnerable passengers.

A standard process and charge across operators would amount to collusion and would

therefore be illegal under competition law. It would also take away the advantage of a

competitive market where, in seeking to win customers’ business, firms will seek to offer

the most attractive service, price, discount or process.

The discounts which Wightlink offers include:

- Multilink fares

- Fares to and from the mainland for hospital appointments

- Discounted fares for students and teachers

- Discounted fares for senior citizens

- Discounted fares for Blue Badge holders

- Isle of Wight Council employee discount

- Member of Tesco Clubcard scheme

Multilink tickets for vehicles are available to anyone with a residence on the Isle of Wight.

They offer discounted fixed-price tickets which can be used on any sailing (provided it has

availability). The larger the book of tickets purchased, the greater the discount. The recent

change from ‘car plus driver only’ to ‘car plus seven’ has proved extremely popular with

multilink customers.

Islanders travelling to the mainland for hospital appointments enjoy 50% off published

fares. Over 200 such bookings were made every month during 2013. Customer feedback

tells us how highly valued this service is, for example, Rev J Izzard wrote to us to say “I

would like to say Thank You to you for having this service. You do make a difference to

people's lives by doing so."

Students enjoy discounts of up to 50% on season tickets and we offer a tailor-made annual

season tickets covering the academic year. Discounts of up to 30% are available on

individual foot passenger tickets purchased from our ticket offices making it easy and

convenient for students to travel for leisure purposes as well as study. Student discounts

are available from our ticket offices by showing a wide range of ID’s including NUS and

UK/IOW College Student cards.

Senior citizens also enjoy discounts of 25% on ad-hoc foot passenger travel as required.

Senior Citizens (60+) need to show proof of age (e.g. Bus Pass) to access their discount.

Blue badge holders benefit from a comprehensive scheme offered for persons with all

forms of disability entitling them to discounts of up to 40%.

Isle of Wight Council employee discount – all council employees can buy travel at a

discounted rate. This is one of a number of such schemes.

The full terms and conditions for our discounted schemes are available within the Ferry

Travel Info section of our website.

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14. Can you provide some specific information on the volume of customers and vehicles on your route(s) with a breakdown of how much is business/commercial traffic and how much is private/passenger traffic for the past three years?

As you will appreciate this is sensitive commercial information that we should not share

with competitors – not least due to the restrictions placed on us by Article 101of the EC

Treaty and the Competition Act 1998. Regrettably therefore we cannot publish this

information in this public document. However, the Isle of Wight Council already holds

and can analyse this information.

Wightlink, along with the other cross-Solent ferry operators, submits volume information

for all vehicle classifications, split by route, to the transport department of the Isle of Wight

Council every four weeks. From these submissions, the Council compiles ‘Isle of Wight

Council Public Transport Section, Cross Solent Statistics’.

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15. What investment has been made by the company in its services and infrastructure since 2009 and what is proposed in the future?

Wightlink has invested almost £70m over the last six years replacing the majority of its

fleet and improving port and onboard facilities.

Wightlink Limited Capital expenditure (per statutory accounts)

Year ended £

29 March 2008 13,848,000

28 March 2009 21,215,000

27 March 2010 10,479,000

26 March 2011 10,909,000

31 March 2012 6,349,000

30 March 2013 4,226,000

67,026,000

This investment is evident at every one of our terminals and on board our ships.

£ We purchased three purpose designed and built new vessels for the

Yarmouth~Lymington route and associated shore infrastructure works

£ Both Lymington and Yarmouth terminals have been refurbished

£ We purchased two new purpose-built catamarans – the Wight Ryders – and

invested in new berth and passenger gangways

£ We completely rebuilt Ryde pier – a pier of national historical importance, restoring

it to its former glory.

£ We redesigned our Fishbourne terminal and built a bright modern new terminal

building.

£ Portsmouth Harbour has been overhauled and a new layout introduced along with

a Costa Coffee outlet

£ We’ve just completed a programme to install new modern toilet facilities at all our

ports

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Scrutiny Meeting Questions – Hovertravel Response 22nd January 2014

1) In the OFT report in October 2009 paragraph 3.38 indicated “The ferry companies have told us

that they recognise the essential nature of the services they provide and that they need to

manage a special responsibility to the Island alongside the commercial pressures they face.” Do

the operators still believe that this is the case?

Response:

Hovertravel fully recognises its responsibilities to the island in operating its services, and whilst

we have witnessed many challenging seasons, such as the wettest in 2012 etc we will always

endeavour to operate services that balance the needs of the community and the market and

financial viability. We further demonstrate this by operating additional peak capacity when

required, or as seen in 2013 we operated 3hours earlier to support walkers to 'Walk The Wight'

and 'The Great South Run'. We have demonstrated we are flexible and have the passion to

operate services when the need arises. This is due to the support of our staff and flexibility of

the Hovercraft operation.

2) Regarding complaints and customer satisfaction paragraph 6.89 of the OFT report stated “two of

the three operators have not carried out any substantive customer satisfaction surveys for three

years. This may suggest that cross Solent operators have had more of a ‘take it or leave it’

attitude to their customers…’’. Paragraph 6.92 also indicates “All of the ferry operators have

indicated to us that they will be undertaking regular customer satisfaction surveys and reporting

the results.” Can you list what surveys have been undertaken since 2009, the outcomes from

these and where these have been reported?

Response:

At the end of 2009, Hovertravel carried out a customer survey asking a broad range of questions

about our service, terminals and communication. This resulted in a number of suggestions from

our customers which in turn led us to make a number of improvements including additional

evening services, improved facilities in waiting room (vending machines, new layout), and

improved communication in the form of direct newsletter and LED information signage.

In November 2011, a customer survey was carried out again asking customers for their views

and opinions regarding our services, booking facilities and terminal facilities. All results were

posted on our website and through our Hovertraveller newsletter, with improvements being

implemented including Costa Coffee, Wi-Fi and TV in terminals and additional customer service

enhancements.

We held a timetable consultation and review from December 2012 to end January 2013. The

objective was to gain input from our customers on their most favoured timetable from the

options we were proposing. The option which was most highly favoured was the timetable we

ran from April 2013. The consultation was posted on our website and social media sites for

feedback as well as on display for over a month in our terminals. Results were communicated via

our newsletter published in hard copy, via email and through our website and were also

reported by the local media.

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3) Not applicable to Hovertravel

4) On punctuality of services the 2009 OFT report believed that the percentage of scheduled

departures which are not completed appeared to be low and stable. The Wightlink figures did

show that there had been some decline in punctuality in recent years. Can the information

provided in table 6.11 (Wightlink), table 6.12 (Red Funnel) and table 6.13 (Hovertravel) be

provided so that there is updated information on punctuality and cancellations since 2009?

Response:

NB – These include weather cancellations.

Punctuality (only recorded from 2011)(within 5 minutes of scheduled departure time)

2011 – 83.28%

2012 – 89.54%

2013 – 94.21%

5) Paragraph 7.18 of the OFT report of 2009 indicated that whilst there had been some decline in

frequency this did not appear to be a long term trend. Can the level of services for each year

since 2009 be given?

Response:

2009 – 20801 flights

2010 – 21032flights

2011 – 21222 flights

2012 – 19802 flights

2013 – 19520 flights

This is the total number of services operated including extra services outside the standard

operating timetable.

6) Not applicable to Hovertravel

7) In 2002 the Isle of Wight Quality Partnership (QTP) was established as an independent

organisation. This comprised of transport operators, business representatives, local interest,

environment and transport user groups. Within the aims and objectives of the QTP are the

following :-

2009 2010 2011 2012 2013

Total flights 20801 21032 21222 19802 19520

Number cancelled 498 504 454 679 574

Cancelled (as a percentage of total flights) 2.39% 2.40% 2.14% 3.43% 2.94%

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a. Work together with other partners to ensure that the island has high quality

transportation services which are available to all users and at a reasonable cost.

b. To encourage the improvement of cross Solent ferry links.

Given this should the involvement of the operators in the QTP be reviewed to ensure that this

does provide a constructive forum for both them and users?

Response:

Hovertravel regularly attended QTP meetings between Jan 2006 and Sep 2009. At times the

meetings were relevant with topics such as ‘Island Core Strategy’, Cross Solent Travel Costs/

Public Transport connections, Local Transport Plan, but also covered a broad range of other

topics including ‘Variable speed limits on Island Roads’, Bus Strategy, St Mary’s Hospital Travel

arrangements on Island’, Motorcycle Training facilities’, Subsidised bus services’, ‘Cycle Routes’,

‘Parking Services’, ‘Walking paths’ and so forth. A lot of these meetings were very long.

Mid 2009 it was proposed to change the format of the QTP with only an Executive QTP meeting

with the Ferry operators and an additional meeting for the broad group (excluding Ferry

operators). Since September 2009 Hovertravel have not been invited to attend a QTP. However,

it should be noted that communication currently with the QTP is via our participation in the

Chamber Of Commerce Strategic Group, where there is constructive dialogue with its members

who include the QTP.

We welcome participation in any group which is looking at the interests of the Island’s transport

infrastructure to assist in meeting our common goals. It is important that such groups have a

clear focus on the relevant transport issues and that we avoid duplication of effort and wastage

of time through multiple groups/meetings with overlapping objectives.

8) What would be the impact at this time of any OFT investigation into cross Solent ferry

services?

Response:

At the current time the impact for Hovertravel would be significant from the perspective of

resource time and costs to undertake the required inputs for any investigation.(It should be

noted that footnote 2 to paragraph 2.1 of the OFT report said “the Complaint did not include a

complaint about Hovertravel”, but Hovertravel nonetheless had to devote time and effort to

assisting the OFT.) Our concern is that at a time when our priority should be to focus on the

development and growth of our passenger services for the island through our investment

strategy, the uncertainty such an investigation would create would ultimately impact the

business’ ability to achieve and deliver efficiently at a time when the shareholders have

committed the future investment. It is also difficult to see why the OFT would reach a different

conclusion from the one they reached in 2009.

Other issues

9) What dialogue takes place with other public transport providers, such as Islandline, Southern

Vectis and South West Trains, regarding timetables and connecting services?

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Response:

Considerable dialogue in relation to timetables takes place with these operators. It should also

be noted that we are also in dialogue with National Express (where extra services were added

from Southsea for the island connections).Whilst it is noted all connections are not possible on

all bus and train routes on either the mainland or the island we always endeavour to meet the

wishes of the majority of our customers.

10) What arrangements are in place to assist Island businesses to obtain the most effective fares?

Response:

For many years, Hovertravel have offered and continued to offer reduced priced (up to 40%

discount*) Company Tickets for companies to distribute to their employees for business travel.

Additionally, we offer travel cards which provide travel discounts ranging from 60% discount to

74% per single journey.

*Based on single fares

11) What incentives are given to increase traffic on off peak sailings?

Response:

Throughout the year we monitor traffic and offer low cost travel at off peak times including

Hover Nighter fare, two-for-one for senior citizens, children travel for £1 at weekends and

various discounts for our Hoverplus customers to travel with family and friends at little or no

cost.

12) Is there evidence of there being unmet demand at peak periods?

Response:

We operate additional services at peak periods – every 15mins Mon-Fri . The fact that these

services operate at an average of 80% capacity suggests that there is no unmet demand on these

services.

13) What is the current process and charge for students and those travelling for medical

appointments? Can a standard process and charge be introduced for these categories?

Response:

In April 2011, Hovertravel launched a discounted NHS healthcare scheme to reduce the cost for

patients attending NHS hospital appointments on the Mainland which has proved to be

extremely successful and highly used. Patients simply need to show an appointment letter to

obtain the discount. Additionally, we arranged a through ticket deal with Stagecoach to take

patients directly to both hospitals in Portsmouth.

Student fares are part of our concessionary product range which includes day returns, singles

and period returns. Students show their student ID/NUS card to obtain the discounted fares.

We also provide discounted season and travel cards covering all terms and have an offer of card

types suitable to individuals’ travel arrangements (triple term, term cards, and travel card 40, 3

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month season). These card types can be purchased on production of a letter from an education

provider stating course dates.

14) Can you provide some specific information on the volume of customers and vehicles on your

route(s) with a breakdown of how much is business/commercial traffic and how much is

private/passenger traffic for the past three years?

Response:

We do not hold such information.

15) What investment has been made by the company in its services and infrastructure since 2009

and what is proposed in the future?

Response:

Since 2009 there has been considerable investment made in the business. Examples include:

2009-10 - circa £500k in the new ticketing and booking system (self service kiosks, website

capability)

2010-11 - £1.8m investment into the overhaul and refurbishments of the 2 AP188 craft

2011 - new later services from 8pm to 10pm.

2013 - Announced the order of 2 new hovercraft to replace the existing 2 AP188 craft

(investment £10m).

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