ORKNEY is set to enjoy cheaper ferry fares – and potentially even more tourists – after a landmark legal case.

Plans for road-equivalent-tariff or RET fares to the Northern Isles were supposed to be in place by last summer.

Transport watchers expected Orkney – already overwhelmed with cruise ship traffic – to be hit by a tourist influx, just as Scotland’s west coast islands were earlier.

However, RET plans were delayed by a challenge to overall subsidies to the routes from a private operator.

Pentland Ferries, which believed the subsidies to the main publicly owned but privately operated Northlink ferry franchise were excessive.

The firm, one of just two private car ferry operators in Scotland, challenged the lawfulness of a proposed subsidy under a single public service contract on ferry routes between Scrabster, in Caithness, and Stromness on Orkney, along with Aberdeen to Kirkwall, in Orkney, and Lerwick, in Shetland, and between Kirkwall and Lerwick.

The firm, which operates its own ferry business between Gills Bay in Caithness and St Margaret’s Hope on South Ronaldsay,, in Orkney, first saw its challenge rejected by a judge at the Court of Session in Edinburgh earlier this year. It appealed against Lord Boyd of Duncansby’s ruling.

READ MORE: Experts demand action to solve Scotland’s ferry crisis 

But yesterday three civil judges ruled that the appeal should be refused.

The firm, whose services are not subsidised, challenged the inclusion of the Scrabster route across the Pentland Firth within the contract and maintained that subsiding it threatened its competing business.

Its counsel, Mark Lindsay QC, earlier described the move as “an existential threat” to the ferry firm.

The Scottish Government invited bids for a new contract for the mainland to Northern Isles ferry links between Aberdeen, Kirkwall, Lerwick, Scrabster and Stromness which envisaged five ferries being deployed.

The estimated value of the subsidy for the contract over an eight-year period is £370 million. and

It is due to be awarded on August 2.

Bidders included Serco, which currently runs services, and CalMac.

Unions and the Labour party have backed a CalMac bid to effectively fully nationalise what are lifeline services.

Scotland’s senior judge the Lord President, Lord Carloway, said it was for the Scottish ministers to decide what would constitute an adequacy of service.

“If only the petitioners’ [Pentland Ferries] service operated, the respondents were entitled to

hold that the services across the Pentland Firth would be inadequate,” he said

“The market would fail to meet the demand.

“There would be insufficient service to meet a real public need, especially in the peak season and

if problems arose, for whatever reason, on the petitioners’ route,” he said.

The senior judge said the ministers were also entitled to take into account the advantages of the Scrabster crossing in terms of convenience as an alternative route.

Lord Carloway said “bundling” routes together was a recognised way of producing economies of scale and attracting operators.

He said it was not unlawful if it did not produce “undue market distortions” and it did not appear to do that.

READ MORE: Calls mount for lifeline Northern Isles ferry services to be fully nationalised 

Lord Drummond Young, who heard the appeal with the Lord President and Lord Menzies at the Court of Session, said that at this stage the court had to rely on the ministers observing their legal obligations in a proper manner.

He said: “Provided they do so, any risk to the economic viability of the petitioners’ own ferry service should be kept as a minimal level or eliminated.”

An independent report by Ekosgen in 2017 urged Orkney Islands Council and Highlands and Islands Enterprise to look carefully at the impact of RET on visitor numbers in light of Hebridean experiences.