Western Ferries chief says CalMac should not have ferry monopoly

It is believed a precedent has already been sent with ministers sanctioning a nine month charter of MV Alfred from Pentland Ferries at a cost to the taxpayer of £1m-a-month to help cope with an ageing fleet which has suffered breakdowns and annual maintenance delays.

Western Ferries which operates a frequent, year-round car and passenger service between Gourock and Dunoon made a £2.5m pre-tax profit in 2021/22 against subsidised Scottish Government-owned CalMac's £2.35m loss.

READ MORE: Relief vessel drafted as CalMac ferry breaks down for second time

And its managing director Gordon Ross believes that firms like his should have a greater part to play in keeping lifeline services running.

He has also supported the calls from some user groups for ministers to properly consider breaking up Scotland's ferry network to improve provision.

Former First Minister Nicola Sturgeon has previously insisted there are no plans to unbundle routes - which would raise concerns that the most lucrative routes would be sold off to private firms.

The Scottish Parliament's Net Zero, Energy & Transport Committee says it wants to bring an end to the system for managing Scotland's lifeline services which "is not working".

And its inquiry report said that the ferry operator CalMac should benefit from a direct award of an extended ten-year rather than the current eight year contract to run lifeline services on the west coast of Scotland.

There has been angry response in some quarters to the idea that CalMac should get a renewed contract in the wake of the management of disruption to lifeline services through breakdowns to the ageing fleet.

It comes as the deadline for re-tendering the Clyde and Hebrides Ferry Services contract is believed to have passed.

It is estimated to take at least 18 months to draw up specifications in the contract and to launch a tendering process for Clyde and Hebrides Ferry Services.

With the current contract expiring in September 2024, it is felt that Scottish ministers will now have to make a temporary extension to the existing contract operated by CalMac.

CalMac's parent company David MacBrayne Group (DMG) has received nearly £900m in taxpayer subsidies over six years from the Scottish Government to run the ferry services since securing the ferry contract in 2016. The level of handout has soared from £131.939m in 2016/17 to over £163m in 2021/22 including £11.7m in Covid funding.

The firm has been weighing up plans for a potential return to serving the islands of Arran and Islay but say that their ambitions have in the past been held back because of the "challenges" of competing against CalMac which benefits from enormous public subsidy.f

Scottish Government-commissioned consultants Ernst and Young were commissioned to make recommendations through Project Neptune over a "potential route/structure for direct award of ferry services contract that Scottish ministers could consider as part of a future strategy".

READ MORE:  'Come what may, Holyrood protects CalMac': Should vital ferry services be privatised?

The consultants were also asked to "include an analysis of the challenges and opportunities associated with options for decentralisation (unbundling of routes into smaller packages)."

But then transport minister Jenny Gilruith said in February that unbundling of CalMac 30-route monopoly was not on the table.

Mr Ross said that breaking up CalMac's hold over lifeline ferry routes should be properly considered before being dismissed, saying that the "stagnant politics" surrounding ferry service delivery means a shake-up is not even being considered.

 READ MORE: 'CalMac are not interested in helping the islands':  Fury as Scots ferry cuts remain

"Scottish ministers have steadfastly refused to consider the pros and cons of debundling the CalMac monopoly, and this topic was removed from the remit of the recent Project Neptune review.

"Only when a detailed study has been undertaken, can the financial impact on future subsidy levels be firmly established and at the same time island communities will then be better able to make an informed decision on the best way forward.

"Only the Scottish ministers can accurately explain why they continue to protect CalMac.

"Scottish ministers’ protection of the bundle should be distinct from protecting CalMac or any other operator. The questions going forward are therefore whether Scottish ministers are, taking into consideration all the recent events, going to permit CalMac to tender for the next contract and is this what the island communities want.

He said the "extraordinary" level of protection should only be extended if CalMac can actually provide services that meet the needs of the communities and at the same time provide value for taxpayers’ money.

He said in the shorter term - ferry companies like his should be better able to support services.

"CalMac has on many occasions chartered in additional vessels to provide additional network capacity and resilience, the recent charter of MV Alfred being an apt case in point," he said.

"However, these charters have only been in place for a short period of time. Looking forward, if charters could be put in place over a much longer period, it would enable additional vessels to be provided under the umbrella of a main tender. These additional vessels would then provide additional capacity and resilience, at the same time removing some of the future capital burden on the taxpayer. He said Western Ferries had always had ambitions to expand beyond its current service between Gourock and Dunoon, and "therefore provide efficient and reliable services to other communities".

But he added: "Those ambitions have had to be tempered in respect to the peculiarities of competing against a taxpayer funded operation Western Ferries has a historical connection with the Islay, having launched in the late-1960s as a challenger to David MacBrayne - which later became CalMac - running services in the Islay route. The service pioneered roll-on roll-off ferry services to the island, but it withdrew from the route in 1981 due to “challenging market conditions”.

The firm, which has been celebrating 50 years of commercial operations between Dunoon and Gourock, said its service to Islay lost out to the "unique challenges" of competing against CalMac.

While it considered the return of an Islay freight service, the move was tempered after ministers sanctioned the building of two new ferries for the island in Turkey in March, last year.

But he still believes the freight service would co-exist with existing ferries specifically designed around the needs of the island's prominent whisky distilleries.

"The combination of these three vessels would facilitate the continuing growth of the whisky sector and at the same time satisfy the increasing demands from local residents, local businesses and visitors.

"Importantly, the addition of the freight service would provide additional capacity during CalMac’s winter maintenance periods when the service is reduced to a one vessel service."

Its ambitions to start an Arran service have also been frustrated by CalMac running an extra vessel.

Ten years ago transport minister Keith Brown said "no compelling case" had been made that "tendering individual routes or unbundling the current contract" would lead to greater benefits.

This was repeated by then First Minister Alex Salmond who told MSPs in 2012 that the "case for unbundling, in our estimation, has not been made".

At that time, there was concern that it would hive off CalMac’s four busiest routes, as suggested in a 2010 consultation on future ferry services.

The Mull & Iona Ferry Committee, which has objected to giving CalMac a 10 year award, said that a plan for a possible community takeover of ferry services is "definitely on the cards" after undertaking a feasibility study.

But cannot go forward unless the Scottish Government consider the unbundling of services.

The Western Isles Council, Comhairle nan Eilean Siar, has also floated the idea of a Western Isles bundle which would represent a "step change in connectivity" with management based within the islands.

Mr Ross's appeal comes against a background of a major protest from islanders on South Uist after they lost nearly all services for the month of June due to issues with ferry breakdowns and late annual maintenance checks.

Some 500 residents, 200 cars, 40 vans and 20 lorries converged on Lochboisdale – the port which links South Uist to the mainland – in a protest in early June over CalMac's decision to cancel almost every ferry service in June to the island due to continuing problems with its ageing fleet.

CalMac was approached for comment.

A Transport Scotland spokesperson said: “Scottish Ministers have been clear that we do not favour splitting up the network or privatising any of the Clyde and Hebrides Ferry Services routes.

“We share the desires of island communities for sustainable and effective ferry services and look forward to continuing our constructive engagement with them on future services and vessel replacements.

“The Scottish Government has invested more than £2 billion in our ferry services since 2007 and we have outlined plans to invest around £700 million in a five year plan to improve ferry infrastructure. Since May 2021, we have bought and deployed an additional vessel in MV Loch Frisa, chartered the MV Arrow and MV Alfred, commissioned two new vessels for Islay, progressed investment in essential harbour infrastructure, and now we are delivering a further two new Islay-class vessels."