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Appendix E Germany Case Study

E1. General

Background

E1.1 Germany is a federal country with 16 states (Laender). Each state has the responsibility and right to regulate certain areas, which are defined by law. Legislation concerning ferry services is one of these areas. As a consequence, each of the 16 German states (Laender) is able to have different legislation concerning ferry services.

E1.2 Ferry services which are of interest to this study can only be found in the North of Germany, where Germany has access to the North and Baltic Seas. This study concentrates on the main ferry services from mainland Germany to the islands in the North Sea. Islands in the Baltic Sea, like Rügen and Usedom, are mainly connected through bridges and are therefore exempt from this study.

E1.3 The islands in the North Sea can be divided into 2 main island chains, the Western Ostfriesischen Inseln ² (East Frisian Islands), and Northern Nordfriesischen Inseln (North Frisian Islands) and some additional islands such as Helgoland.

E1.4 These island chains fall within the jurisdiction of two different German states. The state of Lower Saxony is responsible for the Western Ostfriesischen Inseln and Schleswig Holstein is responsible for the Northern Nordfriesischen Inseln and Helgoland. The states have different legal arrangement concerning their ferry services. This study will point out these differences where appropriate.

E2. Ferry Legislation and Licensing

E2.1 This study will concentrate on the 2 main island chains: the Western Ostfriesischen Inseln ³ and Northern Nordfriesischen Inseln and Helgoland.

E2.2 Most islands of the Ostfriesischen Inseln are relatively small and some islands only have passenger ferry operations. The Nordfriesischen Inseln are mainly connected by car ferries. Two of the most well known islands, Sylt and Nordstrand, are connected by rail (Sylt) or roads (Nordstrand).

E2.3 The states have responsibility for regulations concerning ferry operations. The relevant rules are the states' own Landeswassergesetze (States Water Legislation) including relevant by-laws. Some federal legislation, especially the federal Seeaufgabengesetz, is important too. The federal laws, however, are mainly concerned with matters of safety and do not deal with lifeline services.

E2.4 The federal state is responsible for vessel safety monitoring and the same rules are applicable nationwide. The Federal State of Germany has assigned its responsibility for maritime safety issues to the See Berufsgenossenschaft.

Ostfriesische Inseln (Lower Saxony)

E2.5 Table E1 shows the routes of the ferry operations to the Ostfriesischen Inseln. It also contains information on the ownership of the ports. The ownership of the ports is relevant because the owners determine the port duties. This will be discussed further later.

Table E1 Ferry Routes In Lower Saxony Including Port Ownership

E2.6 Passenger carrying statistics ⁴ could only be provided for the state-owned ports. The numbers for 2003 are as follows:

Table E2 Carrying Statistics For State Owned Ports

E2.7 Operators to the Ostfriesischen Islands are all private. It is possible that a local commune is a shareholder in some of the operators. However this will not affect their private status as such. The government or state does not own shares in any of the operators. As discussed above, the state solely owns some of the ports.

E2.8 Private operators are:

• Reederei Baltrum Linie GmbH & CoKG
• Reederei AG Ems
• Reederei Norden Frisia
• Reederei Schifffahrt der Inselgemeinde Langeoog
• Die Schiffe des Nordseebad Spiekeroog GmbH
• Schifffahrt und Inselbahn AG Wangerooge

E2.9 Even though the islands are next to the Dutch border, no Dutch ferry operator has so far tried to offer any service from the German mainland to the German islands. Legally, however, any foreign operator could provide such a service.

Regulation and Licensing
E2.10 The state of Lower Saxony favours the idea of a free market and has not executed many of its legislative rights. The interviewee stated that the past has shown that an open market with free competition provides the required annual service. As a consequence its Landeswassergesetz does not deal with the ferry service to the islands. It is mainly concerned with environmental issues.

E2.11 Generally, ferry operators do not need a license or other permission of any kind. As long as they fulfil the safety obligations and the ports grant them a landing stage they can start operating a ferry service.

E2.12 In the past, things had been different. In 1976 the state of Lower Saxony had signed contracts with the operators for the operation of ferry services to the islands and included a clause which secured exclusive rights on a certain route (Linienschutz) for an operator as long as it provided an all-year service. However, in 1997 this clause was taken out of the contracts and contracts now are very simple and do not refer to lifeline services.

Nordfriesische Inseln (Schleswig Holstein)

E2.13 The Nordfriesischen Inseln are part of Schleswig Holstein. Table E3 shows the level of traffic to and from the Nordfriesischen Inseln in 2003.

Table E3 Passenger Statistics to and from the Nordfriesischen Inseln , 2003

E2.14 The state Schleswig Holstein does not have a stake in any of the ferry operations. The main private operators are Wyker Dampfschifffahrtsreederei GmbH (following WDR) and Neue Pellwormer Dampfschifffahrtsgesellschaft mbH (following NPDG). In Schleswig Holstein, the split of shares between local commune or private ownership of ferry operators is similar to that in Lower Saxony.

E2.15 No foreign operator has offered a ferry service in Schlewig Holstein so far, although it would be legal for them to do so.

Regulation and Licensing
E2.16 In Schleswig Holstein, ferry operators need only hold an operator certificate (Gewerbeerlaubnis) and a technical licence to be able to run a ferry service to the islands. The market is open to anybody who can provide these documents.

E2.17 In 2003, Schleswig Holstein made use of its legal powers and added Section 4 in Paragraph 139 of the Landeswassergesetz. According to this new section, ferry operators to the islands and Halligen ⁷ in Schleswig Holstein need a specific operators' licence from the local transport authority if an all-year island ferry service would otherwise not be secured.

E2.18 Similar to Lower Saxony, Schleswig Holstein also abolished exclusive rights for certain routes in the late 1990's.

E3. Lifeline Services - Inselversorgungsverkehr

E3.1 In general, both states want, and are obliged by Germany's Grundgesetz (Constitution), to provide a secured ferry services to the islands throughout the year. Both states, however, have not experienced problems so far in providing such services. As a result, legislation relating to "lifeline" services, i.e. a guaranteed annual service to the island, either does not exist or is very weak.

E3.2 This study will point out how the two states aim to provide the necessary service to the island with or without legal measures.

Ostfriesische Inseln (Lower Saxony)

E3.3 The very strong operator contracts that were in place since 1976 granted exclusive operating rights to operators. These were subsequently changed in 1997, when the exclusivity of provision was taken out.

E3.4 This does not mean that the state did not see the need anymore for an all-year-round provision of services to the island. However, it felt that in order to comply with EU regulations it had to take this clause out of the contract.

E3.5 To guarantee an annual service provision the state now gives operators who offer an annual service a discount on port duty. As shown above, most of the ports are state- owned and the state has therefore the power to include payment for ports in the transport contract with the operators. Any operator who does not offer an all-year service is exempt from such a discount and the normal port tariffs apply.

E3.6 Other financial support is only granted indirectly in the form of the state paying for improvements of port facilities. However, every port user gains benefits through this.

E3.7 So far, only one operator has tried to operate without this non-compulsive contract during peak times. As the operator did not benefit from the port discount, it had to decrease the service when the operation became non-viable, even though he was allowed to determine his own tariffs.

Nordfriesische Inseln (Schleswig Holstein)

Legislation
E3.8 The new legislation of 2003 stipulated that a service would be considered a lifeline service if the adequate annual service provision for an island were no longer guaranteed. In general, a lifeline service is a service that requires a licence in order to secure the provision of an all year island service.

E3.9 The main objective of the lifeline service is to secure the provision of an annual adequate service for the people on the islands. The regulation applies to the North Frisian Islands Föhr, Amrum, Pellworm, as well as the Halligen Hooge, Langeneß and Gröde and the island Helgoland. These islands and Halligen depend on the provision of a sea service for the transfer of goods and passengers from and to the mainland.

E3.10 This section was inserted into the existing legislation because the government saw the risk of operators cherry-picking in the lucrative season and not providing adequate services in the less busy winter months and on the less used routes, and at the same time driving the existing operators out the market.

E3.11 Previously, Schleswig Holstein granted exclusive rights for certain routes to operators which operated an annual service. This was, however, also abolished about 6 years ago.

E3.12 The exact text of the legislation is very simple, as it was assumed that this part of the legislation would not be used very much.

E3.13 The Kreisordnungsbehörde is responsible for noting and establishing that a service is a lifeline service. It is also the authority which grants the needed licence.

Operation of Lifeline Services
E3.14 To date, no service has been defined as a lifeline service according to Landeswassergesetz Schleswig Holstein.

E3.15 Since communes are part owners of the operators, annual services are often secured as it is in the interest of these communes to provide a year-round for its citizens. In the past, operators such as WDR were founded specially to provide a ferry connection to the mainland for the island citizens. The accessibility of the market, however, gave rise to fears that new operators who only have commercial interests would enter to cherry-pick. The new section was therefore added to the legislation.

E3.16 Presently, operators cross-subsidise their off peak services with revenue they gain in peak times.

E3.17 No service is currently defined as a lifeline service in Schleswig Holstein. If one were to come into effect, however, it is unlikely that it would be provided by the government. It is more likely that a transport contract would be signed with a private operator or that a private operator will be chosen through a tendering process.

Definition of Services
E3.18 Lifeline services aim to guarantee an "adequate" service. "Adequate service" can refer to obligations on which ports should be served, regularity, reliability and frequency of the service, service capacity, charge and staff. These obligations all have to follow the EU legislation on maritime cabotage.

E3.19 The minimum Public Service Obligation ( PSO) requirements would be set by the licensing authority. In Schleswig Holstein that is the Kreisordnungsbehörde, an authority which is based in the local commune.

E3.20 The legislation does not refer to the monitoring authority. One would assume that the licensing authority, i.e. the Kreisordnungsbehörde, would also undertake the monitoring of the lifeline service.

E3.21 If a lifeline service comes into action, tariff arrangements will be included in the licence agreement. There are no other regulations dealing with this matter other than the LWS.

Financial/ Commercial Support
E3.22 At present there is no lifeline service and the government gives no support to any of the operators.

E3.23 However it would be very likely when a lifeline service is in operation that this service would need subsidy. The government, however, intends to keep subsidy low. It will aim to put lucrative and non-lucrative services in a bundle when tendering or signing a lifeline operator contract. The aim is that these would financially balance each other out, up to a point where subsidy can be reduced to zero.

E3.24 There are no other protections other than Sec 4 in Para. 139 LWG and therefore no control facilities or permits are in place to bar competition from entering the market.

E4. The Contract

Ostfriesische Inseln (Lower Saxony)

4.24 The operator contract, as discussed before, will be given to any operator. An operator who provides an annual service, however, will have a discounted port duty included in the contract.

Nordfriesische Inseln (Schleswig Holstein)

E4.1 No service has been defined as lifeline service, and therefore no contract is in place.

E5. The Tendering Process

Ostfriesische Inseln (Lower Saxony)

E5.1 No tendering process exists.

E5.2 The follow up contracts from 1997 were not based on a public tendering procedure. The authorities did not see any need for such a highly administrative procedure as anybody could apply for a contract.

E5.3 The granted contracts are for 15 years (1997 - 2011).

Nordfriesische Inseln (Schleswig Holstein)

E5.4 No contract like the ones in Lower Saxony exists in Schleswig Holstein for the general operation to the islands.

E5.5 Contracts and tendering procedures will only be defined once a lifeline service is needed.

E6. EU Maritime Cabotage Rules

Ostfriesische Inseln (Lower Saxony)

E6.1 As explained above, Lower Saxony had quite strong operator contracts from 1976. These contracts defined and imposed the levels of obligations for:

• Transport (guarantee of annual service) - Verkehrspflicht
• Operation - Betriebspflicht
• Carriage - Beförderungspflicht

E6.2 In addition, fares were monitored and needed to be approved by the state.

E6.3 The operators were granted exclusive rights to operate certain routes (Linienschutz).

E6.4 In order to comply with EU legislation, these contracts were changed in 1997 and led primarily to the abolishment of the Linienschutz.

E7. Nordfriesische Inseln (Schleswig Holstein)

E7.1 Sec. 4 of Para. 139 LWG was introduced in 2003. This section aims to comply with the prohibition of discrimination according to the EU cabotage directive and the wish of islands operators to secure their annual service against unfair competitors.

E7.2 The legislation was not discussed with the European Commission prior to passing.

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