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1. Introduction
Objective of the report
1.1 This report constitutes Deliverable 3 "Research and Advice on Risk Management in Relation to Subsidy of Ferry Services" study for The Scottish Executive Enterprise, Transport and Lifelong Learning Department (the Executive) before the tendering of the Clyde and Hebrides Lifeline Ferry Services. The study analyses how the
EU Maritime Cabotage Regulations rules are applied within the European Union (
EU), with particular regard to the way in which risks are managed.
1.2 This report is a factual summary of the different approaches adopted in British Columbia (Canada), Norway and Japan to support of their domestic island ferry services.
Rationale
1.3 We chose to focus on Canada, Norway and Japan because they all have sparsely inhabited off-shore islands that are linked to the mainland through subsidised passenger and freight ferry services. We believe that the arrangements that they have put in place to safeguard these services are of particular relevance to our study.
1.4 Canada, Norway and Japan are
OECD countries whose economic and government institutions are comparable to those found in the European Union. These are, namely, ensuring a suitable standard of transport connection; ensuring ferry fares and freight charges are not excessive; and ensuring efficient delivery of services at the minimal amount of public subsidy.
1.5 In addition, information regarding ferry services exists in the public domain for these countries, which greatly facilitates the research process.
1.6 The subsidised ferry market structures in the three countries fall within a wide spectrum. In British Columbia, one operator dominates the market under a long contract (60 years) with the Government. In Japan, the market structure is diametrically different, with many operators providing services in a highly fragmented market of over 600 individual routes. In Norway, the concept of
PSO / Lifeline services does not formally exist. Ferry services are regarded as part of the road network. Services, however, are governed by contracts that stipulate ticket prices and frequency of service.
1.7 We feel that the recent institutional restructuring and types of services provided in these countries would make them valuable case studies to inform the tender of the Clyde and Hebrides services in Scotland.
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