SCOTTISH EXECUTIVE

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Final Report: Options for the Ferry Services Between Gourock and Dunoon

4.4 Service Demand Over Time

While the conclusion of the previous section is that a single operator could meet average traffic demand on the Gourock/Dunoon route, a key question is whether a single operator could meet peak demand during the busiest hours of the busiest days of the year.

In terms of the seasonal pattern of demand, the peak weekend is the weekend of the Cowal Games, held on the last Saturday in August.

Tourist traffic is highest in the summer and Saturday is the peak day. Figure 4.9 gives hourly passenger numbers during the Cowal Games on Saturday 31 August 1996 and compares them to the numbers on a typical weekday in February 1996 outside the tourist season when demand may be judged to be close to its core minimum level, and with the day with the next highest traffic, Saturday 10 August 1996.

Figure 4.9 CalMac high/ low all traffic comparison 1996-97 from Gourock to Dunoon

fig 4.9

source: CalMac daily data

The major message emerging from Figure 4.9 is that the Cowal Games weekend is highly abnormal. The level of traffic carried on this weekend is several times greater than the next busiest day in the year. For this reason, it would be uneconomic to plan route capacity simply in order to meet this peak.

It may be possible to address the issue of the Cowal Games weekend through, for example, chartering vessels. The Upper Clyde requires vessels with very low draughts, which may be difficult to source, and while Western Ferries' eight knot-speed vessels are comparatively easy to source, it is less easy to find CalMac's present 12-knot vessels. Nevertheless, the Waverley seems an obvious solution.

Although it might appear that CalMac, therefore, does not need its present 500 passenger capacity vessels, it should be borne in mind that they were purchased with the intention of being interchangeable with other vessels on other routes. CalMac has also attempted to reduce the crewing levels to below 500 passenger capacity levels on its vessels through discussions with the Maritime Safety Agency (MSA), to date unsuccessfully.

It should also be noted that the data shown relates to CalMac only, as Western Ferries has only recently begun to analyse records of passenger numbers by individual sailing. Without equivalent data from Western Ferries, it is difficult to predict, with any certainty, total capacity requirements for this route on a daily and hourly basis. However, a working assumption is that, as CalMac. is carrying 43% of all passenger traffic, then the traffic patterns shown, multiplied up by a factor of 100/43, would give a reasonable approximation of the total flow of traffic across the two routes. This would suggest, for example, that-the busiest day of the year, aside from the Cowal Games, would require a total capacity of 465 passenger units, if CalMac's service frequency were maintained. If service frequency were changed, then this capacity requirement would alter: for example, if service frequency was doubled, then, in theory, capacity requirements would be halved. This assumes a constant, but highly unlikely, traffic flow which does not take account of traffic peaks and troughs.

Analysis of Western Ferries' data for one representative ship on a busy day ( in this case, Easter Saturday) shows the effects of these peaks and troughs:

Figure 4.10 Western Ferries daily peaks & troughs: Easter Saturday 1997 (both ways)

fig 4.10

Source: Western Ferries activity data

While the average car capacity utilisation on this day was only 53%, it ranged from 14% on the 07:30 a.m. sailing, to 86% on the 18:55 p.m. sailing. A review of weekly data throughout the year 1996 indicates the following minimum and maximum ranges for a single journey (CalMac data only):

Figure 4.11 CalMac high low comparison: weekly, Gourock/Dunoon

Source: CalMac weekly data

Note to Table: during the week of 6 January 1996 sailings were disrupted by bad weather and there were no sailings at all on New Year's Day. The number of sailings, was, therefore, reduced. Average sailings per week are normally 130 (one way).

Figure 4.12 CalMac high/ low traffic comparison: time of day, Gourock/ Dunoon

fig 4.12

Source: CalMac

Figure 4.12 provides data for traffic flows on the CalMac service between Gourock and Dunoon by time of day, for a typical day during the February low season and for the second busiest Saturday of the season. The sailings shown at 14:45 p.m. and 16:47 p.m. were provided by the back-up vessel. Therefore, if the back-up vessel had not been available to service this route because it was in use elsewhere, the peaks shown for the Saturday 10th August 1996 may have been more pronounced.

It will be seen from the figure that there is a clear evening peak when returning commuters and shoppers travel from Gourock to Dunoon at 16:20 and 17:20. An analysis of the Gourock/Dunoon route would show a reverse peak during the morning peak hour.

If peak flow traffic volumes were pressing upwards on capacity limits, it might be worth considering differential peak/off peak tariffs to displace marginal leisure travellers out of the peak period onto voyages during quieter periods. This would be a cheaper and more economically efficient solution than investing substantial sums in the new capacity merely to meet this peak demand.

Figures 4.11 and 4.12 suggest that, taking the Cowal. Games out of the equation, service capacity is not a limiting factor, as CalMac scarcely ever reaches 200 passengers in a single sailing. Consequently, vessels with capacity for 500 passengers are not necessary specifically for this route, if two operators are maintained.

4.5 Forecast Growth in Traffic Volumes and Tariffs

There are a number of drivers of market growth, which include the following:

• growth in numbers of tourists;
• growth in resident numbers;
• new products and services. For example, in the course of our interviews, CalMac stated that it was considering expanding the existing passenger service between Gourock and Kilcreggan into a car service.

There is a distinction in the historical growth patterns of both operators with the growth of demand for the Western Ferries service having been greater than that of the CalMac, service over the past five years. There are certain special factors which account for at least part of this differential, for example the closure of the rail tunnel between Gourock and Greenock from October 1993 to 1995, when the rail service was replaced by a connecting bus service resulting in a fall in CalMac's passenger numbers.

Figure 4.13 Growth in Total Passengers 1992-97

Source: CalMac & Westem Ferries

CalMac does not project passenger traffic growth on a route by route basis, but has told us that, for the network as a whole, it is predicting 2% growth in passengers and cars, and 1 % growth in commercial vehicle and coach traffic for both 1998 and 1999.

CalMac's experience suggests that the main driver of traffic demand is GDP growth. Taking account of a likely increase in real GDP of between 0% to 3.5% per annum, neither operator seems to be foreseeing any great change in the existing size of the market (presently 1.4 million passengers).

A recent report on The New Ship Effect5 concludes that the introduction of a new vessel to replace an old one can stimulate an increase in carryings which remains permanently. In other words, traffic volumes are ratcheted upwards by a new vessel, and a permanent expansion in the market results. The report concludes that "the scale of the new ship effect has been positively and significantly related both to the severity of the previous capacity constraints and to the subsequent pressure of demand as measured by the rate of growth in traffic carryings on the rest of the network." In other words, a new ship will have a larger impact on total carryings where there was previously suppressed demand, and where the rate of demand growth is high. Our assessment is that neither factor applies strongly on the Gourock/Dunoon route, so that while some stimulus to demand could be expected from a new ship, it would be likely to be modest. We take up this point when evaluating options for the future of the service later in the report.

In terms of future tariff growths, CalMac has been advised by the Scottish Office that it will have to impose price rises exceeding inflation next year. The price behaviour of the two operators to date suggests that Western Ferries will follow suit. It is difficult to predict any more long-term pricing strategy. Finally, any moves to reduce "bucket shop" discounts is likely to increase average yields per passenger, which may in turn increase overall revenue if, as we suspect, the price elasticity of demand is less than unity.

4.6 The Piers

Ownership of the Piers from which the services operate is given in Figure 4.14. The shortest route across the Inverclyde-Cowal is Mclnroy's Point to Hunter's Quay. Wemyss Bay and Rothesay are much further out to sea and, consequently, the route is more exposed than the Gourock/Dunoon route. The terminals at Gourock and Hunter's Quay are more sheltered than those at Dunoon and McInroy's Point.

Figure 4.14 Ownership of the piers

Source: interviews with CalMac & Western Ferries

In Figure 4.15, the present condition of the piers and their ancillary facilities, are

summarised. The figure shows that there is considerable variance in the condition of individual piers, which has implications for the timing and level of investment which will be needed to ensure future service delivery. This will be considered in greater detail in section 8.

Figure 4.15 Condition of the piers

Source: Portia/ interviews with CalMac & Western Ferries note to Table: The opinions as to the condition of the piers are those of our technical advisers, Portia Management Services. However, since they are based on a brief visual survey, they should not be considered conclusive.

4.6.1 Gourock Pier

The Gourock Terminal is owned by CalMac. It is in a well sheltered situation and is, consequently, used as CalMac's "port of refuge". In other words, when adverse weather conditions make docking difficult for the vessels at Wemyss Bay and Ardrossan, they go to Gourock instead. However, if Gourock was abandoned, alternatives may be possible. For example, the Wemyss Bay vessels might lay up in Rothesay and the Arran vessels in Brodick, although that would imply a cessation of the service. Fairlie Pier may be capable of modification into alternative ports of refuge for the Arran vessels. The cost and transitional arrangements would need to be examined in greater detail: the cost of upgrading Ardrossan was estimated at £8 million in 1992.

CalMac also runs a passenger-only service to Kilcreggan, and a small number of cruises, from Gourock.

The Gourock Terminal is also CalMac's Head Office, housing all senior management and 100 staff. CalMac has advised us that if it were not the main operator of the Gourock/Dunoon route, it might relocate its Head Office elsewhere.

£400,000 of CalMac's Head Office costs were allocated to the Gourock/Dunoon route in the most recent financial year.

The Gourock Terminal forms part of an ambitious waterfront development scheme costing an estimated £8 million which is currently under active consideration by Inverclyde Council. As part of the scheme, a supermarket would be built near Gourock Pier and CalMac would be rehoused in improved offices. The consortium, which includes the local authority, intend to apply for Millennium Commission funding to meet part of the costs of the development.

4.6.2 Dunoon Pier

Dunoon Pier is owned by Argyll and Bute Council and a proposal to refurbish and improve it was the subject of a recent application by the Council to the Scottish Office. As well as serving scheduled CalMac services to and from Gourock, some use is made of the pier by non-scheduled vessels such as the Waverley cruise ship.

The pier is sited in an exposed position open to the southerly winds and swell Sailings are sometimes suspended during periods of stormy weather.

Figure 4.16 (overleaf) shows that the percentage of cancellations on the route has run at below 1% in each of the last three years, and that they have fallen year-on-year from 117 in 1994 to 68 in 1996. Most cancellations are due to adverse weather conditions; and CalMac estimate that 90% of poor weather cancellations are attributable to the exposed position of Dunoon Pier and the submergence of the linkspan during extreme high tides.

Figure 4.16 CalMac cancellations on the Gourock/Dunoon route

Source: CalMac

The condition of the working part of the terminal is poor and will require major repair as well as ongoing maintenance if it is to remain operational in its present form. The piles of the linkspan are made of steel-covered reinforced concrete; the steel is corroding and the concrete is crumbling. The pier is also unsuitable for bow and stem loading vessels, being equipped only with a side ramp.

We understand from CalMac that, since our visit, the Council has undertaken significant expenditure on the linkspan, but that further investment needs to be made on the pier.

Figure 4.17 Dunoon Pier Income & Expenditure 1997-98

Source: Argyll & Bute Council

The surplus made at Dunoon Pier contributes to the costs on other piers.

Potential Capital Expenditure

The Council estimates the cost of upgrading and refurbishing Dunoon pier as follows.

Figure 4.18 Estimated cost of upgrading Dunoon Pier

Source: Argyll & Bute Council

The pier building is a Grade B listed building, under the protection of Historic Scotland. The estimates shown assume that refurbishment preserves the original timbers. If this condition is relaxed, the cost could be reduced. Historic Scotland may be a source of refurbishment funding, as may the Millennium Commission and the Local Enterprise Company, Argyll & the Islands Enterprise.

4.6.3 Wemyss Bay Pier

The Wemyss Bay terminal is owned by CalMac. It is in a slightly exposed position but it is unusual for services to be cancelled due to adverse weather.

The railway station forms part of the terminal and major refurbishment of it is under way, with substantial financial assistance from Historic Scotland.

4.6.4 Rothesay Pier

The terminal is in a well sheltered situation.

4.6.5 Hunter's Quay

This terminal is in a sheltered situation and is not normally affected by adverse weather conditions. Analysis of information provided by Western Ferries shows that the level of cancellations on this route have never reached 0.5% between 1991 and 1996.

4.6.6 McInroy's Point

The McInroy's Point terminal is in a slightly exposed location, but is not normally disrupted by adverse weather.

Under the terms of the lease, the site will have to be restored to greenfield status when the site is given up. There are 18 years left to run on the lease. The landlord for the land area is Ardgowan Estates (the Crown Estate own the seabed and this applies to all the terminals). The cost of returning the site to greenfield status is estimated by Western Ferries at between £ 100-200,000.

Western Ferries' linkspans are supported by compressed air tanks and, if they are punctured, the service will be non-operational until they are repaired. However, Western Ferries tells us that there has only been one three hour incident of non operational linkspan in 25 years of service.

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