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SCOTTISH EXECUTIVE

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

Footnotes

1 The STUCC is now known as the CalMac Users. Consultative Committee (CMUCC). There is a general requirement to refer to the CMUCC in any situation where CalMac intends to withdraw a service.

2 These included the Monopolies and Mergers Commission Report on Cross-Solent Ferries: A report on the existence or possible existence of a monopoly situation in relation to the supply of ferry services between the Isle of Wight and the mainland of England, Cm 1825, HMSO, 1992; the 1983 Monopolies and Mergers Commission Report on Caledonian MacBrayne Ltd, Cm. 8805, HMSO, 1982, and the report by the Scottish Office Industry Department on Fare Price Elasticities on the Caledonian MacBrayne Ferry Network by R.A. Henderson and D.J. Maddison, ESU Research Paper No 30 (1993).

3 This also resulted in the disposal of surplus vessels designed specifically for the route at a loss to CalMac.

4 All passenger vessels in the UK must be docked and inspected annually before their passenger certification is renewed.

5 The New Ship Effect on the Caledonian MacBrayne Network, R.A. Henderson, The Scottish Office, May 1996

6 An Appraisal of Caledonian MacBrayne's options for replacing the MV "Suilven " on the Ullapool / Stornoway service, Economics & Statistics Unit 2, Scottish Office Industry Department, Caledonian MacBrayne Ltd, June 1993

7 Fare Price Elasticities on the Caledonian MacBrayne Ferry Network by R.A. Henderson and D.J. Maddison, Economics & Statistics Unit 2, Scottish Office Industry Department

8 the Kyle / Kyleakin crossing has since been discontinued following the opening of the Skye Bridge

9 R.A. Henderson and D.J. Maddison, op. cit., p. 18

10 in a recent study for the British Tourist Authority, we carried out a detailed econometric analysis of the impact of the exchange rate and changes in GDP on the UK's international tourism receipts, and found elasticities of -1.4 for demand regressed against the trade weighted exchange rate of Sterling, and +0.63 for demand regressed against real OECD GDP for the period 1975-1995, with a correlation coefficient (R2) of 0.85. In other words, these two factors together explained between 75% and 90% of changes in the UK's international tourism receipts over the period, and if Sterling appreciated by 1% during the course of a year this would be expected to reduce her receipts from international tourism receipts by 1.4%, other things being equal.

11 this assumption may not be strictly correct, as in practice it might make sense for the service operator to provide additional waiting room, catering and other facilities. However, these investments could generate additional revenues, for example from franchisees of catering facilities, news vending, etc., so overall they are assumed to be self-financing

12 whether in fact such an external effect exists, and if it does what its value is, are questions which lie beyond the scope of the present report

13 perhaps according to an "RPI-X" formula

14 In principle, the best client organisation would probably be the Scottish Office itself, but other interested parties could be represented on a Steering Group responsible for drawing up a Service Agreement and issuing an Invitation to Negotiate to prospective service providers. If one of the interested parties was itself bidding (as for example could be the case for Western Ferries), they would then have to withdraw from the Steering Group to avoid any possible conflict of interest.

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