6 Route Demand Projections
6.1.1 Chapter 5 outlined the recent trends across the Gourock-Dunoon route. This Chapter details the overall volume projections used to estimate costs and revenues associated with a new town centre passenger and vehicle ferry service.
6.1.2 A two-step process to demand forecasting has being undertaken:
- Step 1: Define scenarios in relation to the total volume of travel across the upper Firth of Clyde; and
- Step 2: Estimate the market share accruing to Western and Gourock-Dunoon under a number of ferry service scenarios.
6.2 Developing Scenarios
Step 1: Define Market Volume Scenarios
6.2.1 Having analysed the trend data on the Firth of Clyde in Chapter 5, the key issues in any projection are:
- when will growth resume with the anticipated economic recovery?
- at what rate will growth resume in relation to recent trends?
- would the addition of a second car ferry between Gourock and Dunoon 'generate' significant demand? and
- in the longer term, is there a 'saturation' point for volumes on these crossings, ie growth cannot continue indefinitely without significant population growth?
6.2.2 The relationship between Scottish economic growth and Gourock-Dunoon volumes is complex. Total car and passenger volumes have drifted steadily and consistently down between 2007 and 2011, despite the economy suffering a sharp fall in 2009, rebounding in 2010 and contracting again in 2011. Car ferry volumes have dropped much faster than national traffic volumes since 2007 and were growing at a faster rate than national traffic between 2000 and 2007. This suggests volumes here are more volatile than national road traffic. It is therefore not obvious that volumes on the route will immediately increase with economic growth. For example the national economy grew between 2009 and 2010, yet local passenger and car volumes dropped. As such, national economic forecasts are probably not the most reliable basis for forecasting here, and a trend based approach considering a number of scenarios is more appropriate.
6.2.3 In terms of population, the GROS21 projections for the Argyll and Bute Council area suggest a 7% drop in population between 2010 and 2035. There are no sub-local authority projections available. GROS estimates of the population of the settlement of Dunoon (which includes Sandbank) suggest that the population grew from 8,950 in 2003 to 9,410 in 2010, a growth of around 5% which will account for some of the ferry passenger and vehicle traffic growth seen in this period.
6.2.4 The prospective starting year for the analysis of a new service has been agreed as 2015 and the assessment period is 15-years, following the precedent set in the Deloitte and Touche report of the late 1990s, 'Options for the Future of Ferry Services between Gourock and Dunoon'22. Note though that the current Argyll Ferries contract is six years in duration.
6.2.5 As suggested above, although volumes are currently dropping, it would not seem unreasonable to assume that travel volumes across the upper Clyde will begin to increase again when the local economy recovers and in particular when real incomes start increasing. A number of different growth scenarios are therefore developed here to explore the sensitivities of the outcomes reached in response to this growth.
6.2.6 The total volume will of course also be determined to some extent by the nature of the ferry services in operation (ie service frequency and price) and this is accounted for, in terms of changes from the current level of service described further below. In the decade or so up until July 2011 there had been a relatively stable supply side, although there were some enhancements to Western Ferries' frequencies and operating day (and Western Ferries also brought two new vessels into service). The commencement of a half hourly foot-passenger only service, together with a much longer operating day, has not led to any increase in foot-passengers. However the issues surrounding the foot-passenger vessels currently in use makes it difficult to draw any conclusions from this.
6.2.7 A number of whole route scenarios have been developed. These were designed to represent a range of outcomes for a forecast period of 2015-29 inclusive, and are outlined below:
- Scenario 1 'Static' Demand - all cost and revenue estimates based on 2010 total route volumes, ie the last full year before the introduction of the Argyll Ferries service;
- Scenario 2: 'Gradual Recovery' - volumes pick up at half recent trend rates following economic recovery. The scenario here sees volumes continue to decline at half the rate of the recent trend (2006-2010, ie up to the commencement of Argyll Ferries) until 2014, at which point growth resumes at half the pre-recession trend rate of growth (2000-06 (passenger) and 2000-2008 (car / cv)), so that's 1.0%, 1.2% and 0.6% per annum for passengers, cars and cvs respectively;
- Scenario 3: 'Trend Growth' - volumes continue to drop to 2013 then resume full pre-recession trend growth from 2014 onwards (2.1% per annum for passengers, 2.4% per annum for cars and 1.2% per annum for CVs / coaches); and
- Scenario 4: 'Ongoing Decline' - assumes volumes continue to drop at half of current rates to represent a 'worst case' scenario.
6.2.8 These four scenarios give rise to the following total route passenger and car projections, shown in Figures 6.1 and 6.2 below.
Figure 6.1 Total Route Passenger Projections, 2015-29
Figure 6.2 Total Route Cars Projections, 2015-29
Step 2: Estimate Route Volume 'Uplift'
6.2.9 The introduction of a new passenger and vehicle ferry service operating between the town centres would lead to an increase in the overall demand for vehicle based travel across the Firth of Clyde, and this has been accounted for in terms of an elasticity, based on the increase in the number of vehicle carrying sailings. The elasticities have been taken from a survey undertaken for the Scottish Government as part of the Scottish Ferries Review. This survey was undertaken across the network and used a series of 'Stated Preference' questionnaires to estimate Scottish ferry travellers' behavioural responses to changes in ferry supply. The total sailings elasticities derived for those travelling on short ferry crossings (less than 30 minutes) are shown below:
- 0.10 and 0.15 for residents and visitors respectively - vehicle based; and
- 0.07 and 0.10 for residents and visitors respectively - foot-passengers.
6.2.10 These figures suggest for example that a 100% increase in the number of daily sailings would lead to a 10% increase in vehicle-based travel by local residents and a 15% increase by visitors. Using these elasticities, a new two vessel service for example would increase total route volumes by 7% in each year.
6.2.11 The four demand scenarios outlined above are therefore subject to an uplift based on the elasticities noted here, depending on the timetable / vessels on the new service in each case.
Step 3: Estimate Market Share
6.2.12 2010 was the last full calendar year when both passenger and vehicle ferries were operating. The market share between Cowal and Western is shown below in Figure 6.3.
Figure 6.3 Market Share, 2010
6.2.13 The forecast market shares, and the resulting costs and revenues are now reported in Chapter 7.