9 Summary and Conclusions
9.1.1 This study has set out to test the feasibility of operating a passenger and vehicle ferry service between Gourock and Dunoon town centres, without the need for additional subsidy to that required to run a like-for-like weather resilient foot-passenger only service. The wider feasibility, in terms of the market's response to any potential tender will ultimately depend on operators' own criteria, but this study is concerned with the feasibility in terms of the balance of projected revenues and costs associated with the prospective new service.
9.1.2 Four different forecast scenarios were developed for total volumes across the Clyde between Gourock and Dunoon (Static, Gradual Recovery, Trend Growth, and Decline) to test the findings under different wider economic conditions over the coming years. Three different vessel scenarios were also developed, based on running two, three or four ferries on the town centres route, so 12 'core' scenarios have been tested in total.
9.1.3 The first step was to estimate the costs and revenues associated with running a weather resilient and reliable foot-passenger only service and, having estimated these a level of 'defensible subsidy' under each scenario was determined. This value is in the range of £2.9m to £3.1m per annum for a two vessel scenario depending on the outturn economic conditions.
9.1.4 The incremental costs and revenues of moving from this foot-passenger service to a passenger and vehicle service (running an identical timetable) were then estimated to provide a forecast net revenue (positive or negative) under each scenario. A positive net revenue means that the service is feasible (although not necessarily commercially attractive), based on the definition of feasibility used in this study.
9.1.5 Costs have been estimated based on suitable vessels for the route, benchmarked against similar vessels operating in comparable waters elsewhere, as it is beyond the scope of this study to undertake detailed vessel design. Pier and Harbour dues have been estimated based on current published tariffs. The analysis suggests that a large proportion of the incremental costs of moving to a passenger and vehicle service are associated with Pier Dues (higher volumes of passengers and vehicles) and Harbour Dues (higher gross tonnage). Revenues have been estimated based on the characteristics of the prospective new service and that of the existing Western Ferries service determining a market share for the new service.
9.1.6 This analysis suggests that net revenues would be positive in a two-vessel scenario in all four of the economic scenarios considered. This 15-year net revenue value ranges from £7.8m in a Static growth scenario, £9.0m in a Gradual Recovery, £13.6m in a scenario where mid 2000s growth rates are resumed, and £3.4m in a market where decline continues. A three vessel scenario would also be feasible under three of the four growth scenarios, and a four-vessel scenario is only feasible under the highest growth scenario considered here, as the incremental costs of operating the additional vessels outweighs the incremental revenue in the other cases.
9.1.7 These 'core findings' were then subjected to a range of sensitivity tests focussing on: crewing levels, gross tonnage of the passenger and vehicle vessel, and harbour dues. These tests underline the importance of pier dues in particular to the overall feasibility and there is scope for both harbour authorities / owners to explore the basis upon which harbour dues are set in the future, provided they receive an adequate income to cover the costs of operation, maintenance and future investment.
9.1.8 The core findings assumed no competitive response from Western Ferries due again to the level of uncertainty associated with this. However, a number of 'what if?' tests were undertaken to assess the sensitivity of the core findings to a competitive response from Western Ferries. These tests indicate reduced, although still positive net revenues under the Static, Gradual Recovery and Trend Growth economic scenarios, with revenues becoming negative under the Decline scenario. A combination of reduced fares and higher frequency would erode net revenues further. There is however an alternative view that Western Ferries may not be capable of mounting or sustaining a competitive response and therefore the company may have to retrench if it lost significant market share. The current stated position of Western Ferries is that they would mount a competitive response to protect their commercial interests. It would clearly be a matter for potential operators to come to their own judgement with respect to the potential response from Western Ferries.
9.1.9 In summary there are a range of key potential 'upside' aspects (eg lower vessel GT, pier & berthing dues reduced through negotiation, Western Ferries retrenchment) and 'downside' aspects (eg higher GT, higher crewing levels and competitive response from Western Ferries) which could affect the service and the balance of these would be crucial in determining the ultimate feasibility of the town centre passenger and vehicle service. Some of the inherent uncertainties associated with these aspects of the prospective service could be resolved as part of a market testing exercise whilst other aspects (in particular the response of Western Ferries) would only become apparent on commencement of the service.
9.1.10 This study has therefore demonstrated that, given the assumptions made and analysis undertaken here, a passenger and vehicle ferry service is feasible. It could attract the level of market share, and therefore generate sufficient incremental revenue, to cover the various incremental costs of delivering the service. This core finding is subject to the uncertainties explored during the sensitivity testing, but the study does provide an evidence base which could be used to inform discussions with potential operators. Ultimately, it is their judgement and level of interest in this proposition that will determine the feasibility of a passenger and vehicle service between Gourock and Dunoon town centres.