Chapter 4: Fares
1. Our Draft Ferries Plan made clear that we would replace the route-specific nature of fare-setting with one single overarching framework. We also said that we would roll-out the Road Equivalent Tariff (RET) scheme across the network as the basis for single fares.
2. The Scottish Government is responsible for agreeing fare levels, including annual increases to be applied, on all routes included in the CHFS contract currently operated by CalMac, routes included in the Northern Isles contract, currently operated by Serco NorthLink and on the Gourock-Dunoon town centre to town centre route. Local Authorities are responsible for setting and agreeing fares for all of the ferry services that they provide. Setting fare levels for privately operated services is of course a matter for each commercial operator.
3. As noted in the Draft Ferries Plan, RET will be rolled out to lifeline ferry services only. Where we are not responsible for the delivery of those lifeline routes we will discuss the appropriate form and timing of any roll-out with those who are, i.e. the Local Authority or the commercial operator.
Our Key Principles
4. A fares system will depend on the principles that underpin it. In this section we describe our principles in relation to our RET policy in more detail.
Simplicity and Transparency
The basis for fares must have an established rationale, and be relatively simple for a user to understand.
5. Along with the administrative benefits to the operator, a simplified fare structure which is generally understood by users, with a clear rationale, provides a framework to achieve certain key objectives. In contrast, the complexity of the existing fares system - for example there is around 10,000 different fares on the CHFS network - inhibits the effectiveness of future policy changes on fare-setting.
Comparability and Consistency
The basis for fares should be the same for each community.
6. A review of existing fares shows a variation in the cost per mile rates between different routes regardless of patronage type. For example, Oban - Craignure which is approximately 9.3 miles has a vehicle and driver cost per mile fare of £7.72 and Wemyss Bay-Rothesay which is approximately 6.8 miles has a vehicle and driver cost per mile rate of £5.97.
7. Importantly, these differences in fares between routes appear to be unrelated to the different costs of either ports or vessels. Historically, fare-setting has been particular to the route (or community) and doesn't appear to be strongly linked to any underlying rationale or consideration.
Public Sector Affordability versus Community Sustainability
Fare-setting needs to balance the different requirements of public sector affordability with community sustainability
8. Fare-setting needs to balance the wellbeing of communities against the public sector cost. Fare levels that are set too high can have adverse consequences for what, in many cases, are quite fragile local economies. Commercial fares, that would recover the costs of running these services, would be hugely damaging on services that require a substantial degree of public subsidy.
9. On the other hand, cheaper fares are not self-financing; the additional patronage does not offset the cost of lower fares. The gap in funding is made up by additional subsidy from the public sector. There is a trade-off between cost recovery (higher fares) and social and economic requirements for the future sustainability of communities (lower fares).
Car and Driver/Passenger Fares
Road Equivalent Tariff (RET)
To roll out a road equivalent tariff (RET) system of fares across the network.
10. As a demonstration of our principles the commitment of the Scottish Government is to roll out RET fares for passengers, cars including small commercial vehicles up to 6 metres, and coaches. This will mean that ferry users will pay the same rate per mile, regardless of where they are travelling from and to by ferry. A system of RET for these fare groups will resolve the issue of comparability and consistency with the current fare structure.
On 29 November 2011, we announced our intention for:
- RET for passengers, cars including small commercial vehicles and coaches to become a permanent feature on routes to the Western Isles, Coll and Tiree;
- RET on the same basis as outlined above to be introduced as a pilot from October 2012, on Islay, Colonsay and Gigha;
- RET on the same basis as outlined above to be introduced as a pilot from October 2014, on routes to Arran; and
- RET to be rolled on the same basis within the term of this Parliament, to all other West Coast and Clyde islands including the Sound of Barra and Sound of Harris.
11. The tables below provide a summary of our plans to roll-out RET.
Timing of roll out of RET
Western Isles, Coll & Tiree
October 2008 (now permanent)
Islay, Colonsay & Gigha
Rest of Clyde & Hebrides ferry services network
Within this term of Parliament
Additional concessions with RET
Commercial Vehicle Length
Extension of definition of commercial vehicle from 5m to 6m
Hay & Livestock
Returning lorries carrying hay or livestock returning lorries travel free when empty, other than a charge to cover the pier dues
Returning lorries carrying hay or livestock returning lorries travel free when empty, other than a charge to cover the pier dues. In addition, an exemption to the weight limit for Light Goods Vehicles less than 6 metres in length, carrying live shellfish, to allow them to qualify for the non-commercial vehicle rate
RET single fares will be competitive with any discounts that would or might be available through any multi-journey equivalent ticket scheme.
12. The Scottish Government is committed to lower fares for all passengers, cars including small commercial vehicles and coaches. At present the CalMac routes that do not have RET offer people access to cheaper tickets by purchasing booklets of multi-journey tickets. This ticket type will be replaced (along with saver returns and other forms of multi-journey ticket) by single RET tickets. The guarantee is that the price of an RET ticket will be competitive with the single-journey equivalent of a multi-journey ticket. In most situations, regular users will find that the effective cost of a single journey has reduced under RET. And there will no longer be a requirement to purchase booklets of tickets at significant cost to access these prices.
No one will pay more for an RET fare than their current standard single fare
13. As noted in the Draft Ferries Plan, for the Northern Isles, implementing RET now or in the next few years, would mean an increase on a range of fares currently available. We explained that our intention is to phase in the introduction of RET fares over a much longer time-frame so that no one will pay more for a RET fare that their current standard single fare. This position has not changed. In the meantime, all communities will be entitled to retain their existing fare structure.
14. Depending on the future allocation of responsibility for ferry services, it may be that other communities could be affected in a similar way and the same principles would apply.
Eligibility Criteria for RET Fares
Non-residents will be eligible for RET fares
15. The Draft Plan confirmed that a future fares policy would not make a distinction between residents and non-residents or visitors. This position has not changed. Higher fares for non-residents would undermine some of our key principles around simplicity, transparency and the requirement for a system that is relatively straightforward for the operator to administer.
16. During the course of this Review many people and organisations expressed concerns that higher non-resident fares would have adverse consequences on areas such as tourism. Higher non-resident fares would also discourage the strong social ties between residents and friends and family living elsewhere. This is a view that is shared by the Scottish Government.
Existing allowances will be retained
17. The current National Concessionary Travel Scheme for older and disabled people and the Young Scot Concessionary Travel scheme will be retained under RET. Further information about the National Concessionary Travel Scheme can be found on the Transport Scotland website.
Demand will be managed on busy sailings
18. Cheaper (RET) fares are not a panacea. We know from the period of the RET pilot on the Western Isles, Coll and Tiree that on average the additional car traffic amounted to approximately 30 per cent. While this additional activity is broadly welcomed, we need to meet the challenge of the greater likelihood of capacity constraints in the future.
19. As explained in the Draft Ferries Plan, RET offers a uniform fares structure, in which everyone is treated the same, regardless of their particular need to travel. We recognise however that these needs are different and some people will have a greater willingness to pay than others, based on the purpose behind their journey. Also, some people might occasionally travel, and can be flexible about when they travel. Others have to travel regularly, often at short notice, and there is little or no discretion about the timing of that travel. We confirmed in the Draft Ferries Plan, that there would be a requirement for some form of demand management and that this was well supported by a range of organisations with a significant interest in the ferry services.
20. While RET will form the basis for the fares structure across all sailings, the operator will have the opportunity to bring forward proposals on how they intend to manage demand where there is excess demand. Demand management will only be considered where projected demand on a particular route, as a result of the introduction of RET, indicates that this is necessary. Each community will be different in this regard. The operator will consult with the community and agree the level of demand management to be introduced. Demand management techniques will only be introduced if they are agreed by the community.
21. It may be that for shorter crossings with a distinctive operating day it will be possible to distinguish between peak and off-peak services. Typically peak sailings will be around commuter times covering the early morning and later afternoon/early evening period, with services during the day and in the late evenings revert to off-peak. For longer journey and crossing times, where there might only be one or two services a day, the busy sailings might be for two-three weeks during July, or a particular sailing might be extremely popular.
22. Proposals set out by the operator will be discussed with a range of stakeholders, including the local Ferry Committee or User Group, before they move to the implementation stage. As noted above, in introducing RET we will not make a distinction between residents and non-residents or visitors. The same principle will be applied when considering demand managements.
Large Commercial Vehicles
Western Isles/ Coll and Tiree
23. At the completion of the RET Pilot Study on the Western Isles, Coll and Tiree, Scottish Ministers were persuaded that there was not a compelling case to retain RET for commercial vehicles. Recognising the financial implications of such a decision for hauliers, a transitional protection scheme is currently in place for commercial traffic on the Western Isles, Coll and Tiree.
24. Following the removal of RET for commercial vehicles on these routes we re-introduced the concessions provided elsewhere on the CHFS routes for hay and livestock carriers. In addition, we introduced a further concession for commercial vehicles carrying live shellfish. All of these carriers travel free when they return empty, other than a charge to cover pier dues.
25. A study on freight fares is currently underway on the Western Isles, Coll and Tiree economies, which involves a range of stakeholders. The findings of this study will be used to inform future fares policy for commercial vehicles.
A comprehensive review of large commercial vehicle fares
26. In the Draft Plan we said that it was our aim to develop an overarching policy for freight fares. We will do so at the earliest opportunity following the publication of the Ferries Plan.
27. The aim of this review of freight fares will be to deliver on a new fare structure that is simple and transparent, and importantly does not advantage one part of the network over any other part. Any future fares structure will also need to balance the wellbeing of communities against the public sector cost.
28. Our intention is to first consider the findings of the study on the Western Isles, Coll and Tiree economies. We will then set up a working group to take this forward and will consult with key stakeholders as we do this.
Small Commercial Vehicles
Small commercial vehicles under 6 metres (current height and weight restrictions apply) will be eligible for RET fare rates
29. For the purpose of fares, small commercial vehicles up to six metres in length, will be treated as non-commercial vehicles and be eligible for RET fares. This policy is now in place on routes to the Western Isles, Coll and Tiree and to Colonsay, Islay and Gigha. This policy will be applied to all routes as RET is rolled out in line with our announcement in November 2011. This change will also ensure that the threshold criterion for a commercial vehicle is the same throughout the whole network, including the Northern Isles (where the six metre threshold has been in place for some time).
Future RET Formula
30. Our Draft Ferries Plan indicated that further work was required around the precise rates for RET. We have now carried out this work and have set an updated RET formula. This formula has been applied to the new pilot for Islay, Colonsay and Gigha and steps will now be taken to introduce this to the Western Isles, Coll and Tiree. The updated formula does not change the position that fares will continue to be competitive with any discounts that would or might be available through any single journey equivalent of a multi journey ticket.
Annual Fares Review
31. We noted in the Draft Ferries Plan that RET fares would be reviewed each year, in line with the cost of travel. The recently updated formula will apply on RET routes until the end of winter 2013/14. Thereafter, an updated formula, in line with the cost of travel, will be applied at the beginning of each summer timetable period.
Summary of way forward
32. Our plans are summarised below:
- We will continue to meet our commitment to roll-out RET to other routes across the network;
- We will consider the outcome of the study on the Western Isles, Coll and Tiree and will take forward work to set an overarching freight fares policy;
- We will discuss the need for any demand management measures with the current operator; and
- We will carry out annual reviews of RET fares.