Fares - RET and dynamic pricing

The Road Equivalent Tariff (RET) is a distance-based fares structure with a formula for calculating fares comprising a fixed element and a rate per mile. RET fares were rolled out across all Clyde and Hebrides Ferry Services (CHFS) routes by October 2015. A majority of respondents – 61% of those who answered the question – said they would like to see RET fares for islanders on NIFS routes. However, while 84% of Orkney residents agreed with RET fares, this fell to only 52% of Shetland residents.

The high cost of travel to the Northern Isles, a desire to see reduced fares, and fairness in relation to other areas of the ferry network were most likely to be given as reasons for supporting RET fares for islanders. Respondents from Orkney were most likely to cite fairness as a reason for supporting RET fares with some noting that these fares are already available on services in the CHFS area. This view was apparently linked to an expectation that application of the RET formula would reduce fares to Orkney.

In contrast, the most frequent point from Shetland residents was that they would support RET fares only if prices were reduced as a result. A view that RET fares might be more expensive, particularly for Shetland, was the main reason for not supporting their introduction.

A majority of respondents – 71% of those who answered the question – said they would like to see more dynamic pricing for visitors. The most frequent comment was that tourists should pay more than local residents for ferry travel or, alternatively, that costs for islanders should be reduced. The need to manage demand (particularly at peak season) in view of limited capacity and a perception that the current service is designed / operated for the benefit of tourists rather than islanders were also cited.

Reasons given for not supporting dynamic pricing for visitors included disagreement with the principle of dynamic pricing, a view that what is required is more capacity not reduced demand, and concerns with respect to potentially negative impacts on the tourism sector and, by extension, on island economies. An alternative perspective was that many tourists already book well in advance and dynamic pricing for visitors could provide an even greater incentive to do so.