'Hidden' page on Speedferries web site

[Jonathanmiller]

Okay, this is not such a huge secret - and certainly known to all travel writers.

Still, if you go to www.speedferries.com/press you will find a number of interesting documents that Speedferries is putting out to the media.

[Will]

Well, I'm not a travel writer, but as a member of the maritime press I was well aware of Speedferries' press releases.

Much as one admires what the company is attempting to do (and if, as it claims, its service really is profitable it could be succeeding) I don't think that complaining to the UK and EU governments about P&O responding to Speedferries' pricing policy will do it any favours. After all, Speedferries started the price war and it is totally naive of it to expect the other protaganists not to respond. And calling its last offer 'fight the pirates' tickets is surely being just as 'predatory' as it accuses P&O of being.

Maybe it will result in lower fares on the short-sea routes, which will have a knock-on effect on the Western Channel. As long as that doesn't bring about a reduction in services in order to save money because despite the 'rip off' tags, the longer crossings do not bring in vast profits for the operators outside the busiest times.

[Alcazar]

Who would like to bet AGAINST the following?

P&O to lower their fares massively, then........

Speedferries to go under, then..........

P&O to then RAISE their fares massively. After all, they almost tripled them in three years in the late 90's/early 00's

Alcazar

[Will]

I certainly wouldn't like to bet against it, and it's probably what P&O would like to happen. Trouble is, unlike previous price wars when ferries were very profitable and crossings could be given away because the operators were making a fortune from on-board sales (in fact the more people they could get on the ships the more they took in the duty-free shops), P&O Ferries is now coming from a weaker position than Speedferries. The latter claims to be making a small profit from its service - though unless it has an artificially low charter deal for its ship, which isn't beyond the realms of possibility - I don't really see how.

Another likely occurrence could be a real 'dirty tricks' campaign, as allegedly employed by certain airlines. That would be far more damaging, and nobody would benefit. Maybe Speedferries is expecting this, hence its protests.

[Jonathanmiller]

I am not a competition lawyer but SpeedFerries would seem to be entirely within their rights to draw the attention of regulators to questionable pricing tactics by marketplace competitors.

We shall see how the regulators respond to the complaints. They might well consider it to be unlawful predatory pricing and abuse of dominant position.

But this price war will not be settled by the regulators, at the end of the day. It will be settled by consumers.

I notice that P&O will now offer no long-term commitment to its ferry business. There must therefore be a good chance that they will be out of this business within 12 months.

P&O's ferry business is losing money and customers at a rate of knots that suggests that those in charge have only a vague notion of what they should be doing.

Their cost base is too high, they have the wrong ships, and now they are facing real competition as the cartel breaks apart.

Listen for the glug-glug-glug as they sink slowly into a sea of red ink.

[Lavie]

I support speedferries 110%. Having seen the dirty tactics employed against them in the recent BBC Documentary i shall certainly make every effort to continue using Speedferries. This latest development cannot be seen to be anything other than directly aimed at them. All they have done is set up a new service on a DIFFERENT route giving consumers more choice. If that ruins someone's monopoly then tough! Monopolies don't benefit the consumer.

Also, running a small business myself (much smaller than speedferries!) i have also had 'smear tactics' from some bigger competitors - so fully understand how they must feel.

I, for one, certainly hope Speedferries survive to cross each and every hurdle others create.

[Carolski]

Just a quickie in huge support of Speedferries. I for one sincerely hope they do succeed. Sounds like a lot of cynics out there!!! We have used various ferry companies over the past few years and Speedferries where way out there ahead of the others as far as service was concerned. My husband is in a wheelchair and we have many horror stories to bore people with, which at the time were anything but boring for us. Speedferries on both outward and return journeys, were faultless regarding accessibility and providing their own help re wheelchair etc.Their attitude was wonderful without being patronising. Also we used their pet passport facility. Great, no fuss, professional and straightforward. All in all, long may they reign! We would never dream of using anyone else...............unless the other companies can match all this........thought I saw a pig flying!!!

C

[Will]

I don't think anybody is being cynical. If Speedferries' route and level of service suits you then of course you should support the company. As a maritime journalist by profession I personally have doubts about it being viable and sustainable in the long term, regardless of what tactics P&O may or may not be employing, but I would love to be proved wrong in that respect. Surely if it is forcing P&O to lower its prices then it will be doing many people a favour. P&O doesn't exactly have a monopoly - SeaFrance and Hoverspeed operate on the same route, and Norfolk Line is another near competitor.

From what people say about Speedferries on this and other forums it does sound as if the company has got things right. Despite all the talk about cartels, ferry operation is a competitive business, and if one company can substantially, and consistently, undercut the others there is no reason why the competitors should not be able to re-jig their operations and match Speedferries.

The comment about P&O having the wrong ships is interesting - on a short route like this the ship type is not particularly relevant. P&O's fleet is getting old though and is probably not the most efficient. Theoretically the slightly longer routes like the western channel should give Speedferries' catamaran a significant advantage over conventional ferries (we could discuss shipping economics in depth here but that would get very boring) but in practical terms the sea conditions are not in the smaller vessel's favour.

[CeeJay]

I agree with the last comment from Will.

Took the Speedferry back to Dover last Sunday, just outside Boulogne the engines stopped with a message saying that they had a problem, I understand that there were a lot of problems with this last year.

Because it is a catamaran and there was quite a swell running it was very very uncomfortable, a strange movement nothing like a conventional ship's rolling.

It was about 30mins before we got going again and with only the one vessel available it made me think what would happen if there was a dead engine!.

I think the comment about the right type of vessel is interesting and I think thas Speedferries have the right business model, with P&O's cost base to expensive due to the level of crew support needed to service all their, somtimes, unnecessary facilities.

[Russethouse]

I suppose I'm a cynic but surely P & O ferries already make a loss? If competition results in them cutting prices, less profit, (or greater loss)

So will it be any great surprise if they withdraw from the Dover - Calais service?

[BJSLIV]

It seems to be a fairly open secret that P&Os plan is to slim the operation down to a viable level and then sell it off. It is after all their last "Ship" business apart from a shareholding in one other outfit. So as soon as they can get it vaguely profitable it will be goodbye to P&O for good.

Perhaps Sven Speedferry could put in a bid and see how he copes running a truly comprehensive service.....

[Jonathanmiller]

[quote]I don't think anybody is being cynical. If Speedferries' route and level of service suits you then of course you should support the company. As a maritime journalist by profession I personally have do...[/quote]

With the greatest respect to our esteemed moderator (a politish sort of way of saying I disagree with him)...

I think you will find that - 'under the meaning of the act' - P&O does indeed have a monopoly and a dominant position.

This is not itself illegal. It is how such a position is employed that risks putting P&O and its ilk into confrontation with the competition authorities. Not necessarily the weak-livered ones in London but the much fiercer and more impressive breed in Brussels.

Prior to the arrival of SpeedFerries these monopolists - operating I have alleged as a cartel - produced essentially identical prices and identical restrictive and discriminatory conditions of travel.

These made the short crossing the most expensive in the world by far on any meaningful basis of comparison.

This was the basis of my complaint to the EU (joined by 5,000 others) which I am happy to say remains an open docket. P&O and its pals have NOT been cleared. Indeed, they are now in even deeper pooh.

Your comments on economics are interesting because they are utterly, 180-degrees reversed from what I have been led to believe by authorities on this question.

Firstly, I am told by those who have studied this that the economics of a fast ferry on the western channels are much less favourable than on the short sea crossing.

But more significantly, I am astonished that you would dismiss the type of vessel as unimportant on a route like this.

Maybe when there was a functioning cartel it mattered little. But in a competitive environment it matters hugely.

The margins are crucial and operating cost, manning levels, flexibility and speed are all crucial.

These are considerations I see referenced continually in the maritime trade press. I am just astonished you would dismiss them. You only have to see the P&O tubs wallowing out of Dover to know that there is something bizarre here about their operational approach.

P&O is operating second-rate floating supermarkets in a marketplace that wants transportation.

SeaFrance has gone to an even greater extreme, deploying new and even more absurd vast floating palaces, and is about to introduce a new one.

SeaFrance is an operation that has survived only because the cartel and French state have protected it. In the face of competition, they are also in big trouble.

I am certain that SpeedFerries will succeed because they are attracting phenomenal customer loyalty. This is because they are consistently offering the best value fares, a very high and caring level of customer service, and because they completely lack the arrogance of their competitors. I do not expect to see Lord Sterling cleaning a toilet; I doubt he knows how. The last time I met him the only thing he could boast about was how high he had set his prices. Can I confess to a frisson of pleasure at the mess he has got himself into in the ferry business!

The bottom line here is that P&O will thankfully soon be gone from Dover because their shareholders are disgusted with the business, now apparently losing money and customers faster than ever.

À donf, Curt Stavis!

[bixy]

Talking to a friend not long ago about Eurotunnel and its debt mountain, I was speaking in sympathetic terms. My friend's response was to say he didn't care about their financial state, all he wanted was cheap crossings. Well, so say all of us, but it's a little childish to think only in terms of 'what I want' without examining the bigger picture and the effect it may have on all of us in the future.

We know that Eurotunnel are in deep trouble with a seemingly incompetent management who are not coping now and will cope even less well when they have to start repaying debt. Judging from these postings  it seems that P&O are also likely to be in trouble before long. So what happens when one of these operators goes out of business? Cheaper fares? I don't think so - rather the opposite. We have seen this over the years, the way that prices yo-yo up and down according to the market.

So what's the answer? Well as long as we rely on the forces of capital there may not be one, if we are thinking in terms of stability. When the Chunnel was first mooted some of us felt that it should be part of the national infrastructure in the way that the roads and railways are. That the British and French governments should have financed its construction and it should have been run as a vital link to join one part of the EU to another. They have in any case poured in billions in the way of subsidy, in one form or another. The actual cost, if we disregard the financing of debt, of transporting a car through the tunnel is less than £20. Private enterprise isn't always the best way of financing major undertakings - just look at the railways, which are now receiving a subsidy of £5 billion per annum, compared to the subsidy BR received of £1 billion - and is the service better? - er, I think not.

Interestingly, I see that SANEF is being privatised this week - I wonder what effect that will have on motorway pricing.

Patrick

[Will]

I think anybody who reads this forum, or any of the magazines I have been involved with, will know that I am no friend to P&O and that I am basically in favour of the use of fast ferries. And that's despite economics showing that they use more fuel, of a much more expensive grade, than a conventional ship, and regular maintenance costs are (or should be - I somehow doubt it in P&O's case) far higher.

However, by far the biggest item in any ship operator's budget is the crew, both at sea and on shore. Where a ship needs to carry two or three crews, as is the case with conventional ferries on longer crossings, not only do these crews have to be paid, they have to be housed and fed on board while off duty, and even more staff are required to do that - and so the costs spiral.

High speed ferries are able to operate with just a single crew, and because they don't have to service any sleeping accommodation for passengers or crew on board, and things like onboard catering and sales are all on a rather smaller and simpler scale, it all adds up to the fact that it takes a mere fraction of the people to run a high speed ferry compared with a conventional ship. And if that means the boss of the company cleans the loos (admittedly in a publicity stunt for the telly) that is an indication of a much leaner organisation. Speedferries realises this, P&O doesn't (or perhaps Speedferries listens to Incat's aggressive sales blurb while P&O thinks it knows better).

On a crossing like Dover-Calais which takes a couple of hours at the most there is no reason why a conventional ship could not be operated equally as efficiently in terms of manpower, and thus take advantage of cheaper fuel, less maintenance and the economies of scale in terms of transporting large numbers of people and cars. There is no need for vast crews, onboard accommodation etc. That's why I say that the type of ship is less important (probably shouldn't have inferred that it was irrelevant) on the short-sea routes. On the western channel it is necessary to have comparatively high manning levels to maintain the three crossings a day schedules, though a fast ferry is still able to operate with a single crew on these timings. The economics of using a comparatively small vessel, like Speed One, on the western channel, are not in its favour due to the high number of probable cancellations due to sea conditions. A larger ship, as chartered by Brittany Ferries, is a much better bet. Although in terms of length it is not much different from the P&O ships, in terms of tonnage and capacity it is quite a lot larger. The economics of a fast ferry on the western channel have, with all due respect (there, my turn to use the term) never to my knowledge been comprehensively studied other than from the point of view of the initial attempts to run services with totally unsuitable craft (hydrofoils and the original Hoverspeed Great Britain), followed by the later P&O service. And see below for my take on the stupidity of using the words 'P&O' and 'economics' in the same sentence. Condor Ferries would provide a better base for a study, but its services to France are mostly run either via Guernsey or Jersey and so can't fairly be considered as a direct rapid crossing, or, betwen Poole and Cherbourg, are subject to Brittany Ferries' booking and pricing policies. My observations are based on figures produced in the USA last year and presented at a high speed craft conference run by the institution which publishes the magazine I currently edit. These, as far as I know, are the first such studies to compare modern fast ferries with conventional ships in often unfavourable conditions for the former, and I agree - even allowing for the even higher manning costs in North America - they have rather turned conventional ferry economics on their head.

Notice I start the previous paragraph with 'there is no reason why' which is totally different from believing that P&O operates in such a way. P&O is a vastly inefficient dinosaur of an organisation and, like Mr Miller, I would not be at all surprised to see it pull out of this sort of ferry crossing altogether - the vast profits from duty free sales are long gone, so there is nothing in it for P&O. Far from being 180° opposed, I thoroughly agree with the comments about P&O's unsuitable floating supermarkets. It's not so much the ships, it's the way they are arranged and run that's the problem.

The other point that hasn't been mentioned is that fast ferries are not capable of carrying the levels of freight that provide, despite the tunnel, a very substantial slice of the income for conventional ships, particularly at night when the fast ferries don't run.

Thanks, Mr Miller, for taking the time to respond. Although I feel that my stance follows that of the maritime industry while yours is definitely consumer-based, so our perspectives are different, in the end we are both in agreement about the desirability of Speedferries continuing and not being fans, to put it mildly, of P&O. Don't forget that I supported in principle your Channel Pirates campaign and even wrote an editorial about it in my magazine so I don't think you should really be disagreeing with my position quite so strongly. Brussels' transport policies, as they apply to cross-channel ferries, are another subject altogether: don't start me on this one (though Bixy alludes to it above).

I don't disagree with your comments about Sea France. There are more efficiently-run organisations on the channel - Norfolk Line, though part of a vast organisation itself, manages to operate well, with decent, purpose-built ships, at sensible fares. James Sherwood of Sea Containers (Hoverspeed's parent) has never been friends with P&O's Lord Sterling, and Hoverspeed has long had its own aggressive pricing policy with, for example, £19 single fares, though these have been offered on a comparatively late booking basis and have never really been as well received as the Speedferries offer. Transmanche is an interesting prospect too, though appallingly run a lot of the time.

My main area of concern is that I still feel a bit uneasy about what would happen if Speedferries did put the other operators out of business - then the company would need to expand several times over to meet customer demand, which would lose a lot of the leanness it enjoys from just operating the one ship on one route and would, of course, give Speedferries itself a monopolistic position. I'm not saying that the boss of Speedferries will necessarily adopt the same attitudes to his customers as the boss of Ryanair - I rather hope not - but it is a familiar pattern when a small outfit becomes bigger. Thougn I won't shed any tears for P&O or SeaFrance, speaking as a customer rather than a journalist or economist, I wouldn't like to see a true monopoly.

[Will]

[quote]It seems to be a fairly open secret that P&Os plan is to slim the operation down to a viable level and then sell it off. It is after all their last "Ship" business apart from a shareholding in one...[/quote]

Although I agree with what you are saying, I don't think it's quite true that P&O wants to cease its shipping involvement. It clearly wants to get out of the Dover-Calais business and has already dropped Portsmouth-Cherbourg and expressed its intention to cease its ferries to Le Havre. I understand that P&O will be retaining its ferry businesses on the North Sea serving Belgium and Holland, and on the Irish Sea, while there seem to be no plans to drop the Portsmouth-Bilbao ferry either. But of course, if anybody was to offer to buy the remaining ferry business...

P&O retains various interests in logistics and container shipping (though its stake in P&O Nedlloyd is, now, only about 25%). The P&O Cruises business was 'demerged' a few years ago, it retains the corporate brand but is now run independently. Anybody who thinks P&O Ferries has a monopoly should look at the corporate structure of Carnival, as P&O Princess Cruises was renamed.

However, it's perfectly correct that P&O is now mainly a ports and property company.

[Jonathanmiller]

[quote]Although I agree with what you are saying, I don't think it's quite true that P&O wants to cease its shipping involvement. It clearly wants to get out of the Dover-Calais business and has already ...[/quote]

Unlike our esteemed moderator my background is not in industry journalism. I have always tried to make it my business to represent the interests of consumers, not producers.

This is not the place for a legal argument about the definition of monopoly but it is pretty clear P&O has one.

The sordid deal by which the government allowed P&O to merge with Stena set up a cartel between two monopolists - P&O and Sea France - with control of all the slots between Dover and Calais. The result was virtually identical fares, terms and conditions that made this international crossing indisputably the most costly in the world.

These operators continue to exercise what is known as market power. They are now using this power to selectively introduce fares that appear designed for no other purpose than to destroy an emerging competitor.

This is why SpeedFerries is quite right and entitled to seek the protection of the law against those who seek to abuse position so as to restore their cartel. Imagine criticisng someone who has been mugged for going to the police!

Imagine for a moment that P&O and Sea France succeed in driving SpeedFerries to the bottom of the channel. How long would it take for prices and conditions to revert to their previous extortionate level? Ten seconds is my guess.

For those who are seriously interested in an administrative discussion of what constitutes a monopoly I refer to the Office of Fair Trading link cited below:

http://www.oft.gov.uk/NR/rdonlyres/5FC5ADD6-1FE0-4A95-BE60-30D6FA0550EA/0/oft342.pdf

[Boghound]

It never fails to amuse me when "journalists" start talking about price/monopolies. Perhaps if they came down from their "ivory towers" once in a while and actually started a service company off with money out of their own pockets. Where every pound that is taken has to pay running costs and if no-one pays, then there is no bread on the table. They would quickly realise that you can't please everyone all the time.

This is the real world. Where large companies have to placidate share holders and employees alike. The balancing act is extreemly difficult at times I can assure you.

So to both of you "journalists". Give it a rest and just be greatful the price has come down, for the time being, at least.

[Will]

Boggie - I've said what I need to say, so won't bore you further. Unlike many scribblers I spent a fair few years doing it before getting into writing about it, so I know what you are saying. I don't know about Jonathan Miller's background, but I do know that when not berating ferry companies or visiting the 'starter chateau' he's trying to make a living from farming on the Surrey/Sussex border (an area I know very well) . So neither of us conforms to the stereotype. I'm just waiting for Speedferries to build up its profits so the company can invest on a western channel service.

[Boghound]

[quote]Boggie - I've said what I need to say, so won't bore you further. Unlike many scribblers I spent a fair few years doing it before getting into writing about it, so I know what you are saying. I don't ...[/quote]

Thanks for shattering an illusion Will. I thought JM was the reporter for Channel 4 news!!

Now. If only someone would get a petition going for direct flights from Manchester to Nantes and Stuart FL in the States to Nantes. I might put them in the will.

[Stuart]

".....I'm just waiting for Speedferries to build up its profits so the company can invest on a western channel service."

Hang on young Will me lad - if Speedferries do start to expand, it would make more sense for them to gradually creep along the coast instead of leaping from one end to the other.

By that I mean that they should consider making a bid for the Newhaven to Dieppe service now that Hoverspeed have let us down so badly.  Once they have consolidated those bases, it would make sense to move further westwards.

Stuart 

[Hilaire]

[quote]I am not a competition lawyer but SpeedFerries would seem to be entirely within their rights to draw the attention of regulators to questionable pricing tactics by marketplace competitors. We shall se...[/quote]

On reading recent threads regarding P & O and its possible demise, has anyone any views about the concessionary stock of which I am one of the poor unfortunate holders.  A few months ago I asked for a quote to redeem these and of course the 'buy back' price was absolutely ridiculous.  How 'safe' is our money if they cease to operate  the Dover/Calais ferry?  Do we sell now and cut our losses or perhaps risk losing all?!  I guess Will could have a sensible input to this question.  Many thanks.

[Will]

I'm certainly no expert on the financial side of shipping or any other business, but it is no secret that P&O is somewhat less interested in ferries than most of its other current activities, and if a buyer came along for that side of the business I would imagine P&O would be very interested. That should, in theory, make your shares worth considerably more. If no such interest is received, then probably the worst case is that P&O would wind down its ferry operations, making the shares virtually worthless. The ferry side makes a big loss at present which does nothing for share values.

I do think that in recent years the shareholder discount has been far from worthwhile as there were frequently special offers at lower cost than the discounted tickets, so a lot of people have wanted to offload this rather dubious investment, keeping the value low.

[Robbie34]

There is a very wide spread in the bid to offer price with P&O Preference shares so you will take a big hit if you sell just now.

I seem to recall, when I had to choose between the concessionary and ordinary stock, that if P&O decide to withdraw the stock that they will be redeemed at a value of £1.00 per share.  No doubt this will be a loss for many stockholders.

[Mozman]

I really really wish there was more comptition on the Western Channel routes. P and O from Portsmouth  to Le Havre was the right route for me but the wrong operator. Neither Cheap NOR Well appointed. Kind of in between too stools.

For me Brittany Ferries to Caen is a better experience but hellishly expensive, despite Home Owners discount.

So I have switched to Transmanche Newhaven/Dieppe. The route is a good compromise and actually works out quicker despite being an hour longer drive in France. Of course the ship is old (read antique...my son asked if it was one f the ships that picked up the Titanic survivors) but it has a sort of dated charm and the food is good...much better than Pand O's Motorway Service Station menu. Besides, for four hours I can put up with it and its much cheaper than the other operators. I've made the crossing so often I simply provide my own entertainment, a baguette and some ham and just want the cheapest trip I can get. (Short of being handed an Oar at the ticket booth that is)

I know Transmanche have been swamped a bit quickly by business since Hoverspeed cancelled their Dieppe route....and a dented ferry hasn't helped their cause. They were not really geared up for the volume of passengers around Easter and it was clear they'd had a sleepy hollow of a few frieght drivers and a dozen cars a trip.

However, I am keen to support the business. It gives travellers another option rather than nothing between Portsmouth and Dover and Le Havre and Calais. And I have heard they have some faster ferries on order to cut the trip to 3 hours. Whether that comes about who can say. Not only that, if the the P and O Portsmouth/Le Havre route goes belly up for good then it would make sense for Transmanche to take it over. I could see that happening....as Transmanche is run by S. Maritime council.

[steve@sarah]

I've looked intoTransmanch Ferries and although they look much cheaper and the crossing would be right for us, they dont take pets!

And of course the dogs have to go too....

Sarah