Ferry operator David MacBrayne Group 2011-12 Annual Report published

In a performance that bucked the trend, the David MacBrayne Group, Scotland’s principal operator of domestic ferry services, has revealed that it paid back £5.8m to Government as a result of efficiency savings in the last financial year and increased its operating profitability by 19% to £3.8m.

The figures were published in the group’s annual report which was laid before the Scottish Parliament today (12th October 2012).

The Group’s subsidiaries include CalMac Ferries Ltd, NorthLink Ferries Ltd and Argyll Ferries Ltd.

Group Chairman Peter Timms says: ‘As recipients of significant amounts of public funding we take our responsibility to provide value for money to the taxpayer very seriously so it was very pleasing to report that our ongoing efforts to improve efficiency both internally and in collaboration with colleagues at Transport Scotland has resulted in just under £6m being returned to the Scottish Government as part of a contractual “clawback” payment.’

Highlights frm the report include:

  • The David MacBrayne Group carried 5.2m passengers, 1.1m cars and 1.5 million freight metres – a 5% decrease in passengers and the same for cars, but a 6% increase in freight, on the previous year.
  • Grants received from the Scottish Government rose by nearly 20% compared with the previous year to £121.8m, mainly due to increased fuel costs and support for Road Equivalent Tariff (RET) fares on Western Isles routes.
  • Clawback paid to Scottish Government as a result of efficiencies increased by 33% to £5.8m
  • The group recorded an operating profit for 2011/12 before interest and tax of £3.8m, an increase of 19% on the prior year, increasing the group’s retained reserves.

Mr Timms says: ’2011/2012 was a year of highs and lows. Among the high points was winning the tender to provide the ferry service between Gourock and Dunoon.

‘Losing the Northern Isles services to another operator after serving Orkney and Shetland for nearly 10 years was a major disappointment.

‘I wish to take this opportunity of thanking our crew and staff for their commitment and hard work which saw carryings on these routes significantly increase during our period of operation.’

While seeing the drop in passenger and car traffic as disappointing, Mr Timms says: ‘These figures reflect carryings across the group and the impact on individual routes will vary enormously, with some doing better than others depending on local circumstances such as major building projects.

‘That said, overall our feeling is that  a combination of factors have contributed to a general decrease in traffic including fewer people travelling due to the economic downturn, higher fuel costs and poor weather.’

Looking to the future, Mr Timms said he welcomed the interim contract to extend CalMac’s current contract to 2016 and said that the company intended to use this period to improve services further.

He points here to the stellar hat trick achieved very recently by Calmac: ‘Our commitment to customer service was recognised recently by the award of the ‘Best Ferry Company’ in the Guardian and Observer Travel Awards for the third year in a row.

‘However   there are a number of further improvements we would like to make to the customer experience such as updated ticketing systems and improved online booking.

‘We will now push ahead and make these improvements as soon as possible and look forward to working with the Scottish Government and Transport Scotland to further develop our services to best meet the needs of island and rural communities.’

This is the spirit the general public want to hear.

The Scottish Government can be seen to have an equivocal attitude to its own ferry companies. The MacBrayne group’s determination to  be in the sort of spanking good shape by 2015 to bid powerfully to retain the 2016 contract for its own routes [Ed: yes, we know this timeline is procedurally curious] is the fighting talk that warms the cockles of their wealth of support amongst the traveling public.

A cracking business performance in tough economic times and a ‘down to work’ determination to see off allcomers leaves little room to manoeuvere for those who might seek to do so.

Note: The Annual Report of the David MacBrayne Group is available online here.

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5 Responses to Ferry operator David MacBrayne Group 2011-12 Annual Report published

  1. “A cracking business performance in tough economic times and a ‘down to work’ determination to see off allcomers leaves little room to manoeuvere for those who might seek to do so.”


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  2. A 5% reduction in both cars and passengers? Cracking performance? That’s one of the most perfect cases of public sector Doublethink I’ve seen for a while. Classic, in fact.

    And if the car and passenger numbers fall this year by 5%? And again next year? And again…? Still cracking performance? Probably, because, as a loss making, subsidy driven transportation service, the less transporting MacBrayne do, then in the ultimate case ( i.e., were they to transport nothing at all), so much smaller will be their subventions and losses.

    A 5% reduction in car and passenger carrying is a disturbing indicator with regard to the local economies MacBrayne supposedly serves. Were this trend to continue year on year, the compounded cumulative effect would be calamitous.

    Orwell’s Doublethink: “The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them. To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies – all this is indispensably necessary.”

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    • It is irrational to hold a single company responsible for a deep and continuing recession made by the banks and by weak governments.
      Here you have a performance where – against a 5% recession-driven decrease in passenger and car numbers, you have an increase of more than that percentage – 6% – in freight carriage.
      The indications are that usage by the markets these lifeline ferries are fundamentally there to serve has not dropped and their use of the freight service has gone up by a rate higher than that of the overall fall in passenger and car numbers.
      The loss of passenger and car business will have been in the visitor sector, which VistScotland’s figures indicate were down.
      Against this market picture, turning in a managed performance which has seen a 19% rise in operating ‘profit’ and a 33% rise in payback to government is evidence of a company that is making efficiency savings and building its market where it can – as with freight.
      RET also distorts the picture in reducing revenue from sales while increasing the level of subsidy paid.
      Where in this reporting year, there has been an increase in RET-related subsidy, that shows an increase of usage on the routes supported by RET. As the Isle of Colonsay predicted from the outset – visitors have choices and routes outside the RET honeypot inevitably see a consequent drop in visitor usage.
      In the hard times we are unable to avoid, usage will tend to hold up better on the routes cheaper to the traveller, at the expense of those without the artificial reduction of fares by RET.
      The CalMac services require subsidy to keep them going as the lifeline services they are.
      For instance, you need a stout ship to get out to Tiree and Coll in all weathers. This means heavy fuel costs. The small population of these sister islands, with their limited visitor season, means that this service can never hope to be other than a loss maker. Without the subsidy there would be no service. And if the routes were tendered unbundled, no private sector operator would bid for this one.
      In our view, with the world economy certain to be troubled for around a decade more, we may need to redefine what we mean by lifeline services.
      At the moment the definition is substantially generous. There is a case for reductions on what is currently offered as a state owned lifeline service, leaving any commercially viable additional services to be met, utterly without subsidy, by private sector operators.
      At the moment, any private sector operator, like Serco NorthLink, gets the same subsidies but operates in greater margins arising from service reductions of various kinds.
      The freight services for the Northern Isles now seem to us to be no more advantageous than that offered by CalMac’s former sister company, Northlink Ferries. Yet when Serco were given the contract, in a shock decision, it was a supposed improvement in freight services that drove the award.
      The industry is convinced of cuts Serco intends to make when the dust has settled. Time will tell if this anticipation is correct.
      We can say, on evidence and with certainty, that the current government has shafted its own owned ferry operators twice in recent years. It has done this in ways no genuinely independent company would tolerate without the heavy duty legal challenge these companies are actively as well as circumstantially prevented from making.
      It;’s easy to bleat and to criticise. It’s a lot harder to deliver what CalMac is delivering.
      You identify very real matters for examination but the source of them is government, not this company – master not slave.

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  3. It’s too easy to talk of a ‘loss making, subsidy driven transport service’. How about the reality, the basic fact that it provides the sea links in our road system? How about the fact that the money gathered in road taxes is far, far greater than the money spent on the system?
    You begrudge the money needed to provide these ‘sea links’?
    I’d only object if money’s wasted on inefficient, profligate or just plain inept ferry provision, and surely that’s the real issue.

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  4. Did someone blame MacBrayne for a “deep and continuing recession”? Missed that.
    My earlier point is quite simple: to equate a 5% reduction in two out of three elements of main revenue sources to a “cracking business performance” is not just irrational, it’s disingenuous (or maybe, to be charitable, just plain idiotic).

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