Proudly serving the Channel Islands

Transcription

1 Proudly serving the Channel Islands Comprehensive Service Review November 2016

2 Chief Executive s Foreword Comprehensive Service Review Condor Ferries has been proudly serving the Channel Islands for over 50 years. The signing of a new Operating Agreement with the Harbour Master of Jersey in 2014 introduced a requirement to undertake a Comprehensive Service Review by January 2017 and another by January This, the first of those reports, has been delivered early. In undertaking the Review we have gone beyond the letter of the Operating Agreement, and have taken the opportunity to consult extensively with our customers, stakeholders and the wider Channel Islands community to understand what they need and want from our services. We have also been forward looking in our Review not just learning the lessons of the past, but focussed on making sure the plans for our services align with the needs of the Channel Islands into the future, and looking for ways to improve our service for the long term. Within the Review we reflect on the impact that a difficult 2015 has had on our Islands and share details of the work we have done to improve our services. We also reflect on the impact that work has had on raising levels of reliability, punctuality and customer satisfaction. But we know there is more to be done. We share the passion which the States of Jersey and States of Guernsey have for ensuring reliable, robust and affordable connectivity, whether by sea, air or in the digital space. And we will play our part in delivering this objective. We are grateful to the many people who have given generously of their time to contribute to the Review and look forward to sharing and discussing our findings with them and with you. Paul Luxon Chief Executive 1 November 2016

3 Executive Summary BACKGROUND TO THE COMPREHENSIVE SERVICE REVIEW Condor Ferries signed an Operating Agreement with the Harbour Master of Jersey in 2014 and also observes the Agreement in relation to its services to and from Guernsey. Under the terms of the Operating Agreement, Condor is required periodically to undertake a Comprehensive Service Review, covering the following: the Strategic Needs of the States as regards to ferry services (having regard to any market consultation) the alignment of the Services offered by the Operator, including product, price and service structure, with such Strategic Needs; and Operator performance (by reference to the Performance Measures). A ROBUST AND EVIDENCE LED PROCESS The Review has been conducted in partnership with the States of Jersey and States of Guernsey, has been supported by independent and expert external advisors, PA Consulting, and overseen by a robust governance process. The Review has been built on a wide range of objective evidence sources, including from States of Jersey and States of Guernsey. It has also been informed by a comprehensive consultation exercise including quantitative survey data and qualitative input gained from roundtable discussions, individual meetings and other engagement methods. Ferry services to and from the Channel Islands operate in a challenging and changing market, with inherent operating constraints. Freight volumes have been impacted by significant external factors including the global financial crisis, market efficiencies, the withdrawal of Low Value Consignment Relief and the move of the supply chain to a just in time model. This provides a lower than anticipated base for growth, which is now projected in line with GDP. The market for passenger sea travel is constantly evolving. Growth in air travel means more choice of places to go on holiday and more choice of ways to get to and from the Channel Islands. There has also been a reduction in bed stock on the Islands, and a move towards shorter stays for holiday makers. These structural changes have also given a lower base from which growth is now projected both in terms of population and the visitor economy. The tidal conditions of the Islands, combined with the characteristics of their historic ports, create a unique operating environment, where Condor s local knowledge and more than fifty years of experience is highly valuable. There are also legislative considerations affecting crew hours, and increasing environmental requirements to comply with. 2 November 2016

4 These factors have shaped Condor s fleet with the reduction from two to one vessels providing high speed services between the UK and the Islands. This reflects the structural changes to the market following the significant expansion of air travel. ALIGNMENT OF THE SERVICE WITH THE STRATEGIC NEEDS The diagram below outlines how the extensive data collation and consultation work led to the Review Findings, which in turn enabled the Ferry Services Steering Group (FSSG) to identify and prioritise the Strategic Needs. Objective data was used to assess the extent to which Condor s service is aligned to each of the Strategic Needs, which was again agreed by the FSSG. Review Findings Findings reached as a result of data collation and consultation process Findings are the key conclusions of the work undertaken Strategic Needs Used Findings to identify Strategic Needs Strategic Needs then prioritised as Critical, Key or Important Lower level items categorised as Service Considerations Alignment Analysis Analysed service alignment for each of the Strategic Needs Objective evidence used to determine alignment Options Appraisal Where there is opportunity to improve alignment, identify how this could be achieved Identify whether improvement is feasible within existing operating model or whether other changes would be required The results of this rigorous process are shown in the table overleaf. 3 November 2016

5 Strategic Need Priority Alignment A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) A reliable, year round freight service A ferry service which can provide a just in time service for essential food and other freight deliveries A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. A ferry service which can accommodate predicted levels of population and economic growth A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) Sufficient resilience and contingency to minimise the impact of service disruption A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors A service offering that balances value for money and high levels of service A ferry service which is able to facilitate predicted levels of visitor growth Effective communications through the supply chain to support just in time operations A service that recognises the differing needs of the Islands A passenger service which operates with minimal delays Port facilities and immigration services which support an excellent end to end customer experience An inter-island service that enables day trips for business, leisure or tourism Critical Critical Key Key Key Key Key Key Key Key Key Important Important Important Important Important 4 November 2016

6 The Review has concluded that Condor s service is fully aligned with all of those Strategic Needs which have been prioritised as Critical. With the exception of Sufficient resilience and contingency to minimise the impact of service disruption the service is either fully or largely aligned with all of the Key Strategic Needs. Where Strategic Needs have been identified as Important, the service is moderately or largely aligned with the exception of An inter-island service that enables day trips for business, leisure or tourism. According to the Operating Agreement, the alignment analysis would complete the Comprehensive Service Review. However, Condor has gone beyond the letter of the Agreement and has also looked at how alignment can be maintained (where the need is fully met) or improved (where alignment is not complete). This has led to a series of 26 report recommendations. REPORT RECOMMENDATIONS Maintaining Alignment Maintaining alignment with the two Critical Strategic Needs is the overarching recommendation of the Review. Meeting these needs is critical to national infrastructure and, if they are unmet over an extended period of time, there are likely to be serious consequences. Improving alignment against other strategic needs may rely upon making changes to the fleet or the operating model and, because different elements of the Channel Islands ferry services are interdependent, improvement in one area might have a negative knock-on effect on another. In particular, pressure to make investment where there is no reasonable prospect of a return could imperil overall financial viability. When considering any future changes to ferry services, Condor, the States of Jersey and States of Guernsey should ensure that Condor s continued delivery of the Critical Strategic Needs is not imperilled. The Review has also found that the service is fully aligned with four of the nine Key Strategic Needs. In order to maintain alignment, the following recommendations are made: To protect the provision of A ferry service which can provide a just in time service for essential food and other freight deliveries : Condor must prioritise and protect the operating schedule of the overnight UK to Channel Islands freight service. Compromises should only be made in extreme circumstances and only for short periods. 5 November 2016

7 The following recommendations are made to maintain alignment with the Key Strategic Need for A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. In due course, Condor Rapide should be replaced with a vessel which will enable the continued provision of high speed passenger and car services between the Channel Islands and France. When selecting the replacement ship, Condor should bear in mind the desirability of flexibility across routes and between sectors (i.e. North and South, passenger and freight). Within the current fleet configuration, in order to maintain capacity, there should continue to be year-round high speed ferry services between the Channel Islands and the UK. In order to ensure continued alignment with A ferry service which can accommodate predicted levels of population and economic growth the report explores capacity utilisation. Since actual growth might outstrip projections, Condor should keep under review the extent to which projections are realised. It is also important that Condor reviews areas of its schedule where demonstrably excess capacity exists. At the moment, 48% of all high speed ferry services operated by Condor across the four-month winter period are loss making. Utilisation is particularly poor on the Southern route between the Channel Islands and France; across the full year, vehicle decks are, on average 63% empty, and less than half the passenger capacity is used. There may be advantages to reviewing the alignment of capacity and demand, particularly if doing so could increase Condor s ability to invest in other areas of its service and/or support the overall viability of lifeline services. The report therefore recommends that: Condor should keep capacity and utilisation under review, including monitoring actual levels of population and economic growth. Where demonstrably excess capacity exists in some sectors, Condor should consider reducing service frequency, if this would facilitate improved service levels in other sectors, or support the viability of, or investment in, the service as a whole. Condor s service is fully aligned with the need for a route network with Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors. Whilst some Islanders remain interested in sailings to Weymouth, the Review identified significant barriers to operating from there in the future. It is therefore recommended that: Condor should retain its current route network, whilst continuing to keep under review the viability of alternative ports (including Weymouth and Portland) if they would enhance the appeal of its services. 6 November 2016

8 Improving Alignment with the current fleet The Review identified a number of Key and Important Strategic Needs where there are opportunities to improve service alignment. Improving alignment with the Strategic Need for A ferry service which is able to facilitate predicted levels of visitor growth requires effective capacity management. If tourism growth targets are exceeded or if sea travel captures an increased share of visitor numbers, there could be insufficient capacity from the Channel Islands to the UK on a small numbers of peak days during the summer holidays. Therefore: Condor should keep under review whether, in future summer periods, double rotations should be reintroduced to the schedule on some key days in order to provide the necessary capacity to support growth in the visitor economy. Improving alignment with the Strategic Need for A service offering that balances value for money and high levels of service is part of constant service improvement. The Review recommends that: Condor should continue to monitor closely competitor pricing, aiming to balance the need for sufficient returns to maintain continuous investment in its service with the need to ensure travel is attractive and accessible in order to support resident and visitor travel. The Review found that changes to operating practices or fleet management could improve alignment against five Strategic Needs: A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) A passenger service which operates with minimal delays Sufficient resilience and contingency to minimise the impact of service disruption A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times An inter-island service that enables day trips for business, leisure or tourism. Condor has successfully improved both punctuality and reliability, primarily as a result of an enhanced asset health programme. Therefore: As part of its normal operating procedures, Condor should continue the current high level of focus on improving reliability and punctuality. 7 November 2016

9 Effective contingency planning, to cover planned maintenance and dry dock periods, as well as unexpected outages, is also vital and: Forward planning should continue to include contingency plans to minimise the impact of planned maintenance or unanticipated disruption to services. The move to one ship on the Northern route inevitably limits the extent to which inter- Island daytrips can be facilitated. However, so long as it does not negatively impact alignment with other Strategic Needs of higher priority: The timetable should continue to be reviewed to optimise opportunities for inter-island daytrips. Improving alignment by making changes to the fleet Many respondents to the consultation process, including leading politicians in both Islands, felt that Condor should make changes to its fleet configuration in order to increase service levels as well as to improve resilience and contingency. The three key suggestions were: Replace Commodore Goodwill with a RoPax Purchase another RoPax to operate between the Channel Islands and the UK Purchase another HSC to operate between the Channel Islands and the UK It was also suggested by some that Condor should replace Condor Liberation with a different high speed ferry, however the Review could find no objective reason for considering this option, particularly in light of the favourable independent reports from the Jersey Harbour Master and Houlder Ltd. There is a risk that replacing Commodore Goodwill with a RoPax could compromise alignment with the need to maintain the lifeline overnight freight service from the UK to the Channel Islands. Additionally there would need to be a change to shipping methods for hazardous goods; as a result of freight meterage being almost fully utilised on the southbound (overnight) service, there would be very limited capacity for passenger vehicles on this leg of the route; and the 3am arrival into Guernsey necessary to maintain freight services would be unappealing for many customers. Nevertheless, it is undoubtedly the case that this change would offer increased fleet flexibility and would therefore provide an element of increased contingency, particularly during periods of planned maintenance. In fact, contingency and resilience would be considerably enhanced if the fleet were generally more flexible. At present, Condor has four individual ships of individual design, each ideally suited to its own purpose. Although there is already some inbuilt flexibility with, for example, Condor Liberation and Condor Rapide serving each other s route over winter dry docks and Commodore Clipper able to carry passengers, resilience is reduced when one ship is out of service because not all ships within the fleet can effectively deputise for one another. 8 November 2016

10 The Review therefore recommends that: Future fleet planning should take account of the benefits of flexibility across sectors and routes. In particular, when the time comes to replace Commodore Goodwill, the new vessel should not only protect the delivery of a reliable just in time freight service, but should ideally also have passenger capacity in order to enhance contingency plans and improve resilience. Replacing Commodore Goodwill earlier than planned would, however, require an early injection of capital and increased operating costs. In order to make such a purchase viable, it is estimated that there would need to be an increase of 60% in passenger travel on the CI-UK leg. These growth levels are significantly above current business projections. Whilst there would be some improvements to fleet flexibility and resilience from replacing Commodore Goodwill with a RoPax ship, market growth analysis does not indicate a reasonable expectation of generating a return on the investment required for early replacement, and therefore doing so would imperil alignment with the Critical Strategic Needs. Protecting the overnight southbound freight service whilst adding substantial additional resilience could theoretically be possible if a second RoPax ferry were added to the fleet. However an additional ship would not only need capital investment but also would add to operating costs. In order to protect the viability of the overall service, financing this would mean a need for either new freight revenues and/or new passenger revenues. On the assumption that the volume or revenue growth would come from passengers (since freight growth is historically linked to economic growth), an increase of at least 60% on current levels would be required. These growth levels are well above current business projections. As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional RoPax for the fleet, as well as to cover the increased operating costs, it may be that the States of Jersey and States of Guernsey wish to explore with Condor other changes to the operating model (e.g. a longer Operating Agreement or an operating subsidy) which would make such an investment viable The move from two to one HSC on the Northern route was the result of a declining market due to air competition for holidays and off-island travel. Generating the return on capital required to purchase an additional HSC would require additional revenue equivalent to almost doubling UK-CI passenger travel. These growth levels are well above current business projections. 9 November 2016

11 As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional HSC for the fleet, the high speed service between the Channel Islands and the UK should continue to be provided by one ship. The Review investigated the feasibility of a dedicated inter-island passenger service. Initial modelling found that, in order to break even, the service would require 750 passenger legs per day (273,750 per annum). The maximum historic number of annual inter-island trips is 99,126. It is therefore highly improbable that the passenger levels required to support a new dedicated service could be achieved. As there is no reasonable expectation of being able to generate sufficient income to support a dedicated inter-island service, the States of Jersey and States of Guernsey should explore with Condor whether other changes to the operating model (such as an operating subsidy) would facilitate such a service. Improving alignment with partner support In order to improve alignment with the Strategic Need for Port facilities and immigration services which support an excellent end to end customer experience, Condor will require the support of its partners, Ports of Jersey and Guernsey Harbours. Although the higher levels of investment enjoyed by both airports is commensurate with the much larger number of passengers using air services than sea services, the importance of maintaining an attractive environment for arriving and departing passengers was a clear finding of the Review. Ports of Jersey and States of Guernsey should consider what improvements can be made to port facilities to support an excellent end to end customer experience. The particular difficulties faced by passengers arriving into Jersey from France can only be addressed by a different approach to the resourcing of immigration services. Extended and regular delays, such as those experienced by participants in the consultation process, will reduce the appeal of sea travel for residents and visitors alike. Immigration services should review resource prioritisation in order to address the considerable delays regularly faced by passengers arriving from France. The Strategic Need for Effective communications through the supply chain to support just in time operations can be better met by implementation of the following recommendation: 10 November 2016

12 Condor should work with its logistics customers, and their end customers, to improve communications through the supply chain to support just in time operations. Alignment with the need for A service that recognises the differing needs of the Islands is very much an ongoing process which combines bilateral discussions with a range of stakeholders and engagement with the FSSG. Condor should continue to engage widely with the Channel Islands communities in order to understand the differing needs of Jersey and Guernsey. The FSSG should ensure that it continues to provide an effective forum for discussing how the service can best recognise these differing needs. SERVICE CONSIDERATIONS The Review has explored the interest in Morning departures from the Channel Islands to the UK and afternoon departures from the UK to the Channel Islands, which would be facilitated by basing a ship in one of the Island s ports. This could be attractive for hoteliers and self-catering operators, but, for visitors, would mean less time in the Islands for the same number of nights. There would also be a complete loss of daytrips to Guernsey from the UK (worth circa 900k annually to the Island). Practical operational considerations include refuelling facilities, overnight mooring, a suitable layby berth, available and trained crew, maintenance, spares and stores and the reduced speed of access to external marine experts who are based in the UK. The FSSG should discuss whether, taking into account both the benefits and potential disadvantages, it would be attractive to base a ship in the Islands. States of Jersey and States of Guernsey should consider whether it would be practical and affordable to provide the infrastructure and support which would be necessary to support basing a ship in the Islands. Condor should assess the financial viability of basing a ship in the Islands. The desire for A simple service delivered excellently is largely being met by Condor. But given the high levels of complaints regarding Condor s customer service during the 2015 disruption, Condor is prioritising improving the customer experience. Condor should maintain its focus on improving customer service, monitoring closely ongoing levels of customer complaint and responses to customer satisfaction surveys to ensure that interventions are having the desired impact on service levels. 11 November 2016

13 The Review found that Service enhancements to meet the needs of 21st century travellers could increase the appeal of ferry travel. Plans are now underway to implement a pilot of on-board Wi-Fi, and seat allocation functionality is under review by the designers of the booking system used by Condor. Condor should continue its programme of implementing service enhancements. THE PERFORMANCE MEASURES In terms of performance, 2015 was a difficult year, particularly with the problems encountered during the entry into service of Condor Liberation. These difficulties extended into 2016, exacerbated by the incessantly stormy weather. Condor acknowledges and apologises for the considerable disruption this has caused to customers, and the knock-on effects on the Islands, in particular for the tourism sector which was directly adversely affected. The company intends to pursue passenger arrival numbers recovery in support of the Visit Jersey and Visit Guernsey tourism growth strategy. Regulatory review Condor reports performance monthly on its website covering reliability, punctuality and customer service. Condor also reports performance to the FSSG in accordance with the formal Performance Measures defined in the Operating Agreement. The regulatory assessment, conducted by PA Consulting, of Condor s performance against these measures concluded that: There is some vulnerability to services due to conditions outside Condor s control which cause cancellations, particularly during the winter months. Condor s low levels of Fault Cancellation Events are compliant with the Operating Agreement. The punctuality of services is affected by a range of external factors, which contribute to No Fault delays. Material delays experienced by freight services are often the result of focusing on maintaining lifeline services in poor weather. Condor is generally performing to the punctuality requirements of the Operating Agreement. There have been instances where remediation is required, largely due to the very low number of material freight delays which trigger remediation. With the resolution of the start-up issues surrounding the introduction of Condor Liberation, which had knock on effects to the rest of the fleet, Delay Fault Events have reduced to their previous low levels. Customer satisfaction is significantly influenced by circumstances outside Condor s control as well as by operational matters such as the difficulties 12 November 2016

14 associated with the introduction of Condor Liberation and the installation of scrubbers in Recovery is being seen in Customer focused review Since the reason for disruption (i.e. regardless of a weather or technical delay) makes little difference to the customer experience, the Review team concluded that a comprehensive evaluation of performance should be included within the Review. This included fully evaluating the service impact of the difficulties experienced in 2015, and setting these within the context of the full 24 months of Operating Agreement data. Some key findings were that: Over the term of the Operating Agreement, services have operated at 96% reliability Over the term of the Operating Agreement, services have operated at 86% punctuality The most reliable ship is Condor Rapide (98%) The most punctual ship is Condor Rapide (92%) Punctuality of Condor Liberation rose from 82% in 2015 to 87% in November 2016

15 Table of Contents Chief Executive s Foreword... 1 Executive Summary... 2 Table of Contents Introduction Background a challenging and changing market with inherent operating constraints Performance assessment The Strategic Needs of the States Service alignment Maintaining and improving alignment to Strategic Needs Appendix A. Glossary Appendix B. Operating Agreement Extract Appendix C. Performance Assessment Appendix D. Roundtable Consultations Appendix E. Individual Submissions Appendix F. Organisational Submissions Appendix G. Freight Consultation Appendix H. Survey Appendix I. MindMover Data Appendix J. Harbour Master s Benchmarking Review November 2016

16 1 Introduction This introductory section sets out the context and requirements for the Comprehensive Service Review, summarises how the Review was carried out and explains how this report is structured. 1.1 The context and requirements for the Comprehensive Service Review are set out in the Operating Agreement Condor Ferries signed an Operating Agreement with the Harbour Master of Jersey in 2014, building on more than five decades of successful operations. The Operating Agreement governs the provision of the services and covers all areas relevant to the operation of ferry services including schedule, fleet composition and maintenance, reliability, punctuality, customer satisfaction, pricing, return on capital employed, and how the service will be benchmarked and reviewed. The Operating Agreement, which was jointly negotiated with the States of Jersey and States of Guernsey, states that it is expected that a similar Agreement will be put in place between Guernsey and Condor. In the interim, Condor is acting as if such an Agreement were in place in both Islands. Under the terms of the Operating Agreement, Condor is required periodically to undertake a Comprehensive Service Review, the first of which must be conducted by 31 January As set out in Section 9 of the Operating Agreement, the Review must cover the following: the Strategic Needs of the States 1 as regards to ferry services (having regard to any market consultation) the alignment of the Services offered by the Operator, including product, price and service structure, with such Strategic Needs; and Operator performance (by reference to the Performance Measures 2 ). 1.2 The Ferry Services Steering Group agreed a more detailed set of principles which have guided this Review A set of principles (the Principles) for the Comprehensive Service Review were agreed by the Ferry Services Steering Group (FSSG) at the end of Identify the Strategic Needs of the Islands (per clause 9.1.1) a) Establish a high level understanding of the long term population, economic, business and tourism projections for the Islands. 1 The States are defined in the Operating Agreement as The States of Guernsey and States of Jersey. 2 As set out in Section 10 of the Operating Agreement. 15 November 2016

17 b) Using both secondary (market research) and primary (customer contact) data, determine the long run volumes, nature of goods and Island requirements for freight ferry services. c) Using secondary (market research) and primary (customer contact) data as well as supply chain analysis, determine the long run volumes, nature of traffic and Island requirements for passenger ferry services. d) Analyse future plans and opportunities for Island ports in relation to Operator services. 2. Analyse alignment of Operator s services, including product, price and service structure (including fleet configuration) against the Strategic Needs (per clause 9.1.2), and how port investment can support this. 3. Analyse Operator performance and delivery (per clause 9.1.3) possible third party verification. 4. Following consideration of the Review by the FSSG, any proposed changes to the Operator s services as a result of the Review to be implemented in accordance with Service Change Procedure Operator to outline to FSSG, as part of its annual Vessel Maintenance and Retonnage report 4, how the completed Review will inform long-term future vessel investments. Success measures 1. Create a solid information base, which can be readily updated in future Reviews, of Islands needs and requirements for long term ferry services. 2. The foundation of solid information is such that Condor can build a long-term investment strategy. 3. Create opportunities for Condor to engage with stakeholders in the Islands through the process. These principles have guided the work of the Review. 1.3 The Review has been conducted in partnership with the States of Jersey and States of Guernsey The Review has been conducted by Condor Ferries in partnership with the States of Jersey and States of Guernsey, each of which has contributed to the cost of the Review. Before the Review commenced, a meeting was held with Senator Farnham 3 As set out in Section 16 of the Operating Agreement. 4 As set out in Section 11 of the Operating Agreement. 16 November 2016

18 and President Ferbrache to affirm the Principles as agreed by the FSSG, the governance structure as outlined below, and the project plan. The Review reports through the Condor Board to the FSSG as shown below: Figure 1 Review governance structure The roles for each of these groups have been as follows: Review Leadership team Condor Overall management of project Model all company and Island data Determine and source additional information and data to support modelling process Review Leadership team PA Consulting Moderation of consultation events to ensure integrity and credibility Validation of all data and assessment of alignment of services with Islands strategic news Analysis of Operator performance under the Operating Agreement Performance Measures Advisory Panel Islands Oversight of consultation process Facilitate provision of data and information from Islands Provide conduit for Ministerial engagement 17 November 2016

19 Advisory Panel Condor Development of options based on business insight and alignment assessment Validation of options against operational factors and legislative compliance Fleet configuration intelligence Intelligence Islands Provision of information regarding proposed or anticipated investment in ports Projections for population, economic and business growth Tourism plans (volumes, stay duration, bed stock goals/planning frameworks, geographical targets, marketing plans, air/sea, etc.) Intelligence Condor Performance data: reliability, punctuality, customer satisfaction Current and historical passenger and freight volumes Cost and other commercial assumptions to facilitate modelling Condor Board Review draft Comprehensive Service Review outcome Interrogate and challenge conclusions (and options as appropriate) Agree final conclusions and determine whether to propose options for consideration by FSSG Ferry Services Steering Group (FSSG) Receive final Comprehensive Service Review Review conclusions Consider options (if proposed) in line with Service Change Procedure The Advisory Panel has convened several times during the course of the Review with the FSSG also discussing the project at all of its quarterly meetings. In addition, the CEO of Condor Ferries has provided regular updates to the Minister for Economic Development Department (Jersey), Chief Minister (Jersey), President of Economic Development (Guernsey) and President Policy & Resources (Guernsey). 1.4 Independent and expert advisors have supported the Review PA Consulting was appointed by Condor Ferries, in consultation with its partners the States of Jersey and States of Guernsey, as advisor to the Review. PA Consulting has worked as part of the project team, providing verification and oversight of the Review as outlined above. 18 November 2016

20 1.5 A wide range of sources means the Review is evidence-based Inevitably, almost everyone in the Channel Islands has a view about ferry services: all Island residents are indirect users of the service as consumers of imported goods; many also have first-hand experience as customers and have direct experience of the importance of ferry services to tourism. Exploring and capturing the views of Islanders and other customers has therefore been an integral part of the Comprehensive Service Review. Personal experience is only part of the picture, however, so a wide range of other data sources and business modelling techniques has also been used Data Sources The Review team has, with the support of its partners in the States of Jersey and States of Guernsey, collated extensive data to inform its work: The States of Jersey and States of Guernsey shared population and economic data. Visit Jersey and Visit Guernsey provided plans and projections for tourism. The basis for capacity, fleet and financial projections was Condor s own business model 5. Past years of passenger and freight volumes were analysed to provide historical trend analysis. MindMover Consumer Insight provided full details of its >10,000 sample point customer satisfaction research conducted on behalf of Condor Ferries over the duration of the Operating Agreement. In addition to the hard data sources outlined above, and in order to get the fullest possible picture of the Strategic Needs of the States Condor wanted to understand what customers, Islanders and key stakeholders would need from ferry services in the future. Therefore, working with its States of Jersey and States of Guernsey partners, Condor developed an extensive consultation programme which ran from May to August Engagement methods In order to gain the most comprehensive input and depth of insight to the Review, a range of engagement methods was used. 5 Defined in Section 9 of the Operating Agreement as the then current financial model for the Services. 19 November 2016

21 Public and customer surveys PA Consulting, working in partnership with Condor Ferries and the States of Jersey and States of Guernsey, conducted an online quantitative survey (the PA/Condor CSR Survey ) into future sea travel needs. The objective of this survey was to build a clear picture of current and potential customer needs for ferry travel from Islanders and visitors alike. It was also important to collect sufficient responses to provide a representative and informed response from current users of the service. A short questionnaire was devised and, after consultation with stakeholders in the States of Jersey and States of Guernsey, fieldwork was conducted between 7 and 25 July The survey was conducted using SurveyMonkey Professional - a global research platform used by an extensive array of companies. It was set up to avoid multiple responses from the same person, which might have had the effect of distorting the survey results; SurveyMonkey offers a number of tools to support this approach. The sampling methodology was constructed to ensure the widest possible participation from the following groups: Island resident - both recent travellers on Condor's services and the wider population. Visitors to the Islands from both the UK and Continent. More than 15,000 recent travellers on Condor's services were invited to take part via . These addresses were selected on a systematically random basis from the records that Condor holds with a 50/50 split between Islands residents and off Island travellers. A check was then performed to make sure that the Island resident sample broadly represented the populations of both Bailiwicks. In addition to this, notices were placed on the home page of the Condor website, in prominent positions on board Condor's ships and in port offices to publicise the survey and encourage participation. Several reminders were sent by during the course of the survey to those who had yet to respond. More than 1,800 individual responses were received from the invitation with an overall response rate of over 10%; the response rate amongst the Islander segment was 14%. The high number of responses overall and strong response rate give a high degree of confidence that the results are representative and permit detailed analysis and cross tabulations of results. More than 850 people participated having seen the link on the Condor website, and notices in ports and on board. This took the total number of individual responses to more than 2,700. Full details of the PA/Condor CSR Survey are included at Appendix H. 20 November 2016

22 Engagement via social and traditional media Condor and its partners, the States of Jersey and States of Guernsey, wanted to ensure that as many people as possible participated in the consultation exercises. Social media was used to raise awareness of the PA/Condor CSR Survey, and Condor worked to ensure the widest possible coverage via print and broadcast media. These are some sample tweets which were promoted to over 10,000 Condor followers on Twitter. The launch of the consultation programme was promoted via extensive media engagement at the end of June and CEO, Paul Luxon, used media interviews to raise the profile of the Review and gather views from customers. These included phone-ins on BBC and Commercial Radio in both Jersey and Guernsey. A letter, from Guernsey Economic Development President, Deputy Ferbrache, encouraging Islanders to take part in the PA/Condor CSR Survey was published in the Guernsey Press on 23 July. Stakeholder events Roundtable discussion events were held in Jersey and in Guernsey. Over 250 individuals representing business, sport, education, tourism and community life were invited to attend. The guest list for the roundtables was deliberately diverse; this stimulated wide ranging debate amongst participants with varying perspectives and the informal setting encouraged open discussion. Although a number of States Members chose to attend the mixed roundtable discussions, separate events were also held for Members in both Islands. Discussion events were also held with representatives of the travel trade on each Island. These included hoteliers, self-catering accommodation providers, on island bus and coach operators, tour operators selling package holidays and to larger groups. A special meeting of the Jersey Consumer Council Condor Group was held. 21 November 2016

23 A full list of all stakeholder meetings and events is presented at Appendix C. Individual meetings The stakeholder meetings described above were complemented by a number of meetings with individuals who had been unable to attend the various roundtable meetings but wished to contribute. The findings from these discussions have been incorporated into the notes from the roundtable meetings. Discussions were also held with the Harbour Masters of Jersey and Guernsey, which have helped to inform much of the Review. In addition, the Review has been discussed on an ongoing basis as part of Condor management s regular engagement with key stakeholders and customers. Freight customers While the combination of data analysis and the consultation programme provided useful insights into purchasing trends and consumer behavioural changes, Condor was also keen to understand the expectations and perspectives of its freight customers the majority of whom are logistics operators. A bespoke questionnaire was created and shared with all Condor s regular freight customers. A summary of the results is at Appendix G. Input was also sought through routine business engagement with key customers such as Ferryspeed, DSV, Paul Davis Freight and Bowmans. Individual submissions A number of individual submissions were made to the Review. Some of these were submitted to Condor as unsolicited inputs (for example by ing the CEO or customer services). Mid-way through the Review, following feedback on the PA/Condor CSR Survey, a dedicated address was also made available (condor@paconsulting.com) and this was promoted in media communications to encourage and facilitate engagement. Feedback from individual submissions is summarised at Appendix E. Additionally submissions were received on behalf of organisations, also summarised at Appendix F Consultation Themes The Islands Advisory Group worked with Condor to develop a long list of topics to explore through the consultation programme. This list was subsequently refined into six key themes supporting a central objective as shown below. 22 November 2016

24 Figure 2 Consultation themes Speed versus certainty of journey: what are the relative benefits and priorities attached to a short journey time of high speed ferries and the greater certainty but longer journey times of conventional ferries? When, where and why people travel: what destinations are customers interested in, what times of day/week/year are they travelling, and what is the purpose of their journey? How weather and season change behaviour and expectation: are customers more likely to choose different types of ferry, transport or route at different times of year? Type and style of service: what service levels do customers value now or want in the future? Balancing the priorities of freight, tourism, residents etc.: How aware and tolerant are customers of the differing priorities of different sectors when it comes to ferry services? Expected changes in consumer behaviour: what external changes in lifestyle (e.g. shopping habits) might have an impact on ferry services? Using these themes to lead discussions, meetings and research enabled the project team to structure the input and elicit a wide range of well-considered views from participants, rather than simply a series of individual wish lists. 23 November 2016

25 Each theme was mapped across each engagement method i.e. how it would be tested at a high level in a quantitative survey versus explored in an in-depth one-toone meeting. 1.6 Reviewing the Operator s performance against the Performance Measures In addition to identifying the Strategic Needs of the States, and conducting an analysis of the extent to which Condor s services are aligned with those needs, the Operating Agreement requires that the Comprehensive Service Review includes a review of the Operator s Performance against the Performance Measures set out in the Operating Agreement. Given the importance of raising public confidence in service reliability and punctuality, Condor asked PA Consulting to conduct this part of the Review independently. Condor also asked PA Consulting to review the Jersey Harbour Master s Benchmarking Review (as published in February 2016 and reproduced at Appendix J) and the Houlder Report which was commissioned in 2015 by the States of Jersey, States of Guernsey and Condor to investigate the safety, suitability and performance of Condor Liberation ( The outcome of PA Consulting s analysis is set out in Appendix C of this report and includes study of 24 months of data (of which 16 months are with the current fleet configuration). Section 3 of this report considers punctuality, reliability and customer satisfaction from a customer perspective. It explores the challenges faced by Condor, particularly in 2015, and examines the impact of work which has been undertaken to improve punctuality and reliability, as well as the resulting impact on customer satisfaction. 1.7 Structure of this report Section 2 analyses the market within which Condor Ferries operates and, in particular how this has changed in recent years. It also reviews the inherent structural factors which shape ferry services to the Channel Islands. As noted above, Section 3 reviews reliability, punctuality and customer satisfaction. Section 4 sets out the Findings which have been reached as a result of the work undertaken in the Review and uses these to identify the Strategic Needs of the States as regards to ferry services. 24 November 2016

26 Section 5 analyses how well Condor s current services are aligned to those Strategic Needs. Section 6 of the Review outlines what needs to happen in order to maintain alignment against those Strategic Needs which are being met, and considers what actions or interventions could improve alignment against those Strategic Needs that are not yet being fully met. It recommends which of these actions or interventions merit further consideration or discussion. Finally, there is a full set of appendices, including a glossary at Appendix A which explains some of the technical terms used in this report. 25 November 2016

27 2 Background a challenging and changing market with inherent operating constraints The market for ferry services in the Channel Islands is an unusual and challenging one. It is unusual because (unlike the Isle of Man, for example) fast ferries operate all year round, unusual because (unlike the Scottish Islands) there is no public subsidy, and unusual because (unlike the Isle of Wight) there is only one operator 6. It is challenging because, as is explained later in this report, freight, tourist and resident lifeline services are all equal first priorities, challenging because food supplies rely on just in time deliveries, and challenging because of the unique characteristics of the Island ports. Condor operates under the terms of a formal legal Operating Agreement with the States of Jersey which recognises the unique nature of the market. The agreement followed many years of policy development, informed by studies such as the 2009 Oxera Report The supply of ferry services, a policy assessment for States of Jersey 7 and input from the then Jersey Competition Regulatory Authority. It was developed as a non-exclusive licence, which imposes universal service obligations (USOs) on the Operator. That is, other operators are able to enter the market in competition with Condor, so long as they offer the same comprehensive service (winter and summer, freight and passenger, north and south, high speed and conventional). Key objectives in developing this non-exclusive USO approach included the security of supply in the provision of passenger and freight ferry services, scope for competition in the market, the net welfare impact on consumers and the impact on the States of Jersey s budget 8. The approach also recognised that, as individual components, the ferry services were unlikely to be viable since summer and winter, passenger and freight are significantly inter-dependent. As well as being influenced by these important matters of public policy, the ferry services which exist today have been shaped by a number of important market factors. 6 Of year-round passenger and RoRo freight services (there are LoLo operators) 7 The supply of ferry services, A policy assessment for States of Jersey 2009, Oxera %20Ferry%20Services%20% %20OXERA.pdf 8 Because the Oxera report was commissioned by States of Jersey, the Jersey budget was the focus. However these principles were enshrined in the Operating Agreement (as jointly negotiated with States of Guernsey) and so minimising the impact on Guernsey s budget is similarly implied. 26 November 2016

28 2.1 Freight services have been impacted by significant external factors The global financial crisis and market efficiencies created downward pressure on freight volumes Freight volumes are closely aligned to GDP and so are impacted when, as in the late 2000s, there is a global financial downturn. Guernsey GDP and Jersey GVA typically lag UK GDP. At this time, the logistics market in the Channel Islands was also undergoing change which led to efficiencies. A decade ago there were several logistics operators of roughly equal size. Each palletised its own goods and, as a result, there were normally as many partly-loaded trailers as there were logistics clients. Consolidation led to downward pressure on rates (less revenue per freight metre shipped) and, at the same time, logistics operators developed methods for greater efficiency of trailer use, including the introduction of double deck trailers enabling 44 rather than 26 pallets to be contained with a 13.6m trailer (fewer freight metres shipped). Whilst the underlying link between freight volumes into the Channel Islands and GDP (a combination of UK and Islands) is well-understood, the global financial crisis and one-off step-change associated with improved logistics efficiencies (combined with the loss of Low Value Consignment Relief (LVCR), explained below) reduced and dampened freight demand across an extended period. These one-off effects have now washed through and freight is growing in line with GDP again, but from a lower base than initially envisaged The loss of Low Value Consignment Relief led to further significant downturn in freight volumes All businesses face changing regulatory and legislative regimes. For many Channel Islands companies, the loss of LVCR had a significant impact. The market for shipping goods through the Channel Islands grew strongly in the early 2000s as businesses based there imported goods in bulk (such as CDs and DVDs) from the UK before taking orders and despatching them to the UK from outside the EU. Freight volumes dropped nearly 10% as a result of this change. The loss of LVCR also led to the contraction of the logistics market and a consequential realignment of operators and services, including the ultimate closure of Condor Logistics. The following graph shows the cumulative impact of all of these factors. 27 November 2016

29 Figure 3 Freight volume vs GDP/GVA (Source: Condor) The supply chain has moved to a just in time model The move to a just in time model for freight is another important factor. In recent years, there has been the gradual erosion of on-island food production and storage. There are now no major food production units on either Island, and in 2014, Co-Op decided to close its Jersey and Guernsey warehouses; these were the last of the retailed bulk temperature-controlled facilities on the Islands. There has also been a loss of ambient bulk storage (for goods such as breakfast cereals with a longer shelf life) and storage for products such as furniture. These factors increase the pressure on logistics operators and ferry services to deliver a just in time service to the food and general retail sector. When there is disruption, goods which are highly time-sensitive are prioritised, whilst seeking to minimise the delay in shipping the remainder of ambient products. As well as these lifeline priorities, lifestyle priority is moving towards fast delivery. In the Islands as elsewhere, customers increasingly expect to be able to receive goods very soon after ordering, whether the order is placed in store or on line. A further driver for the increase in just in time demand is the trend back to daily food shopping, rather than a large weekly shop. This is driving demand for more fresh produce. A report by BeMyEye published in The Grocer comments on the shift away from the once weekly larger shop towards little and often shopping habits. Lifestyle changes mean that people are not making the time to do a weekly shop; in the UK Sainsbury s made the decision to stop doing multi-buy offers last year because the 28 November 2016

30 average shopper now goes to the supermarket twice a week to buy what they need, when they need it The market for passenger sea travel is constantly evolving No market stands still or is immune to the changes brought about by technology, economic growth or (de)regulation. The market for ferry services in the Channel Islands is no different. A recurring theme in the consultation programme was the question of why Condor is operating a different fleet and schedule approach from that which existed, for example, 15 years ago. Here we explore four key market factors which have influenced the market for passenger travel: Growth in air travel means more choices of places to go on holiday Growth in air travel means more choices of ways to get to and from the Channel Islands There has been a reduction in available bed stock in both Islands The market has moved towards a short-stay model. How each of these factors have impacted passenger air and sea travel is set out below Growth in air travel means more choice of places to go on holiday Arguably the single most important market change in recent history was the completion, in 1996, of the deregulation of EU air routes. This paved the way for the EU short haul travel boom, boosted by reduced border formalities and freedom of movement across the EU. By way of illustration, Ryanair launched in 1985 and by 1995 had more than 2.2m passengers. This year it expects to carry 117m passengers. The launch of Easyjet (in 1995) coincided with this deregulation and grew its passenger numbers to over 60 million within 18 years. Jersey European (forerunner of Flybe) began operating in earnest in 1991, with a route from London Gatwick to Guernsey and within four years had seven jets operating UK regional and Channel Islands routes 10. Figure 4 shows the dramatic grow in budget airlines November 2016

31 Figure 4 Budget airlines passenger numbers (Source Ryanair and Easyjet) With this expansion came lower prices and therefore much greater choice of destination for UK (and French) based holiday makers. UK government data below demonstrates how price was the key factor in driving a three-fold increase in demand. Figure 5 Key drivers explaining historic air passenger demand growth (source: 30 November 2016

32 With the number of international tourism trips having grown by 40% since 2005 it is not surprising that there was pressure on the attractiveness of the Channel Islands as a short haul holiday destination, especially given the reconfiguration of the Channel Islands tourist offering that happened at the same time (see Section below). By way of illustration, the number of staying leisure visitors to Jersey has halved since 1992, though this has levelled out considerably in recent years with the aggregate drop only being 7% between 2005 and Figure 6 Market Change Impact Analysis Resident Travel from the Channel Islands Visitor Travel to the Channel Islands air sea air sea Growth in air travel means more choice of places to go on holiday Growth in air travel means more choice of ways to get to and from the Channel Islands As well as impacting the extent to which people choose to holiday in the Channel Islands, the growth in air travel can also have an effect on their mode of transport for their holiday. A similar effect could also be expected in relation to resident travel choices. Data published by the UK Department for Transport shows the high substitutability of travel mode on certain routes. The chart below shows that the opening of the channel tunnel had a dramatic impact on the number of international short sea passengers. 11 Visit Jersey: A Destination Plan for Jersey 31 November 2016

33 Figure 7 International short sea passengers and Channel Tunnel passengers (source: Note: the introduction of an alternative means of travel did not have any significant impact on the overall size of the market. There is likely to be a greater level of substitutability between sea and tunnel travel since there is only a 45 minute journey time differential and, crucially, both enable customers to take their own car. However, the increased availability of reasonably priced hire cars and significantly shorter air journey time would suggest that some impact would also be seen on air and sea travel to the Channel Islands, at least for those customers who can limit their luggage to airline-permitted levels and who don t wish to take their own car. However, this impact is far less pronounced in terms of the split in Channel Islands travel between sea and air. The chart below shows that the market share for air grew in the early 2000s as this mode of cheap transport became more popular and prevalent. Since then, the market split has remained broadly constant. For instance, between 2012 and 2015, Total Passenger Number arrivals to Jersey increased by 6.5%, with sea travel increasing by a slightly higher percentage and air travel increasing by slightly less. This is despite Condor s operational problems in the final year of data. This is to be expected, as the shorter air travel time and availability of cheaper hire cars means that many people who wish to travel in such a way are already likely to be travelling by air. Hence Condor can expect resilient customer numbers going forwards (assuming continued operational stability) and an increasing market share 32 November 2016

34 if the Islands plans for greater tourist numbers eventuate. As with freight, however, this is from a considerably lower base than has been seen historically. Figure 8 Jersey passenger arrivals (source: Ports of Jersey) This shows how the market for sea travel to the Channel Islands declined in the early 2000s with the proliferation of lower cost air travel. Visit Jersey concurred that there was significant growth in air travel driven by the introduction of low cost airlines. This combined with the advent of the Channel Tunnel, resulted in the share of all outbound visits by ferries from the UK falling from 39% in 1980 to 12% today. From 2002 there was a 30% reduction in the number of outbound trips made by ferry by UK residents. The number of ferry passenger arrivals in Jersey from the UK over the same period declined broadly the same - a 34% reduction 12. These changes also correlate to an increase in short stay visits (for which fewer visitors took their car). However, the growth from 2012 onwards is also evident; a trend which Visit Jersey and Visit Guernsey are determined to see continue, and which will be supported by Condor s > 1m investment per annum in destination marketing. Figure 9 Market Change Impact Analysis Resident Travel Visitor Travel Air sea air sea Growth in air travel means more choice of ways to get to and from the Channel Islands _ There has been a reduction in available bed stock A further key driver for the visitor economy is available bed stock. Here we see changes in the Jersey accommodation market from 2005 to Visit Jersey: A Destination Plan for Jersey 33 November 2016

35 Figure 10 Changes in Jersey visitor accommodation market Bed stock 13,400 13,100 13,100 12,800 12,000 11,900 12,000 11,800 11,700 11,554 11,480 Sold bed nights (millions) Staying visitor volume (000's) n/a n/a Source: This shows the following trends between 2005 and 2013: 12.7% reduction in bed stock 21.5% reduction in sold bed nights 14.5% reduction in staying visitor volumes An even more marked reduction in bed stock has been experienced in Guernsey as explained in the following extract from a 2012 report by Oxford Economics: In 2011, Guernsey had 43 hotels offering 3,350 bedspaces across 1,560 rooms. Adding self-catering and other accommodation, it offered a total of 5,591 bedspaces, down from over 9,000 in 1991 and over 7,000 in The steady downward decline of bedspace stock, though more stable over the past five years, has been a key story in the Island s tourism industry partly the result of hotels being converted to other, more lucrative commercial uses. 13 By 2016, Guernsey s total bed stock had shrunk to 4,985, a reduction of almost 50% over 24 years 14. It is reasonable to conclude that the impact of these strong downward trends in bed stock across both Islands will have impacted on both air and sea travel. However, there are significantly increased aspirations in both islands to attract more tourists going forward and the period since 2012 has evidenced some resultant growth. Hence it is reasonable to forecast ongoing growth in tourist numbers from here. Figure 11 Market Change Impact Analysis Resident Travel Visitor Travel air sea air sea There has been a reduction in available bed stock States of Guernsey data 34 November 2016

36 2.2.4 The market has moved towards a short stay model Having established that air travel increased significantly as a result of the 1996 EU deregulation, there is clear evidence that as air travel became cheaper, people took more holidays. Figure 12 UK residents visits abroad by purpose, 1995 to 2015 (Source: UK Office of National Statistics) Given that individuals holiday allowances have not changed materially over this period, it is reasonable to hypothesise that more holidays means shorter holidays. Data from Jersey supports that this holds true in the Channel Islands. Figure 13 Jersey length of stay analysis Staying visitor Length of stay (days) Source: Data from Guernsey shows that average length of stay has dropped from 6.1 days in 1996 to 4.9 days in This is likely to be influenced, at least in part, but the higher proportion of self-catering accommodation in Guernsey when compared to Jersey, which is less suited to short breaks. Shorter stay breaks are likely to drive tourists towards use of air (and vice versa), since the journey time is shorter and there is no imperative to take a vehicle in order to accommodate large amounts of luggage. However, as can be seen from the 15 Source: States of Guernsey 35 November 2016

37 market share data above, this effect has largely washed through the data now so it is reasonable to expect ongoing market shares to be reasonably constant. Figure 14 Market Change Impact Analysis Resident Travel Visitor Travel air sea air sea The market has moved towards a short stay model Overall, these market changes have historically disproportionately impacted ferry travel rather than air travel trends When we combine these historic factors, we see how they have required a disproportionate service response from Condor, as outlined in Section 2.4. Figure 15 Market Change Impact Analysis Resident Travel Visitor Travel air sea air sea Growth in air travel means more choice of places to go on holiday Growth in air travel means more choice of ways to get to and from the Channel Islands There has been a reduction in available bed stock - - The market has moved towards a short stay model - - Cumulative impact up down flat down 36 November 2016

38 2.3 Inherent operating constraints shape the nature of ferry services to the Channel Islands Operating parameters The unique characteristics of the Channel Islands are well known in the shipping community; small historic harbours, which are tidally constrained, combined with an unusually varied set of approach routes mean that services must be carefully planned within tight operating parameters. Tides Tidal conditions are a dominant feature of the whole of the Bay of Granville and therefore affect all shipping operations in the Channel Islands. Of the five ports to which Condor regularly sails, three are tidally constrained. St Helier, through which each of Condor s four ships pass, imposes the greatest operating limitations, with the port closed for up to five hours 16, twice a day. Here we see how August 2016 schedules adjust to take account of these closures: Figure 16 Jersey Port closures and ship arrivals (source: Condor analysis) 16 The duration of the port closure depends upon the seasonal tide and varies by ship as it depends upon draft. 37 November 2016

39 Guernsey harbour rarely closes fully, but shallow patches on the approach and turnaround area for berth 1, have an impact for conventional ferries in particular. Additionally, the sump on Guernsey s berth 1 is narrow and will not accommodate a modern High Speed Craft (HSC) over low water springs. St Malo port is also tidally constrained and closes for up to five hours, twice a day. Ports and harbours The physical characteristics of the Channel Island ports and St Malo are also a constraint on scheduling ferry services. Factors which influence the operation include limitations on ship size, tug availability/suitability, berth availability/suitability, and the characteristics of the approach routes. Ship size (and in particular length) affects both Jersey and Guernsey. In St Malo, the main operating berth is shared with Brittany Ferries and schedules are mutually agreed to ensure availability. An alternative berth (No.1) is available but it is subject to increased tidal constraints, and does not have a full width linkspan. Additionally, in order to operate from this berth a vessel is required to moor within 30cm of a concrete support, which, in heavy weather increases the risk of damage. Ports of Jersey operates a valuable tug service which can be available to support conventional ship berthing in the most extreme wind conditions. This tug has also been deployed to Guernsey to support operations, but its use has been low and generally when the manoeuvrability of Condor s ships has been curtailed. The St Malo fleet of tugs is of limited use with high speed craft and furthermore, require considerable notice for standby. There are two available berths in Jersey and Guernsey and so, with four ships to accommodate, avoiding berth clashes is a key part of schedule planning. This includes ensuring the requisite gap between ships on the same and different berths, which can also be affected by the weather (and therefore cannot always be factored into scheduling). For example, in Jersey, if Condor Liberation is already on the East berth, in poor weather it is not possible to berth Commodore Goodwill on the West berth. Suitability of berths and fendering is another factor to be considered. Some berths are more suited to conventional ferries and others more suitable for HSCs. For example, Poole Port has improved the berth with HSC-friendly fenders and continues to do so 17. Suitable linkspans are an additional factor. For example No1 berth in Guernsey and No 1 berth in St Malo are not self-supporting (as more modern berths are) and require attaching to the ship by means of strops. This limits the permissible weight and will therefore slow down the load and discharge of vehicles and cargo. 17 Houlder Ltd: Independent Report into the Safety, Suitability and Performance of Condor Liberation 38 November 2016

40 Routing in and around the Channel Islands and St Malo is affected by geography and the tides. The approaches to Guernsey are tidally constrained so when tides and/or weather demand routing via the Big Russel, this can add 15 minutes or more to sailing times, which can have a knock-on impact on the schedule. Ships travelling between St Malo and Jersey need to navigate around the Minquiers where the difference between low and high tides can make a difference of as much as 20 minutes. The lengthy speed- limited approach to Poole Harbour has an inevitable impact on the schedule 18. Finally, the ±12m tidal height variation found in both Channel Island and French waters means that, not only does each journey on a Channel Islands route have the potential to appear physically different to the naked eye, it also has a different set of risks. As a result, the local knowledge and pilotage experience which Condor Masters gain and maintain, is essential. Weather / sea conditions It is well known that the southern route (Channel Islands to France) is significantly less weather affected than the northern route (Channel Islands to UK), which experiences weather-related cancellations much more often. The option to go east about Jersey (when transiting between Guernsey and St Malo) provides additional shelter (thereby reducing the number of cancellations) and a more comfortable crossing via a more protected route. On the northern route, with the prevailing weather coming from the south west, strong Atlantic swells create a long rolling sea. Between the Channel Islands and UK, these affect the ship at an angle of c.45 degrees, contributing to a corkscrew motion. Travelling between the UK and Channel Islands, historically high speed craft (Condor Express and Condor Vitesse) would often track some distance along the UK coast before making the shortest possible run at the best angle across the Channel to the shelter of the Alderney Race, which could increase the crossing time by an hour or more. However, the improved weather handling of Condor Liberation 19 means this is now not generally required. Scheduling impact All of these factors influence how Condor sets its operating schedule. Starting with the customer centred schedule, tidal windows for each individual ship are then applied. Berth clashes and crew hours of rest are then factored in, before a final 18 The operational limitations of other UK ports (including Weymouth) are discussed in Section In its Independent Report into the Safety, Suitability and Performance of Condor Liberation, Houlder noted that the ability of the Condor Liberation to maintain average speeds over 30 knots in sea-states with a significant wave weight over 3m is exceptional. Given the conditions experienced in the English Channel on a regular basis this capability is advantageous to her operation. 39 November 2016

41 schedule can be presented to both Islands for discussion. Requested amendments following consultation with the States of Jersey, States of Guernsey, freight customers or travel trade can often mean the whole process beginning again. However, even with such careful advance planning, changes can occur much closer to sailing time. Whilst constant factors, such as expected high and low tide times, tidal height predictions and crew hours (see below) can be factored in to timetables, a wide range of additional variables must be managed on a day to day basis. For example, a high pressure system can easily impact a tidal height by 50cm, and if the weather has developed a 2m swell, this can quadruple this. This affects under-keel clearance which can mean a change of route and consequently impact the arrival time into port. With more than 50 years experience of operating in this unique environment, Condor has significant skill in predicting such nuances and the published schedule is a best fit which is expected to be achieved c.90-95% of the time. The operations team strives to manage adjustments on a daily basis with as little impact on customers. Unfortunately there are times when conditions and events conspire against the team and there are knock on effects to customers Legislative factors An important factor in planning operations is compliance with crew hours of rest legislation set out most recently in the MLC 2006 which applies to all seafarers on board Condor s fleet. This convention is enforced by several regulatory bodies. Ships must keep records in an approved format for inspection at any time and, under UK and Bahamian law 20, failure to comply is a criminal offence. In summary, the legislation 21 provides that: Minimum hours of rest shall not be less than: (i) ten hours in any 24-hour period; and (ii) 77 hours in any seven-day period. Hours of rest may be divided into no more than two periods, one of which shall be at least six hours in length, and the interval between consecutive periods of rest shall not exceed 14 hours Therefore, maximum hours of work shall not exceed: (i) 14 hours in any 24-hour period; and 20 Condor ships sail under the Bahamian Flag, one of the world s leading flags, since Guernsey s flag does not encompass ships >24m in length a_masters_guide_surv_46_short_rev5_feb15.pdf 40 November 2016

42 (ii) 72 hours in any seven-day period Whilst there are some exceptions (such as emergencies, essential work on board which cannot be delayed for safety or environmental protection reasons or factors beyond the control of the Master or the Operator), operators cannot extend crew hours for reasons such as avoiding passengers experiencing a delay or cancellation. There follow some examples to aid understanding of the legislation. Here we see how Commodore Clipper s standard rotation is compliant: Figure 17 Sample of compliant hours of rest calculation Commodore Clipper (source: Condor analysis) In the chart EOP stands for End Of Passage, a formal shipping term that indicates when pilotage begins on passage as the vessel is on its final approach to a port. At this point a qualified master must be on the bridge. The duration of pilotage varies depending on local conditions but on routes Condor serves it varies between 15 and 60 minutes. FAOP stands for Full Away On Passage, indicating the point at which pilotage ends following departure from a port. After FAOP the vessel proceeds as planned and normal ship routines resume: it is at the Master's discretion to hand over navigation to other suitably qualified officers. Both these events are recorded in the ship's deck log book. The red line indicates 24 hr period, and it can be seen that this is compliant with regulation. Red circles show 5.5hrs + 7.5hrs = 13 hours total rest, therefore this is also compliant. Adding a second Guernsey call into the rotation, however, moves the schedule out of compliance as there is no single rest period of 6 hours. In the table below, EOP Portsmouth is shown at 0530 in both cases. Clearly, it is not possible to sail from Guernsey to Portsmouth in only 4 hours. However the regulations require evidence of compliance in any 24 hour period. This table is laid out so that it demonstrates that there would be insufficient rest in the 24 hours to meet the requirements of the regulations. Figure 18 Sample non-compliant hours of rest calculation Commodore Clipper (source: Condor analysis) 41 November 2016

43 Ensuring compliance with these regulations, consistent with Condor's duty of care to staff and passengers, means significant impact on scheduling and planning, both as routine and during times of disruption. The requirements are integrated into the initial schedule plan (along with factors such as tidal constraints and berth availability) and are then reconsidered should delay or disruption occur. Compliance may require crews being accommodated ashore, adjusted routes (e.g. miss out one port call on a rotation) or delayed departures Environmental considerations Environmental considerations have become increasingly important in the shipping industry in recent years. Whilst pollutants from land-based sources have been decreasing, it is widely considered that air pollution 22 from maritime transport has been increasing. As a result, regulations have changed to ensure that shipping is more environmentally friendly. This includes a reduction in permitted sulphur emissions and ever-tighter scrutiny of CO2 emissions, meaning that heavy fuel oils, which were previously used, are now prohibited unless their emissions are filtered. In areas such as passenger shipping, emissions are measured against the number of passengers which means that the more efficient a vessel can be, the lower the impact on the environment per passenger carried. For example, in CO2 terms, the more passengers carried on a ship, the lower the rate of emission. This is simply demonstrated by setting passenger numbers alongside fuel consumption: Condor Express (smaller ship operating more often): burns c litres per hour of MGO fuel. To provide the agreed capacity, two rotations a day were operated at the busiest times of the year litres x 7 hours actual sailing time x 2 rotations = 58,800 litres/day. Based on average load of 444 passengers per ship 23, this equates to 66 litres of fuel per passenger. Based on a maximum load of 660 passengers 24 per ship, this equates to 44 litres of fuel per passenger. Condor Liberation (larger ship operating less often): burns 4400 litres per hour of MGO fuel. Operates one rotation per day litres x 7 hours actual sailing time x 1 rotation = 30,800 litres per day. Based on an average 22 Including Sulphur Oxide (SOx), Nitrogen Oxide (NOx), Ozone Depleting Substances (ODS) and Volatile Organic Compounds (VOC) 23 April September 2013 (2014 was an atypical year due to the unavailability of Commodore Clipper) 24 Despite theoretical maximum capacity of 740, passenger capacity on 86s was usually dead-weight constrained at c November 2016

44 passenger load of 520 passengers per ship 25, this equates to 59 litres of fuel per passenger. Based on a maximum load of 880 passengers per ship 26, this equates to 35 litres of fuel per passenger. Condor expects to see continued pressure to reduce pollution and is therefore looking to ensure that it delivers the most environmentally-friendly approach possible in managing its capacity utilisation. That is, running larger vessels (whether planes, buses, trains or in Condor s case, ships) less often, and therefore more full, in order to reduce the per person impact of emissions. Condor also commenced a project in support of environment environmental emission reductions to install scrubbers onto the fleet s conventional ships. However, it is proving difficult for the technology provides to successfully complete the complex project in our marine setting. 2.4 Changes in the market led to changes in the fleet Both the passenger and freight markets have changed significantly over the last 20 years. This has in turn influenced the shape of Condor s fleet. Reliable freight services, delivered by ships capable of supporting the just in time food supply chain, have become ever more important. Weather conditions continue to be challenging, particularly in the winter and particularly on the northern route, meaning some conventional passenger capability is essential. These factors underlined the importance of maintaining ships of the capability of Commodore Goodwill and Commodore Clipper. However, as outlined above, the market for passenger travel has changed dramatically. Condor Vitesse and Condor Express joined the fleet in 1996, which, as shown in Section 2.2 above, was before the transformation in air travel. By the start of the Operating Agreement, they were reaching the end of their useful lives for operating in the challenging conditions of the English Channel 27. The new market conditions meant that the capital investment to replace both of these vessels was not sustainable without a subsidy. Instead, to provide the capacity needed for resident and visitor travel, as well as to generate sufficient revenue to support the necessary investment, a larger replacement ship was required. In 2014, with the certainty offered by the new Operating Agreement, the company was able to purchase Condor Liberation (without public subsidy), which enabled the continuation of high speed services on the northern route with greater capacity. 25 April 2015 September There is no dead-weight constraint on Condor Liberation 27 They now serve in the much more benign conditions of the Aegean sea 43 November 2016

45 3 Performance assessment Comprehensive Service Review Under the terms of the Operating Agreement, Condor Ferries operational performance is reported monthly to the Harbour Masters and the FSSG. Because Condor respects and recognises the importance of all the conditions that the States of Jersey and States of Guernsey required, and therefore included within the Operating Agreement, Condor asked PA Consulting, advisors to the Comprehensive Service Review, independently to review performance against the Performance Measures. The findings are summarised in Appendix C. This Section of the Review considers the level of punctuality and reliability experienced by Condor s customers. It also explores how customer satisfaction levels track these key performance indicators. Having two ways of measuring performance (the regulatory and the customer-focused) reflects that Condor effectively has two contracts: one with the States of Jersey (and by association the States of Guernsey) and the other with its customers. While these two contracts have different measures, each is equally respected by Condor. Reporting in both ways requires Condor to assess its service and performance from different perspectives, driving improvements right across the business was a difficult year It is important for this Review to recognise the difficulties faced by Condor in 2015, and the considerable impact that these difficulties had on customers and the wider Channel Island communities. The introduction of Condor Liberation did not go smoothly and, although the Jersey Harbour Master found no evidence to suggest that decisions taken during introduction into service were inappropriate or that any other prudent operator would have taken Performance in Brief Reliability Fleet-wide reliability of 96% over Operating Agreement Three months 100% reliability Poorest month Jan 2016 (90%) Most reliable ship Condor Rapide Punctuality Average punctuality of 86% since start of Operating Agreement Best month Sep 2014 (97%) Poorest month Jan 2016 (77%) Most punctual ship Condor Rapide Customer satisfaction Average score of 6.8 out of 10 over term of Operating Agreement Heavily influenced by reliability and punctuality (even when weather affected) 44 November 2016

46 any other action 28, with the benefit of hindsight important lessons have been learned for future changes to the fleet. Condor Liberation could hardly have got off to a worse start, making contact with the quay in Guernsey on 29 March 2015, her second day in service. Once a period of stormy weather had abated, Condor Express was brought back into service to ensure Easter travellers reached their destination and, following repairs, Condor Liberation returned to service on Sunday 5 April. A number of relatively minor technical issues were experienced in the following weeks, added to which port staff and ship crew were still becoming familiar with loading the new ship, all of which led to relatively high levels of delays. The launch of Condor Liberation had been preceded by a highly successful promotional campaign which had lifted expectations and created a great sense of excitement. This campaign had included 6,000 people attending open days and over 7,000 people participating in the naming competition. Given the high expectations of customers and the local community, it was not surprising that the poor performance led to a great deal of public and media scrutiny. However, when some customers complained of sea spray on the car deck, and then of an unfamiliar ride motion, coverage reached fever pitch, with some regrettable commentary raising unfounded fears about safety and suitability. Condor, working with the States of Jersey and States of Guernsey, sought to allay concerns by commissioning an independent report into the safety, suitability and performance of Condor Liberation from world leading naval architects, Houlder Ltd. This report was published in October 2015 and concluded that Houlder had no concerns with the stability of Condor Liberation, that Condor Liberation is well built and that it is well suited to operating in the English Channel 29. The impact of the difficulties faced by Condor Liberation was compounded by the need to comply with new EU regulations on sulphur emissions, which led to Commodore Clipper being out of service for an extended period in dry dock in September 2015 and then again in November. The September dock period coincided with a fault on Condor Liberation s exhaust system, causing considerable disruption over a busy weekend, with some passengers journeys delayed for several days. Difficulties extended into 2016 when Condor Liberation was damaged whilst in Poole port during the exceptional storms over Christmas 2015, meaning adjustments to dry dock schedules in order that repairs could be carried out. Incessantly stormy weather over the winter further added to the disruption. 28 Jersey Harbour Master s Benchmarking Review, Jan Condor Liberation: Safety, Suitability and Performance, Independent Report, Houlder Ltd 45 November 2016

47 As well as causing great inconvenience to customers, this series of events undoubtedly placed the company, its managers and staff under considerable strain. In addition to responding to unprecedented levels of complaints and dealing with considerable media and social media enquiries, the company provided support and compensation to many customers as a result of the delays and cancellations they experienced. Regrettably many staff and managers were subjected to abuse in person and on-line, leading to then Guernsey Chief Minister, Jonathon Le Tocq calling for a more respectful dialogue 30. Throughout these difficult months, Condor took actions to improve its performance. Later in this section we outline how, for example, a careful plan of actions improved port turnaround times, how an improved approach to predictive maintenance has reduced the number of technical faults, and how improvements in customer services processes have dramatically improved call handling statistics (meaning a better service for customers). Work is ongoing and Condor is determined to keep improving so that it can provide a service of which Islanders, as well as staff and shareholders, can be proud. 3.2 Condor publicly reports performance levels As outlined above, Condor adheres to the terms of its Operating Agreement with the States of Jersey, observes the same terms in relation to Guernsey, and publishes regulatory reports relating to the Operating Agreement on its website. Condor also produces monthly customer-facing information regarding reliability, punctuality and customer satisfaction in easily digestible formats on its website ( on board and in ports. A monthly snapshot of performance is provided via an infographic as shown in Figure 19. The performance data in these infographics includes all delays and cancellations i.e. even those outside Condor s control (such as weather) and therefore reflects the service actually received by customers. 30 Itv.com/news 13 March November 2016

48 Figure 19 Performance infographic (Source: Condor website) 3.3 Reliability (cancellations) Reliability measures how many services operate when compared with those which were scheduled. Sometimes additional sailings are added to the schedule, giving a potential >100% reporting. However, these are excluded for the purposes of public reporting Service reliability over the term of the Operating Agreement Figure 20 below shows reliability across the fleet during the term of the Operating Agreement 31. Figure 20 Fleet Reliability (Source: Condor performance data) 31 Note, charter vessels are not included. 47 November 2016

49 Below we see how individual route performance has contributed to the overall fleet reliability. It is apparent that the HSC north route is much more prone to cancellations. This is principally due to the greater incidence of sea conditions outside permitted operating limits (the graphs show how this impacted the previous ships Condor Express and Vitesse as well as Condor Liberation) which are explored later in this section. Figure 21 Fleet Reliability (split by route) (Source: Condor performance data) 48 November 2016

50 Finally, the following graph overlays each of the routes Figure 22 Fleet Reliability (split by route) (Source: Condor performance data) Reasons for cancellations The following graphs below show reliability split out per ship and per month, with the reasons for cancellations shown by weather and other factors. The freight ships have very high levels of reliability. Commodore Goodwill Commodore Goodwill s overall reliability over the term of the Operating Agreement has been 97%. 49 November 2016

51 Figure 23 Commodore Goodwill sailings (Source: Condor performance data) Commodore Clipper Like Commodore Goodwill, Commodore Clipper operates a highly reliable service: during 13 of the 24 months of the Operating Agreement, it operated at 100% reliability. Over the full term, its reliability level was 95%, a figure which was reduced due to the grounding incident of July 2014 (with the required repair work leading to cancellations in August 2014 as shown below). Figure 24 Commodore Clipper sailings (Source: Condor performance data) 50 November 2016

52 Condor Rapide Condor Rapide s reliability has also been extremely high 98% over the period of the Operating Agreement. During 15 of the 24 months, it operated at 100% reliability. Its poorest month was January 2015 (83%); as is to be expected from a high speed ferry, it is affected by winter weather-related cancellations (albeit at a lower level than on the Northern Route, where the route is much more weather exposed). Figure 25 Condor Rapide sailings (Source: Condor performance data) Condor Liberation As outlined earlier, the reliability of Condor Liberation has been the subject of considerable commentary. Its early months in service showed relatively high levels of cancellations, but here we see how reliability has improved: 51 November 2016

53 Figure 26 Condor Liberation sailings (Source: Condor performance data) Note, the Condor Rapide Sailings (Jan 16) are from when dry docks were swapped so Condor Rapide operated sailings which had originally been scheduled to be operated by Condor Liberation. The average reliability of Condor Liberation since coming into service is 89%. Reliability has risen strongly in summer 2016 with May (98%) June (95%) and July (98%) seeing particularly strong performance. Condor Liberation s poorest month was January 2016 (64% - following storm damage in Poole) when dry dock schedules were rearranged enabling Condor Rapide to cover many of the scheduled sailings Targeted action has helped to improve reliability Following the difficulties experienced in 2015, Condor s Operations team designed an Asset Health Programme to improve prediction, diagnosis and prevention of technical problems across the fleet. The two elements to this programme were Failure Mode Effect Analysis (FMEA) and Root Cause Analysis. FMEA is a step-by-step approach for identifying all possible failures in a design, a manufacturing or assembly process, or a product or service. Root cause investigation is used to identify why a failure occurred; failed components can be sent to specialist facilities for evaluation. When the root cause is identified a process can be put in place to reduce the risk of future incidents 52 November 2016

54 An Asset Health auditor was employed to conduct FMEA and, although Condor Liberation was the principal target for the programme of FMEA and Root Cause Analysis which was put in place, the learnings have been fleet wide. For example, Condor adopted enhanced oil analysis on Condor Rapide. Although there were no external symptoms whatsoever, the trend analysis indicated a slight increase in waste metals in the oil. Work with the gearbox manufacturer showed that this metal was a component in the gearbox bearings, and as a precaution, the gearbox was changed in dock. Without this intervention, it is likely that Condor Rapide would have experienced a gearbox failure mid-season and thus operated at reduced power until the winter 16/17 dock, thereby causing considerable disruption. Although this work is ongoing, and it is extremely difficult to assess what problems have been prevented as a result of the programme, the number of cancellations for technical reasons has reduced Independent analysis An objective analysis of fleet reliability was undertaken by the Jersey Harbour Master in his Benchmarking Review of January 2016 (attached at Appendix J). This stated that "Condor s operational performance has been down on 2014 and the average achieved in recent years. This is largely based on weather (and in particular its incessant nature) although teething issues with a new vessel are also attributable. The Liberation has still achieved nearly 90% of its scheduled arrivals and the overall schedule achievement rate of 97% is only slightly down on Cancellations with more than 48 hours notice Condor publishes its schedules many months in advance; for example, on 4 October 2016 it was possible to book as far ahead as November Releasing schedules a long way in advance is important for the visitor economy, and to help residents plan important future travel. An inevitable consequence of this approach is that schedules need to be adjusted from time to time. Consistent with the implementation of the EU Passenger Rights Directive, the Operating Agreement permits services to be rescheduled more than 48 hours in advance. In order to ensure that Condor s performance statistics were not being unduly affected by this, the Review team analysed operational records over the term of the Operating Agreement. This found that: There were two occasions when, for weather reasons, high speed sailings were cancelled with more than 48 hours notice. This related to sailings being 53 November 2016

55 operated by Condor Rapide between the Channel Islands and the UK on 8 & 9 February Three times sailings were cancelled with more than 48 hours notice for technical reasons (3 & 4 January 2016, due to storm damage suffered by Condor Liberation, and 19 March due to the ship being detained in Poole). 20 amendments were made to conventional services with more than 48 hours notice. These typically related to making additional calls due to freight requirements. There were 5 days when high speed sailings were rescheduled with more than 48 hours notice (1 weather Condor Rapide, 1 technical Condor Rapide, 3 technical Condor Liberation). These small numbers of changes to the schedule, made with more than 48 hours notice would not materially affect the performance statistics quoted in this review. 3.4 Punctuality (schedule performance) Punctuality is measured by arrival time, rather than departure time, in order to reflect customer experience. Even when a sailing departs late, it is often possible to make up time on the journey. Conversely, there is little value to customers in an on-time departure if delays during the journey mean the arrival is delayed. Condor s customer facing reports measure an on time arrival as one which arrived within 30 minutes of schedule. This is regardless of journey duration (a delay of 30 minutes in the arrival into Jersey of Commodore Clipper from Portsmouth would represent a delay of just 6% of the overall journey duration, it would represent 16% of the crossing time of Condor Liberation between Guernsey and Poole or 50% of the journey time inter-island). Whilst there is an inevitable discrepancy in adopting this standardised metric, it enables simple and transparent reporting. As would be expected, Condor s internal reporting assesses more detailed information, for example, what proportion of arrivals were early, or within 15 minutes of schedule. Across all services over the last two years, 75% of sailings were with 15 minutes of schedule. Customers are kept up to date with minute-accurate reports on punctuality via the Condor Sailing Updates twitter feed which reports the precise arrival and departure time of passenger services. 54 November 2016

56 3.4.1 Punctuality levels over the term of the Operating Agreement Condor knows the importance which customers attach to having a punctual ferry service. For freight services, the reliance on just in time means that punctuality is vital if there is to be fresh food on the shelves when shops open, and any delays impact all the way along the supply chain, including enabling retailers to have shelf stacking staff available when supplies arrive. For passengers, onward travel often relies on making connections, and plans can be disrupted when travel is delayed. The following charts show service punctuality over the term of the Operating Agreement. 55 November 2016

57 Fleet-wide punctuality Overall, punctuality has remained relatively constant over the term of the Operating Agreement. Other than the initial months following the introduction of Condor Liberation, seasonal weather factors were the major contributor to any downturns in performance. Figure 27 Overall punctuality across all services (Source: Condor performance data) 56 November 2016

58 August September October November December January February March April May June July August September October November December January February March April May June July Comprehensive Service Review Commodore Goodwill (freight) punctuality Commodore Goodwill is a highly reliable ship, maintaining lifeline freight services to the Channel Islands even in the most inclement conditions. The key observable theme is how punctuality suffers during poor weather as a result of Condor s determination to maintain reliability in order to provide lifeline services. With schedules already very tight in order to support the supply chain, once services run late it can take some time before timings catch up. As a result, punctuality of freight services averaged 84% over the period of the Operating Agreement. Figure 28 Freight Punctuality (Source: Condor performance data) Freight Punctuality 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% <30m 30-59m 1-2 hours >2 hours 57 November 2016

59 Commodore Clipper (RoPax) punctuality A similar pattern is seen in relation to Commodore Clipper (RoPax) punctuality, with high levels of reliability impacting on punctuality, particularly during the winter months when poor weather inevitably impacted journey times and therefore arrival times. Figure 29 RoPax Punctuality (Source: Condor performance data) 58 November 2016

60 Condor Rapide (HSC south) punctuality Seasonal trends are also seen in Condor Rapide s punctuality performance although, with a short crossing time, delays are less significant. Figure 30 Punctuality HSC South Route (Source: Condor performance data) 59 November 2016

61 Condor Liberation (HSC north) punctuality The punctuality of Condor Liberation was a particular concern early in her introduction into service where just one of the first five months of service saw punctuality above 80%. Figure 31 Punctuality HSC North Route (Source: Condor performance data) 60 November 2016

62 However, the impact of the work done on asset health, port turnaround and other business improvements can be seen below, with extended delays (>60 minutes) largely eradicated: Figure 32 Condor Liberation punctuality, Aug 14 to July 16 (Source: Condor performance data) 61 November 2016

63 The strong year on year improvements in punctuality are summarised as follows: Figure 33 Condor Liberation punctuality over time (Source: Condor performance data On time mins late >60 mins late 2015 (April to December) 79% 13% 8% 2016 (January to July) 91% 6% 3% Reasons for delays The Review team analysed the reasons for arrival delays across the term of the Operating Agreement. These reasons are recorded on the day of sailing by Masters, verified by the operational team, and inform the monthly reports issued by Condor to the FSSG. The chart below indicates clearly the different factors which influence the reliability of conventional and high speed ferries. Commodore Goodwill and Commodore Clipper are more likely to be delayed due to weather, whereas high speed ferries are more susceptible to technical delays. Other external events typically refers to delays such as extended immigration or customs checks, whereas sailing time will cover issues encountered during passage, such as unexpected rerouting. Figure 34 Reason for arrival delays, Aug 14 to July 16 (Source: Condor performance data) As well as reviewing performance over the term of the Operating Agreement, the Review team considered longer term trends. The following charts show the reasons for departure delays and arrival delays, based on four years of operational data. 62 November 2016

64 Figure 35 Fleet-wide reason for departure delays, 4 years (Source: Condor performance data) Figure 36 Reason for arrival delays (Source: Condor performance data) Targeted action has helped to improve punctuality By analysing the reasons for delays, Condor is able to take action to improve punctuality. For example, early in her introduction into service, Condor Liberation was affected by considerable delays in port. A detailed study was undertaken and the Improvement Plan identified the following actions: Improved load planning 63 November 2016

65 Improvements and efficiencies in all locations Focus on Guernsey port Improved staff briefings prior to turnaround Mis-declared vehicles identified at check in and placed on standby Check-in closed promptly (as per Condor T&Cs). The charts below, with the dotted lines showing the trend, demonstrate how these actions have successfully translated into improved port turnaround, positively impacting service punctuality. The horizontal axis line shows the planned turnaround time therefore anything above this denotes an extended turnaround and anything below a turnaround which was quicker than scheduled. Figure 37 Turnaround times (Source: Condor performance data) 64 November 2016

66 3.4.4 Punctuality is continuing to improve The next set of graphs compare Condor s punctuality from January to July 2016 with punctuality from the same months in The data illustrates how service punctuality has been better, with fewer drops below 80% punctuality through the year to date. Overall, 2016 performance has been better than 2015 in every month except February and June. Averaged across the seven months from January to July, punctuality has improved from 82% in 2015 to 87% in November 2016

67 Figure 38 Comparison of punctuality between 2015 and 2016 (Source: Condor performance data) 66 November 2016

68 3.5 Customer satisfaction Customer Satisfaction measures the general satisfaction of customers using the services. Condor conducts a continuous customer satisfaction survey, sent to every passenger who books directly with the company shortly after travel by or post. The survey is managed externally to Condor through MindMover, to ensure Market Research Society standards and confidentiality. The graph below shows customer satisfaction (based on a rolling 12 month average) over the period of the Operating Agreement. Figure 39 Customer Satisfaction (rolling 12 month average) (Source: MindMover survey and analysis) Trend graphs such as this smooth out the effect of variably monthly data but, nevertheless, it is clear that satisfaction fell during 2015, reflecting the considerable disruption experienced by customers. Monthly data shows how closely customer satisfaction tracks operational performance as well as how closely overall satisfaction tracks customer views of reliability and punctuality: 67 November 2016

69 Figure 40 Customer Satisfaction Measures (Source: MindMover survey and analysis) Here we see clearly the impact of the poor early months of Condor Liberation when reliability and punctuality fell. We similarly see a strong bounce back as performance improved over the summer, the dip in September to reflect the coincidence of Commodore Clipper being in dry dock and the exhaust failure on Condor Liberation, as well as low levels of satisfaction in the winter when services were affected by relentlessly stormy weather, and the fault with the ramp on Commodore Clipper. The strong improvement since March 2016 reflects improved reliability and punctuality over the same period Targeted action has helped to improve customer service Customer service during periods of disruption was widely criticised during As part of a three part programme of improvements in Customer Services, a key objective was to improve the service offered by the Reservations teams at times of disruption. This involved: Integration of Reservations team within Poole to improve consistency Introduce new booking system Change call waiting messages to give indication of wait time Review working patterns of Reservations staff (flexi hours, part time). The impact of these changes led to considerable improvement in key measures as set out below. 68 November 2016

70 Call abandonment The proportion of dropped calls (customer hangs up) has reduced strongly. This is in part due to longer opening hours and in part due to more efficient call handling. In addition, the innovation of tweeting call wait times means that customers know better when to call in order to have their query answered quickly. Figure 41 Call abandonment (three year performance) (Source: Condor performance data) The more efficient processes are also leading to speedier resolution for customers when there is service disruption. These charts show how effective the Reservations team was at supporting customers during technical cancellations in September 2015, prior to the implementation of process improvements. 69 November 2016

71 Figure 42 Call performance 2015 (Source: Condor performance data) The improved support given to customers during a technical cancellation in June 2016 is shown below. Figure 43 Call performance 2016 (Source: Condor performance data) As part of its long term improvement plan, Condor has also recruited a highly experienced Customer Services Experience Director who is focused on embedding further improvements in this area within the business. 70 November 2016

72 4 The Strategic Needs of the States In this section we summarise the Findings we have made a result of this Review and use these findings to identify the Strategic Needs of the States. Our extensive data analysis and consultation has led us to these Findings which are relevant when considering future ferry services. Below we set out each Finding and the data which has led us to it. Each of these Findings has then enabled us to identify either a Strategic Need of the States, or a Consideration which may help to optimise the attractiveness of ferry services in the future. At the end of this section, we prioritise each of the Strategic Needs based on their importance to the States. Then, in Section 5, and in accordance with the Operating Agreement, we set out an alignment analysis which establishes the extent to which the identified Strategic Needs are currently being met (or are planned to be met). Section 6 identifies how alignment can be maintained and improved. 4.1 Ferry services will remain a critical part of the Islands infrastructure In Section 2 we outlined the very significant expansion of air travel over the last two decades and how this has considerably enhanced travel options for both visitors and residents of the Channel Islands. Within this context, it could be possible to conclude that passenger ferry services are no longer important, or are simply a nice to have. However, our research and consultation found that there is still a strongly expressed demand for ferry services. Specifically: Residents see ferry services as very important to their way of life Visitors value ferry travel as an attractive and convenient way to reach the Channel Islands. More significantly, the Review process also confirmed that ferry services are critical to Channel Island life because freight services supply the overwhelming majority of food and essential goods. Residents see ferry travel as very important to their way of life In the PA/Condor CSR survey, respondents were asked how much they agreed with the statement Good passenger ferry services are very important to my way of life. Results showed a strong tendency to agree with this statement with 85% of Jersey residents and 90% of Guernsey residents agreeing: 71 November 2016

73 Figure 44 Importance of ferry service Island residents (Source: PA/Condor CSR Survey) To ensure robustness of data, as in other areas of the survey, respondents were also asked a question posing the counter viewpoint i.e. There are lots of other options to travel to or from the Channel Islands by air, so ferries aren t that important to me. The table below uses a colour scale to cross examine sentiment towards the two statements: Figure 45 Importance of ferry service Island residents (Source: PA/Condor CSR Survey) This confirms that, not only do the overwhelming majority of Islanders see ferry services as very important, they accordingly disagree that having alternative travel options detracts from that importance. As would be expected, individuals have different reasons for wanting to travel depending on the route. The following charts show travellers main reasons for travel. 72 November 2016

74 Figure 46 Main reason for travel Island residents (Source: PA/Condor CSR Survey) Figure 47 Main reason for travel UK residents (Source: PA/Condor CSR Survey) The graphs above show that customers have a range of reasons for travelling across Condor s routes although holidays and visiting family and friends predominate. 73 November 2016

75 Some participants in the consultation questioned whether the lower levels of reliability and punctuality in 2015 (especially between the UK and Channel Islands) might have permanently impacted propensity to travel by sea. During the round table meetings, representatives of the travel trade attributed a significant downturn in bookings to customers concerns over reliability of the ferry service, and expressed concerns about a poor reputation leading to a slow recovery. However, although 2016 got off to a slow start, bookings have increased steadily over the summer, demonstrating that confidence is returning. Whilst booking levels from the Islands still slightly lag those made in the UK and France, recovery is being seen across all markets. Visitors value ferry travel as an attractive and convenient way to reach the Channel Islands The following chart shows that for visitors from the UK, ferry services are important, although visitors do not attach quite the same degree of importance as Islanders (per Figure 45). Figure 48 Importance of ferry service UK customers (Source: PA/Condor CSR Survey) There are lots of other options to travel to or from the Channel Islands by I prefer to travel by sea when I air, so ferries aren't that important to me can, it's more convenient to me I strongly disagree I tend to disagree I tend to agree I strongly agree I strongly disagree I tend to disagree I tend to agree I strongly agree This was reinforced by our consultation with representatives from the travel trade, where there was an overwhelming view that ferry services are vital for bringing visitors to the islands, which in turn is essential to the Islands economies. This was particularly so for families with young children, where being able to bring a car is particularly attractive, and for older travellers who prefer not to fly. Ferry services are essential for the supply of freight goods to the Islands, and the export of key products Ferry services provide a vital lifeline in bringing freight to the islands, which would not be economical via air (see Section 4.4 below). The number of aircraft movements alone, together with issues around loading / unloading, and restrictions on the freight that could be carried, would also render air impractical for the majority of freight. Similarly ferry services are key to exporting Island goods, such as potatoes from Jersey in early summer. The operations team takes seasonal factors such as this into account when planning schedules, maintenance etc. 74 November 2016

76 Summary The overarching finding of the Review is that ferry services are vital to Island life; they are, quite simply, a lifeline. It is therefore essential that they operate in a sustainable manner. Sustainability first of all depends upon the safety and legislative compliance of the operation; without which either incident or regulatory intervention will prevent their continuation. Thereafter, sustainability means ensuring that the economic model is viable; this is currently ensured by the Operating Agreement s requirement that operators provide a comprehensive service, and cannot simply cherry pick the most profitable elements, a principle supported by an independent Oxera report 32 which outlined the interdependency of services. Viability is also secured by the ROACE provisions within the Operating Agreement which ensure that operators do not earn too much profit at the expense of service levels, and that the investment made by operators is not imperilled by unsustainable obligations. Strategic Need: A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor). 4.2 Population and economic growth in the Channel Islands is predicted to continue at modest levels In order to ensure ferry services continue to be able to meet the needs of the Channel Islands population, the Review team examined key data from the States of Jersey and States of Guernsey. In particular, it was important to understand how the population is expected to grow (or shrink) since changes in Island resident travel are historically closely aligned with population levels. On reviewing population projections from States of Jersey 33, we noted the scenario of net inwards migration of 1,000 people per year. This contributes to growth of 1.0% per annum to 2018 and 0.9% thereafter, and would see Jersey s population rise to 111,700 by The Guernsey Government Actuary Department projects inward migration at 200 per annum, which leads to projected growth of 0.5% in the coming years and 0.4% from At this rate of increase, Guernsey s population will be 66,368 by The supply of ferry services, A policy assessment for States of Jersey 2009, Oxera %20Ferry%20Services%20% %20OXERA.pdf 33 Jersey population projections 2013 release (States of Jersey) 75 November 2016

77 As outlined in Section 2, freight volumes are historically aligned with economic growth and, naturally, the number of people living in the Channel Islands demanding the supply of goods. With Guernsey GDP and Jersey GVA closely tracking UK GDP, future growth in freight volumes can be expected, reflecting both population growth and GDP growth. Strategic Need: A ferry service which can accommodate predicted levels of population and economic growth 4.3 The Islands have ambitious plans to grow visitor numbers Tourism has always been an important part of the Channel Islands economy. From a heyday in the mid-eighties before the deregulation of European skies and growth of low cost airlines, many thousands came for a holiday to Jersey or Guernsey staying in hotels and guest houses many of which have now been converted for residential use. At the same time, the UK staycation product offered in popular locations such as North Norfolk and West Dorset has been transformed in terms of quality and marketing approach resulting in strong recent performance within the UK market 34. There is a determination to reverse the decline which has seen the Channel Islands losing out to other short break destinations, with work by Visit Guernsey and by Visit Jersey (particularly in digital marketing) leading the way in changing perceptions and approach. In support of this, last year Condor delivered 195 million impressions via digital advertising and sent nearly two million promotional s. Early in 2016, Condor confirmed its continuing commitment to spend over 1million per annum marketing the Channel Islands as a tourist destination 35. Guernsey plans to grow visitor numbers by 30% (to 400,000) by This would mean an additional 80,000 visitors per year. Currently approximately 40% of visitors arrive by sea. Jersey plans to increase visitor numbers from 701,000 in 2014 to 800,000 by 2020 and 1,000,000 by 2030 an increase of 43%. Although as outlined above, visitors value ferry travel as an attractive and convenient way to visit the Channel Islands, only a proportion of the growth in visitor numbers will flow through to increased demand for ferry services. This is significantly due to the move to short stay breaks which, as outlined in Section 2, is more aligned 34 Visit Jersey: A Destination Plan for Jersey November 2016

78 with air travel than sea travel. Ferry services are therefore only part of the picture when it comes to supporting tourism growth, with air capacity, bed stock and market competition other key factors. Strategic Need: A ferry service which is able to facilitate predicted levels of visitor growth 4.4 Ferry services remain the only viable option for the overwhelming majority of freight deliveries Condor currently transports almost 900,000 lane metres of freight each year, as well as peripheral freight such as trade cars. This represents approximately 85% of all freight into the Islands with the remainder arriving by LoLo vessel or air. This quantity of freight is broadly equivalent to 900,000 tonnes per year. Even if an aircraft with a capacity of 100 tonnes 36 could land at the Island s airports, this would equate to 9,000 aircraft landings a year, or approximately 25 per day. Furthermore, c.98% of freight is not suitable for transportation by air, due to physical constraints, being too dangerous or being uneconomical. The food retail sector in both Islands wholly relies on a reliable ferry service and their business model fails without it. Condor carries between 35 and 40 temperature controlled trailers to the Islands every day, representing 98% of the temperature controlled product shipped to the Islands. Put simply, life in the Channel Islands depends upon a reliable year round freight service. Strategic Need: A reliable, year round freight service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) 36 A plane not dissimilar in size to a Boeing November 2016

79 4.5 Following significant changes to Island infrastructure, moves in consumer behaviour are likely to increase the importance of just in time freight services As noted above, Condor carries between 35 and 40 temperature controlled trailers to the Islands every day, representing the vast majority of temperature controlled product. This figure has grown considerably over recent years driven by reliance on just in time freight services as described in Section An additional important factor is the growth in online retail. Across Europe, this sector grew 18.4% in 2014 and 18.6% in 2015, and is expected to grow 16.7% in 2016 and 15.7% in In comparison the annual growth rates for all types of retailing range between 1.5% and 3.5% per annum. Feedback from retailers during the consultation exercise was that, in line with general trends, there is also greater use of online channels rather than bricks and mortar stores in the Islands. This move to online channels means more diversity of products, with volumes based directly on consumer demand rather than retailers stock policy. It also means a shift from bulk freight to parcels. Strategic Need: A ferry service which can provide a just in time service for essential food and other freight deliveries 4.6 A just in time freight service creates food resilience issues for the Channel Islands and communications challenges throughout the supply chain As noted above, the Channel Islands have moved entirely to a just in time model for the supply of food and many other essential goods. This has transferred the burden of meeting core Island infrastructure needs onto private companies within the supply chain, such as Condor and logistics operators. LoLo services cannot support this shift effectively due to the higher loading and unloading times associated with this form of freight service versus RoRo. A further consideration is how these changes impact all elements of a supply chain which is already highly complex. Figure 49 shows a typical example. 37 Centre for Retail research 78 November 2016

80 Figure 49 Typical retail supply chain (with overnight delivery) The consultation exercise found that as well as impacting on the operations of logistics operators, retailers are particularly impacted when there are inevitable delays due to weather or other factors. For example, a retailer may schedule staff shift times to restock shelves based on the arrival time of the ferry and the time to unload and drive the trailer to the store. If there is a delay within the supply chain then the retailer needs to be made aware as soon as possible so that staff time can be rearranged accordingly. Strategic Need: Effective communications through the supply chain to support just in time operations 79 November 2016

81 4.7 Conventional ferries are essential for lifeline services for islanders whilst high speed ferry services remain very important, particularly for the visitor economy The relative merits of high speed and conventional ferries has been the subject of lively debate in Channel Islands of late, particularly on social media and in Guernsey. This was prompted by the difficult introduction to service experienced by Condor Liberation, resulting in considerable disruption for many customers, which prompted suggestions that the Islands would be better served, at least on the Northern route, by conventional ferries alone. High speed craft are high performance vessels which, in order to make the necessary speed, generally operate at the upper limits of their capabilities. This makes them more prone to technical breakdown. They are also statutorily limited in the wave height within which they can sail meaning they are more likely to be cancelled because the predicted sea conditions are outside their legal operating limits. However, high speed ferries have an obvious advantage: they are faster. This cuts journey times, making sea travel more attractive 38. Conventional ferries are, by contrast, less prone to technical breakdown and more weather resilient. However, journey times are typically double those of HSC. In light of the above, assessing attitudes towards the HSC and conventional ferries was therefore a critical piece of work for the Review. The PA/Condor CSR Survey tested sentiment towards two contrary positions: I would prefer a conventional ferry service travelling at half the speed 39 instead of a fast ferry to the UK; and I want to be able to travel by fast ferry between the UK and the Channel Islands. The responses to both of these questions (both Islands taken together) are shown in Figure The Independent Report into the Safety, Suitability and Performance of Condor Liberation found that Condor Liberation s exceptional ability to maintain high speeds in heavy seas is advantageous to her operation. 39 It was felt important to specify how much slower a conventional is, in order to gain a genuine response. However, in order to ensure responses were not skewed, the fast ferry proposition was not described as twice the speed. 80 November 2016

82 Figure 50 Preference for high speed or conventional service (Source: PA/Condor CSR Survey) I would prefer a conventional ferry service travelling at half the I want to be able to travel by fast ferry to the UK - the shorter the journey time the better speed instead of a fast ferry to the UK I strongly disagree I tend to disagree I tend to agree I strongly agree I strongly disagree I tend to disagree I tend to agree I strongly agree Perhaps unsurprisingly, given the level of public debate on the matter over the last 12 months, respondents from Guernsey viewed conventional ferries most favourably with 58% stating either a strong or moderate preference for this type of ship. Jersey respondents were less positive with 44%, with only a small minority of UK-based travellers (12%) expressing a preference for conventional ferries. Figure 51 Preference for high speed or conventional service (Source: PA/Condor CSR Survey) 81 November 2016

83 A survey conducted by a member of the Guernsey Condor Facebook Group 40 found that 66% of respondents would be happy to use slower RoPax ferries as an alternative to the fast ferries 41. During the round table meetings, Islanders expressed a strong preference for certainty over speed, and assumed that tourists would feel the same with a view expressed that the ferry crossing was all part of the experience. Similarly, at the roundtable meeting with Jersey ministers on 22 July 2016 the possibility of additional conventional services was raised. In counter balance, the Review found the very strong view from members of the travel trade, supported by the PA/Condor survey data, that a high speed service is essential for tourism. An example was given of a group pulling out of a trip to the Islands as the journey time on Commodore Clipper was too long. This is borne out by responses to the second proposition as demonstrated in the graph below, which shows the preference for a fast ferry service between the UK and the Channel Islands. The responses illustrate how UK-based customers view speed of travel as a priority, with 90% expressing a preference for a high speed service. Islander support for high speed ferries is also considerable, with 59% of Guernsey respondents and 67% of Jersey respondents indicating their interest in high speed crossings. 40 Jonah Lloyd Condor Ferries Survey (Alt to PA Consulting s survey) published 1 September This higher percentage is likely to be influenced by the recruitment processes used and inevitable sample bias. No opposing proposition was tested, and a large proportion of respondents were not current customers. 82 November 2016

84 Figure 52 Preference for high speed service (Source: PA/Condor CSR Survey) The MindMover data shows that from April 2015 to March 2016 overall customer satisfaction with the Northern HSC was higher than the conventional service for eight out of the twelve months, and value for money was rated higher for ten of the twelve months. The high levels of support for both conventional and fast ferries indicate the need for a mixed fleet. This was echoed in a letter to the Review from the Committee for Economic Development in Guernsey which stated: The Committee believes that the operation of both a fast ferry service and a conventional ferry service is essential to meet the needs of consumers. 42 A number of respondents queried whether, in light of the increased likelihood of inclement weather, it was practical to run high speed ferries through the winter on the Northern route. The Committee for Economic Development in Guernsey noted that there may be scope to replace operation of fast ferry services with a convention (sic) ferry (ropax) in the winter months 43. Conventional fast ferries, such as Cap Finistere which operates between Portsmouth and Bilbao, apparently combine the best of both worlds i.e. a higher speed (c25-29 knots) along with improved ability to travel in heavy seas. However, fast conventional ferries are unlikely to be suitable for Channel Islands ferry services, as is explained in Section Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

85 Strategic Need: A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. 4.8 Although trade-offs sometimes need to be made between the needs of resident travel, freight delivery and tourism, no one sector is of consistently higher or lower priority In serving the Channel Islands diverse needs in terms of essential freight deliveries, lifeline Islander services, and supporting the visitor economy, there will, from time to time, be competing priorities. This is particularly the case when there is service disruption, whether due to weather or other factors. In the PA/Condor CSR Survey: 77% of Islanders agreed that the most important part of our ferry services is regular and reliable delivery of urgent freight like food and other daily essentials 87% of Islanders agreed that good passenger ferry services are very important to my family's way of life 91% of Islanders agreed that the future of our tourism industry relies on ferry services. The balance of competing needs between resident travel, freight delivery and tourism was discussed during the round table meetings with it proving impossible to reach a conclusion on prioritising any one of these competing needs. For example, one view expressed was that tourism should be the priority, and the rest would follow. However, another view was that freight for food was a priority, then tourism, then Islanders. A further view was that Condor currently focuses on tourism at the cost of lifeline services, and that this should be the other way round. The inevitable conclusion from analysing this data and the qualitative feedback is that, quite simply, everything is a priority, whether it be: The vital contribution that tourism makes to the Islands economies The essential role of freight delivery in keeping the Islands supplied with food and other essentials The needs of islanders to travel for work, personal, social, recreational or other reasons. Serving such distinct sectors in a small market with equal efficacy is undoubtedly a challenge, particularly given the considerable inherent physical and other structural constraints outlined in Section 2. Unlike airlines, which operate large fleets of often 84 November 2016

86 identical (or at least broadly similar craft), Condor s ships are individual designs, with different characteristics, to meet these different priorities. The ability to flex between the differing priorities will inevitably therefore be made easier by having the most flexible fleet possible, enabling passengers to be carried on freight services and vice versa wherever possible. Strategic Need: A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times 4.9 Jersey and Guernsey have some differing priorities when it comes to sea links Although Jersey and Guernsey share many needs when it comes to ferry services, the Review process confirmed that there are a number of differences between the priorities of the two Islands. Whereas, at a very general level, Jersey particularly values its links with the European mainland, Guernsey tends to attach more importance to UK links. This was confirmed in the submission from the Committee for Economic Development in Guernsey which stated that: All routes to and from Guernsey are important, especially the links to the UK (the Northern route) and links to and from Jersey. We also increasingly see that links to St Malo (the Southern route) will become more important, especially in the context of developing and promoting the tourism sector 44. Discussions in the consultation meetings tended to reflect the emphasis placed by Guernsey and Jersey on northern and southern routes respectively. During the consultation events, Guernsey residents noted that Jersey had enjoyed significantly more investment in air travel, and was much better served (particularly by the low cost airlines). They therefore saw an inter-island ferry service as a way of making the low cost air services accessible to Guernsey both for outward travel by residents and inwards travel by visitors. In the Condor/PA CSR Survey respondents were asked about how they had travelled most frequently with Condor in the last 12 months. 59% of Jersey respondents had travelled to the UK, whereas for Guernsey it was 67%. However, 85% of Jersey respondents had travelled to France, whereas for Guernsey it was 58%. An example of differing needs but a common interest is in relation to the highly important need for sports associations from both Jersey and Guernsey to travel off 44 Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

87 island for events and competitions, which currently is not adequately serviced by either the sea or air travel options. However, with a combined population of just 164,000, and a ferry service run on an entirely commercial basis without subsidy 45, compromise is necessary in order to ensure that the best blend of priorities is achieved. Finding the optimal blend was the purpose behind the three-way negotiations which took place between 2012 and 2014, leading to the signing of the Operating Agreement in Jersey. The extensive discussions between States of Jersey, States of Guernsey and Condor considered how best to balance the needs of freight, passenger and tourism, and to ensure that Jersey and Guernsey both received the very best possible service given their slightly differing priorities. Jersey and Condor signed the Agreement in good faith that Guernsey would do the same once legislative changes were in place, with the Operating Agreement stating It is noted that a separate agreement, which will be similar in substance to this Agreement, will be entered into between the Operator and the States of Guernsey 46. Strategic Need: A service that recognises the differing needs of the Islands 4.10 There is extremely limited tolerance for cancellations to services other than those imposed by weather or other external factors As outlined in Section 3, confidence in Condor Ferries services was significantly impacted by the disruption caused in 2015 by the difficult first year experienced by Condor Liberation, and the impact to conventional and freight services of having pollution-reducing scrubbers installed with the aim of complying with EU Regulations on reducing sulphur emissions. Customers have historically accepted that operating ferry services in the Channel safely means respecting the impact of the weather and sea conditions. But whilst there has continued to be a degree of recognition that extreme weather and other factors beyond Condor s control can cause disruption, recent history has led to heightened intolerance particularly for technical or operational disruption. During the consultation several people noted that living on an Island carries the associated issue of being reliant on transport links, and that those transport links will 45 Indeed Condor pays almost 10m per annum to the States in harbour dues each year 46 Recital (B) of the Operating Agreement 86 November 2016

88 be affected by weather and occasional technical issues. Overall, there was a general acceptance of these occasional disruptions. A survey conducted by a member of the Guernsey Condor Facebook Group 47 confirmed poor levels of perception relating to reliability with 84% of respondents using the word unreliable to describe the company. Independent research conducted by MindMover shows how strongly customer satisfaction tracks service reliability, even when that reliability is weather affected. Figure 53 Customer Satisfaction Measures (Source: MindMover survey and analysis) Consultation with representatives from the travel trade emphasised the importance of reliability on their business, particularly in promoting repeat business. As evidence of this they reported a downturn in bookings in 2016 as a result of the difficulties in Several reported how they had lost business, and one described it as their worst year. Strategic Need: A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) 47 Jonah Lloyd Condor Ferries Survey (Alt to PA Consulting s survey) published 1 September November 2016

89 4.11 There is extremely limited tolerance for delays to services other than those imposed by weather or other external factors Many of the factors which influence (in)tolerance of reliability (i.e. the extent to which services are affected by cancellations) are also at play in relation to attitudes towards punctuality of services (i.e. the extent to which services operate to the scheduled times). As with cancellations, it is broadly accepted that particularly bad weather can lead to disruption, and that this is part of Island life. Channel Islanders are generally well aware that high speed ferry services are particularly vulnerable to weather disruption, but there is extremely limited tolerance for technical or operational disruption. This has been heightened recently because of the difficulties experienced in It was therefore not surprising that 71% of respondents to the survey conducted by a member of the Guernsey Condor Facebook Group felt that ferry services had got worse in the last year 48. Whilst customers are more tolerant of delays than cancellations, there is still a significant impact particularly if the delay impacts on onward travel arrangements. As with cancellations, there was a strong expectation amongst Islanders that effective contingency plans would be in place, good communications, and appropriate and consistent care for customers. Strategic Need: A passenger service which operates with minimal delays other than those imposed by external factors (e.g. extreme weather) 4.12 There is an expectation that there should be enough resilience and contingency to eradicate the impact of any service disruption A recurring theme from respondents to the consultation, echoing media and political commentary over the last eighteen months, was the desire for Condor to have back up in the event of service disruption. However, quantifying what this back up should look like was more difficult. Despite Condor s contingency plans and fleet maintenance schedule being published on its website, there was low awareness of them. 48 Jonah Lloyd Condor Ferries Survey (Alt to PA Consulting s survey) published 1 September November 2016

90 Sentiment has undoubtedly been impacted by the move from two to one high speed ferry on the Northern Route and there was a common view that the solution was to buy another boat. The rationale for the move from a fleet of five vessels to four, as outlined in Section 2, was not well understood. The Committee for Economic Development in Guernsey wrote that it would wish to see another vessel on the Northern Route (perhaps a RoPax vessel). This would increase resilience and consumer choice. 49 Parallels were also drawn with other transport modes although there was limited understanding of the different operating models of, for example, airlines which operate a large fleet of identical or similar planes operating on short routes, compared with a small fleet of ships with a relatively long journey time, which has much less flexibility for contingency. Consistent with customer feedback, the consultation events highlighted a demand for clear information about how customers would be looked after in the event of cancellations or delays. Although the Review found an expectation of enough resilience and contingency to eradicate the impact of service disruption, unless there is an entire reserve fleet on standby in the Channel Islands, eradication is an impossibility, therefore the identified Strategic Need describes the objective as to minimise disruption. Strategic Need: Sufficient resilience and contingency to minimise the impact of service disruption 4.13 There is general satisfaction about the range of destinations offered There was a general view throughout the consultation that the current mix of routes is broadly right, and that the focus should be on delivering a reliable service with a convenient timetable through these routes. Key factors for choice of destination were: For all customers, a reasonable crossing time with effective onward travel links For the travel trade, access to a suitable catchment area of customers within reasonable travelling distance For freight customers, suitable port facilities 49 Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

91 However, a number of people consulted felt there could be advantages to moving sailings back to Weymouth, particularly because of the reduced sea journey length. Similarly, just over a third of respondents to the survey conducted by a member of the Guernsey Condor Facebook Group 50 expressed a preference for sailing to Weymouth. The combined scores for current ports Poole and Portsmouth was 27%, with Southampton scoring 15% and over 20% of respondents having no preference. The Committee for Economic Development in Guernsey asked that services should be retained to Poole, with an open mind on Weymouth 51. Preferred ports analysis research undertaken by Condor Ferries in 2011, which explored issues such as connectivity, road networks, facilities and crossing time, found that residents in Jersey, Guernsey and the UK all preferred Poole over Weymouth. Section explores what would need to change for sailings to Weymouth to be a viable consideration. Strategic Need: Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors 4.14 Port facilities and services in the Islands are poor compared to Island airports, and this impacts on customer experience and visitor perception As noted in Section 2, air travel has become increasingly popular in the last twenty years. There has consequently been considerable investment in both Islands to support this, whether in terms of capital investment in airport infrastructure, operational underwriting of Aurigny, or route subsidy in Jersey. As a result of this investment, Jersey Airport has modern and comfortable facilities, including retail and catering outlets. This has led to high levels of customer satisfaction with the latest data for Jersey Airport (April-June 2016) reporting as follows 52 : 50 Jonah Lloyd Condor Ferries Survey (Alt to PA Consulting s survey) published 1 September Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August Source: Ports of Jersey 90 November 2016

92 Figure 54 Customer Satisfaction Jersey Airport (Source: Ports of Jersey) Service aspect % very satisfied/satisfied Check-in experience 85% Security experience 79% Eating & drinking offering 72% Sufficient seating 76% Overall airport appearance 96% Overall experience at Jersey Airport 79% Further investment is planned in Jersey as outlined in the launch of the Jersey Airport Master Plan in July 2016 which will see 65m invested over the next decade in the works including the construction of a new arrivals facility, relocation of the airport fire service and improvements to the passenger pier. At Guernsey, a 30m investment in lengthening the runway is at the early stages of consideration. In contrast, harbours and port facilities have had much lower levels of investment. From 2011 to 2015 Jersey made capital investments of 21.5m in the airport and 16.7m in harbours. Ports of Jersey does not currently conduct customer satisfaction research at the harbour. The following table shows investment in the airport and harbour at Guernsey from 2008 to 2015: Figure 55 Guernsey Ports Investment (Source: States for Guernsey Accounts) Harbour Airport ,395, , ,351 6,407, ,773,403 65,408, , , , , ,002,237 1,530, ,923 1,350, ,750,500 1,270,194 Total 21,811,677 77,900, November 2016

93 Looking ahead, Jersey Ports is due to publish its Harbour Master Plan by the end of This may see some investment in RoRo supporting infrastructure, and consideration of accommodating larger craft. The Guernsey ports masterplan dates back to January 2013 and it has been acknowledged that this plan is aspirational, and it is unlikely that there will be any significant investment in the port in the next 5 to 10 years 53. MindMover data shows that from 2015 to 2016 satisfaction with time taken to board and ease of getting on-board has decreased and become a priority area for improvement. During the consultation exercise, many people commented on the port facilities and services. Issues that arose included: A lack of, or poor, facilities for example toilets and catering Poor facilities for those meeting arriving passengers A poor user experience for foot passengers for example with passengers having to wait a long time to disembark, or having a long and exposed walk to the terminal facilities Disembarkation delays are a particularly significant issue for passengers arriving into Jersey from France. As noted by the Jersey Consumer Council Condor Group, the move to 100% passenger checks (which has been implemented as a result of the raised security threat level), combined with the fact that immigration and customs staff are shared with the airport means that many consultees had faced waits of up to an hour at border controls. Strategic Need: Port facilities and immigration services which support an excellent end to end customer experience 4.15 Some Islanders find the current schedule for Channel Islands to UK travel unappealing and inconvenient During the consultation exercise, Island-based travel operators stated that the current schedule was broadly satisfactory for bringing visitors to the Islands, although tidal conditions did sometimes require an uncomfortably early departure from the UK. Similarly hoteliers were broadly happy, although again very early arrivals could create issues (this had been a particular issue during 2015 when Condor Liberation operated double rotations meaning an arrival into Guernsey as early as 0630 some days). 53 Source: Ports of Jersey / Guernsey Harbour Master 92 November 2016

94 Some individual Island-based travellers (who contributed at the consultation events, including the Jersey Consumer Council Condor Group and via a small number of individual written submissions) were, however, less content with the timetable, commenting that an overnight stay in Poole was necessary before an early morning sailing to the Island, and with sailings from the Islands sometimes arriving relatively late in the evening, an evening stay in Poole might also be necessary prior to any lengthy onwards travel. Similarly, the Committee for Economic Development in Guernsey commented: Ideally departure times on the Northern route should be early morning from Guernsey (say 10am) to allow arrival into the UK at a reasonable time for onwards travel in the UK. This would be required both for locals visiting the UK and tourists alike. It would also provide a reasonable check out time for local hotels, selfcatering and campsites. This would be of great benefit to the local tourism industry. Likewise a return journey to Guernsey with a late afternoon arrival time would be preferable. 54 Representatives of the travel trade were less exercised about this, with only very early or late sailings causing significant difficulties, Basing one or more of the ferries (which operate between the Channel Islands and the UK) in either Jersey or Guernsey would enable Condor to offer sailing times to the UK which are attractive to Island residents. Service Consideration: Morning departures from the Channel Islands to the UK and afternoon departures from the UK to the Channel Islands 4.16 Inter-island travel is a growing concern for residents and the business community A number of market changes have impacted inter-island travel over the last two years. These have included the loss of the code share between Blue Islands and Aurigny and the new franchise arrangement between Blue Islands and FlyBe, which have cumulatively led to a reduction in the number of flights. In addition, as a result of moving from two high speed ferries to one on the Northern route, there has been a reduction in the number of inter-island sailings offered by Condor Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August The planned schedule for summer 2017 includes an increase in the number of Inter-Island sailings of 12% with daytrips up 59% (Guernsey to Jersey) and 94% (Jersey to Guernsey) 93 November 2016

95 It was not surprising therefore that inter-island travel came up frequently during the round table meetings and, in particular, participants expressed interest in a timetable that would allow meaningful day trips between the islands. Ongoing issues with the reliability of the inter-island air service has heightened this need. A number of discrete inter-island travel needs were identified: Daily commuting, or other business travel Sporting fixtures for islanders Day trips for tourists (for example, who are staying on one island for a week, and taking a day trip to the other island) Island hopping holidays, where visitors spend several days on each island. However, propensity to pay for such a service was lower than the enthusiasm for the concept: just 38% of Jersey residents and 54% of Guernsey residents would like a more regular inter-island service even if it meant paying more. Figure 56 Inter-island services Island residents (Source: PA/Condor CSR Survey) Nonetheless, only 14% of Island residents felt that, if Condor were to change only one thing about its service, a new inter-island service would be their top priority. The Committee for Economic Development in Guernsey wrote: the removal of double rotations during July and August has reduced the scope for daytrip to and from Jersey and noted that inter-island sporting fixtures can be adversely affected by the availability of services between the islands. We understand that Condor has worked hard to fill these gaps where it can, which is appreciated. It added that it would like to see consideration of a passenger only fast ferry service on the inter- Island route Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

96 These comments highlight the inter connected nature of schedules: earlier we noted that double rotations caused difficulties for the accommodation sector which found it hard to welcome guests arriving on very early sailings, yet the removal of those double rotations has impacted on inter-island travel. Strategic Need: An inter-island service that enables day trips for business, leisure or tourism 4.17 There is only very limited demand for a premium service if this would mean higher prices The PA/Condor CSR Survey and the consultation programme undertaken both found very limited appetite for a more luxurious service, if this meant that prices would increase. In the survey, this was tested by using two opposing statements: I would pay for a more luxurious on-board experience with better seats and services; and I would like basic no frills ferry services at a lower price. The following charts show that Island residents would strongly prefer a no frills service. This preference is less marked for UK customers, reflecting perhaps a greater proportion of leisure/holiday travel for UK customers. Figure 57 Service preferences Island residents (Source: PA/Condor CSR Survey) I would pay more for a more luxurious onboard experience with better I would like basic no frills ferry seats and services services at a lower prices I strongly disagree I tend to disagree I tend to agree I strongly agree I strongly disagree I tend to disagree I tend to agree I strongly agree November 2016

97 Figure 58 Service preferences UK Customers (Source: PA/Condor CSR Survey) I would pay more for a more luxurious onboard experience with better I would like basic no frills ferry seats and services services at a lower prices I strongly disagree I tend to disagree I tend to agree I strongly agree I strongly disagree I tend to disagree I tend to agree I strongly agree This was supported by the roundtable meetings, where the general view was that the current service style offered on-board meets needs. Participants felt that some aspects of service delivery would benefit from attention (for example, the length of queues for food). The survey conducted by a member of the Guernsey Condor Facebook Group found that 75% of people rate the food and drink as average, good or excellent. 87% of respondents rated the Duty Free and Shop at these levels, with 70% of respondents scoring Seating & Comfort and 86% scoring Toilet Facilities similarly highly. Within the broad preference for a basic, no frills service, there were some specific suggestions for augmentation, which are discussed in Section 4.18 below. Service Consideration: A simple service delivered excellently 4.18 Some enhancements to the service could increase the appeal of ferry travel As discussed above, the current style of service meets the majority of needs. However, during the consultation programme, a number of suggestions for improvement were made. There was a consistent view that on-board Wi-Fi is becoming expected through the entire journey (not just the current service that is only available in ports) mirroring the general trend for Wi-Fi to be available in public places (e.g. hotels and cafes) as well as while travelling. Wi-Fi would be particularly valued since 3G reception is unavailable for most of the crossing time. There were mixed views about whether this should be a separately charged service or should be included within the ticket price, although it was recognised that providing free Wi-Fi was the general trend. A small number of attendees expressed a desire for an improved dining experience on the southern routes, where a lunch or evening meal could be part of the trip. 96 November 2016

98 There were requests for a more effective way of being able to book seats on board particularly to allow families and groups to be assured of sitting together, or to be able to select a particular part of the boat to sit in (e.g. a window seat, or to be sure of a table). This was echoed in the contribution from the Committee for Economic Development which expressed concern about: the lack of an ability to be able to book specific seats on a particular sailing. 57 Several attendees also requested more effective and proactive communication, particularly during delays and disruption. Examples were given of where communications around delays had not been received. Suggestions included clearer and more accessible information on expected arrival times (significantly augmenting the vessel position function available on the Condor website) for both passengers and those meeting them, and clearer and more timely communication about disruption, the implications of this, and alternative arrangements, to allow customers to make informed decisions and consider the knock-on implications. Service Consideration: Service enhancements to meet the needs of 21 st century travellers 4.19 The shift towards consumer power means that customers have increased expectations of receiving a great service experience and value for money Whereas customers used to be content sitting at the receiving end of brands delivering the product or service they decided to make available, on terms they set and controlled, consumers are now enabled by information and technology to be far more demanding. The omni-channel retail world of the web, social-media, mobile, and chat sees them influenced and directed by the opinions and experiences of each other, not what brands tell them. This creates a general trend towards demanding higher levels of service, even if there is increased cost: 57 Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

99 Figure 59 Attitudes to the cost of excellent service (Source: Institute of Customer Service, 2016) This is in contrast, however, with the evidence outlined in Section 4.17 which notes that Condor customers, particularly Islanders, prioritise lower cost. The availability of travel websites means that people are accustomed to finding offers, including by booking well ahead of time, and will be increasingly reluctant to pay the standard price. In reality, of course, customers want both: high quality and low cost; a tradeoff which is very challenging for service providers. Commenting on increasing sensitivity towards pricing, the Committee for Economic Development in Guernsey noted that increasing competition, both in terms of alternative ways to get to/from Guernsey (i.e. by air) and competition for travel to alternative tourism destinations can make Guernsey uncompetitive. 58 During the consultation exercise several people felt that the value for money of the service had reduced. They perceived that fly-drive is cheaper than ferry travel. Associated with this were concerns about the availability of discounts. Customers are more aware of their rights in terms of claiming compensation when services are disrupted (unlike some operators, Condor has a policy of publicising customer rights and paying compliant claims on first request). Social media has increased customer expectation of immediate resolution of concerns, with some customers expecting a 24 hour response service. During the 58 Letter from President Ferbrache (on behalf of ED Committee) to Paul Luxon, 10 August November 2016

100 consultation customers stated that they generally enjoyed a prompt response when using social media, but that this raised their expectation of the same speed of response when using other channels (for example if ing a complex complaint or a claim for compensation). All of these factors combine to place an upwards expectation on service levels and a downwards expectation on price. Strategic Need: A service offering that balances value for money and high levels of service 99 November 2016

101 4.20 Summary The following tables summarises the Review Findings and the identified Strategic Needs and Service Considerations. Finding Strategic Need Ferry services will remain a critical part of the Islands infrastructure Population and economic growth in the Channel Islands is predicted to continue at modest levels The Islands have ambitious plans to grow visitor numbers Ferry services remain the only viable option for the overwhelming majority of freight deliveries Following significant changes to Island infrastructure, moves in consumer behaviour are likely to increase the importance of just in time freight services A just in time freight service creates food resilience issues for the Channel Islands and communications challenges throughout the supply chain Conventional ferries are essential for lifeline services for islanders whilst high speed ferry services remain very important, particularly for the visitor economy Although trade-offs sometimes need to be made between the needs of resident travel, freight delivery and tourism, no one sector is of consistently higher or lower priority Jersey and Guernsey have some differing priorities when it comes to sea links There is extremely limited tolerance for cancellations to services other than those imposed by weather or other external factors There is extremely limited tolerance for delays to services other than those imposed by weather or other external factors There is an expectation that there should be enough resilience and contingency to eradicate the impact of any service disruption There is general satisfaction about the range of destinations offered Port facilities and services in the Islands are poor compared to Island airports, and this impacts on customer experience and visitor perception A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) A ferry service which can accommodate predicted levels of population and economic growth A ferry service which is able to facilitate predicted levels of visitor growth A reliable, year round freight service A ferry service which can provide a just in time service for essential food and other freight deliveries Effective communications through the supply chain to support just in time operations A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times A service that recognises the differing needs of the Islands A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) A passenger service which operates with minimal delays Sufficient resilience and contingency to minimise the impact of service disruption Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors Port facilities and immigration services which support an excellent end to end customer experience 100 November 2016

102 Inter-island travel is a growing concern for residents and the business community The shift towards consumer power means that customers have increased expectations of receiving a great service experience and value for money An inter-island service that enables day trips for business, leisure or tourism A service offering that balances value for money and high levels of service Finding Service Consideration Some Islanders find the current schedule for Channel Islands to UK travel unappealing and inconvenient There is only very limited demand for a premium service if this would mean higher prices Some enhancements to the service could increase the appeal of ferry travel Morning departures from the Channel Islands to the UK and afternoon departures from the UK to the Channel Islands A simple service delivered excellently Service enhancements to meet the needs of 21 st century travellers In consultation with the Islands Advisory Panel, the Strategic Needs have been categorised according to whether they are: Critical to national infrastructure; likely to be essential to the continuation of Island life; over an extended period of time, un-met critical needs are likely to have serious consequences. Key for economic health and social wellbeing; likely to support a prosperous Island society; over an extended period of time un-met key needs are likely to impact on quality of life on the Islands. Important for choice and growth; likely to support convenience and comfort; over an extended period of time un-met important needs are likely to impact on usage of ferry services and affect dependent sectors on the Islands. 101 November 2016

103 Strategic Need Priority Level Critical Key Important A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) A ferry service which can accommodate predicted levels of population and economic growth A ferry service which is able to facilitate predicted levels of visitor growth A reliable, year round freight service A ferry service which can provide a just in time service for essential food and other freight deliveries Effective communications through the supply chain to support just in time operations A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times A service that recognises the differing needs of the Islands A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) A passenger service which operates with minimal delays Sufficient resilience and contingency to minimise the impact of service disruption Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors Port facilities and immigration services which support an excellent end to end customer experience An inter-island service that enables day trips for business, leisure or tourism A service offering that balances value for money and high levels of service 102 November 2016

104 5 Service alignment Comprehensive Service Review A key element of the Comprehensive Service Review, as set out in the Operating Agreement, is analysing the extent to which the Operator s services are aligned with the Strategic Needs of the States. In Section 4 we summarised how the Review process led to a number of key Findings which, in turn, enabled the identification of the Strategic Needs. In the section which follows, we conduct an alignment analysis. Alignment is assessed using the following scale: Service not aligned with Strategic Need Service only partially aligned with Strategic Need Service moderately aligned with Strategic Need, opportunities to improve alignment Service largely aligned with Strategic Need, some refinements would lead to complete alignment Service completely aligned with Strategic Need The alignment analysis is conducted in order of priority: first the extent to which Condor s services are aligned with critical Strategic Needs is examined, followed by those needs which are key and finally important Strategic Needs. 103 November 2016

105 5.1 A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) The Review found that ferry services will remain a critical part of the Islands infrastructure, leading to the Strategic Need for a safe, compliant and sustainable service which provides lifeline freight and passenger services. Safety and the management of risk is culturally embedded as Condor s first priority. This is overseen by the BRAC subcommittee of the Condor Board. All Condor Board, management and executive meetings begin with a safety review. When concerns about safety are raised, these are always appropriately investigated. When required, third party independent experts are commissioned to undertake reviews. A good example of this is the report commissioned from world-leading naval architects Houlder Ltd into the safety, suitability and performance of Condor Liberation. Compliance is ensured through rigorous adherence to all relevant national and international standards and guidelines. The Jersey Harbour Master Benchmarking Review 59 provided further reassurance of best practice by confirming that Condor has acted as a prudent operator over the introduction of Condor Liberation and its operations from April to September The sustainability of ferry services is protected via the inclusion of ROACE tramlines within the Operating Agreement. These tramlines set the upper and lower boundary for the acceptable level of return which the Operator of ferry services can generate. This ensures that a balance is struck between the need for the Operator to generate a reasonable return on its investment, whilst making sure that customers benefit from increased service and/or reduced prices should returns rise above the upper tramline. The service currently provided is comprehensive. There is a mixed fleet conventional and high speed passenger services together with freight. Key destinations are served, aligned to the needs of both residents and visitors. Performance substantially fulfils the requirements of the Operating Agreement. Condor s service includes a full schedule of sailings for freight and passengers (resident and visitor). It is therefore concluded that this Strategic Need is being met. Strategic Need Priority Alignment A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) Critical 59 Which assessed Condor s performance between the introduction of Condor Liberation and September November 2016

106 5.2 A reliable, year round freight service The Review found that ferry services are the only viable option for the overwhelming majority of freight deliveries to the Islands, creating the need for a reliable year round service. The current service operates year-round, with very high levels of reliability. As was outlined in Section Commodore Goodwill, which operates the overnight freight service from the UK to the Channel Islands has performed at 97% reliability over the term of the Operating Agreement. This high level of performance is critical to maintaining lifeline freight services. This excellent reliability was recognised by attendees at the various consultation events, and in the consultation with freight customers with comments including: the service as a freight user is excellent the current service works very well It is therefore concluded that this need is fully met. Strategic Need Priority Alignment A reliable, year round freight service Critical 105 November 2016

107 5.3 A ferry service which can provide a just in time service for essential food and other freight deliveries The Review found that, following significant changes to Island infrastructure, moves in consumer behaviour are likely to increase the importance of just in time freight services. This creates a need for a reliable just in time service for essential food and other freight deliveries. The current daily service with an early morning arrival into the Islands (and the UK) suits a wide range of freight customers, and when combined with the unloading times offered by a RoRo service allows morning deliveries to stores in both Islands. A high degree of focus is given to ensuring that freight deliveries are prioritised, in support of the supply chain. When delays do occur, Condor s freight team works closely with logistics customers to reprioritise individual loads, ensuring that essential goods make it to the Channel Islands as soon as possible. Punctuality of the Commodore Goodwill service (84% of sailings arrived within 30 minutes of scheduled arrival) is the second highest in the fleet, with the significant majority of delays being for reasons outside Condor s control and only 2% being for technical reasons. It is therefore concluded that this Strategic Need is fully met by Condor s service. Strategic Need Priority Alignment A ferry service which can provide a just in time service for essential food and other freight deliveries Key 5.4 A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. The Strategic Need for lifeline services, outlined in 5.1 above, depends upon the continued provision of sailings operated by Condor s conventional ferries, Commodore Goodwill and Commodore Clipper. The Review also found a Strategic Need for high speed travel from the Channel Islands to and from the UK and France. These services are currently provided by Condor Liberation and Condor Rapide. As noted in Section 4, it has been suggested that Condor consider investing in a fast conventional in order to combine higher speed crossings with improved sea handling. However, maritime architecture means it is not simply a matter of adding more power to the same ship design since, whilst this would improve acceleration 106 November 2016

108 and raise top speed slightly, there would also be a large increase in vibration, wear and fuel consumption. In essence, there comes a point in the power versus speed relationship where, regardless of how much power is applied, chronic inefficiencies are created. Instead, it is necessary to design a hull for the increased speed. Like a racing car, it must be lightweight, slim, long and deep. For example, Brittany Ferries fast conventional ferry, Cap Finisterre, is 205m x 25m (achieving 28knots) whereas Commodore Clipper is 130m x 24m (achieving 18knots). It would be difficult to fit a vessel of this nature 60 into the Island ports given the length and draft constraints of the Channel Island ports (130m maximum length with maximum draft of c.5.5m). A ferry of this size would be very narrow and would therefore have insufficient capacity, as well as increased fuel consumption and sea keeping which is likely to be adverse when compared with that of Commodore Clipper. It is therefore concluded that, at present, fast conventional ferries do not represent a viable option for Condor Ferries. The services provided by Condor Liberation and Condor Rapide are the most effective way of meeting the Strategic Need for high-speed travel and it is concluded that Condor s services are fully aligned with it. Strategic Need Priority Alignment A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. Key 5.5 A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times The Review found that although trade-offs sometimes need to be made between the needs of resident travel, freight delivery and tourism, no one sector is of consistently higher or lower priority. This creates the need for a flexible fleet that allows balancing between these different needs at different times. There is already a reasonable degree of flexibility with the fleet. Condor Rapide and Condor Liberation cover each other s services during winter dry docks, Commodore Goodwill can carry unaccompanied cars, Commodore Clipper can carry passengers when weather (or other factors) disrupt the HSC service on the Northern 60 Extrapolating from Cap Finisterre, this would give a beam of c.15m against Commodore Clipper s current 25m 107 November 2016

109 Route, and both Condor Rapide and Condor Liberation can carry light freight (although Condor Liberation can carry significantly heavier freight than Condor Rapide). However there are limitations, not least those imposed by statutory requirements. For example, products which are classified under the IMDG code cannot be carried at all on services operated by HSC, and limitations are enforced on their carriage on RoPax services. Similarly, Commodore Goodwill is only permitted to carry a maximum of 12 passengers (who are invariably freight drivers). All of this limits the flexibility that Commodore Goodwill can offer the fleet for passenger services, and that passenger services can offer to freight. It is therefore concluded that the service is not completely aligned with this Need. Strategic Need Priority Alignment A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times Key 5.6 A ferry service which can accommodate predicted levels of population and economic growth The Review found that population and economic growth in the Islands is predicted to continue at relatively modest levels. The ferry service accordingly needs to be able to accommodate that growth. In order to assess the extent to which Condor s services are aligned with this need, detailed future capacity modelling has been carried out as part of this Review. Using the current schedule as a template, capacity was projected to the end of the financial year. Current travel volumes were then inflated to take account of: Predicted economic growth Population growth predictions Tourism growth predictions This modelling was applied to: The northern passenger route (measured by number of passenger vehicles) The southern passenger route (measured by number of passenger vehicles) Overnight freight services i.e. Commodore Goodwill southbound and Commodore Clipper northbound (measured by meterage) 108 November 2016

110 Northern Route capacity On the Northern passenger route we see the highly seasonal nature of demand, with capacity generally mirroring the demand shape, albeit with significant headroom for growth. Figure 60 Northern route capacity and demand analysis (Source: Condor analysis) It is clear that, on the Northern route, capacity is available until at least On a small number of days in August 2018 and 2019, demand is predicted to come very close to capacity. The Double Rotation option has been overlaid to demonstrate how additional capacity could be scheduled to meet this (this is also addressed in Section 5.11). The modelling does not take account of how factors such as price incentives could be used to encourage customers to switch travel days, which could also be used to smooth demand. 109 November 2016

111 Southern route capacity A similar exercise was carried out for the Southern Route using the current schedule as a template. Figure 61 Southern route capacity and demand analysis (Source: Condor analysis) The charts above show that there is ample capacity within the foreseeable horizon. Indeed, continuing this modelling for a full five years (not shown above) demonstrates a continuing over supply of capacity. This gives an opportunity to consider how to optimise alignment of capacity with demand on the Southern schedule, potentially enabling greater investment in other areas of the service. Freight capacity As set out in Section 2.1, once external factors (such as the removal of LVCR and consolidation within the logistics market) are stripped out, freight demand is seen to be largely aligned with population and economic growth. 110 November 2016

112 Condor has therefore modelled current freight volumes and applied an uplift to take account of these factors (as a surrogate for GDP), as well as a proportion of predicted tourism growth (since it can be expected that a larger number of visitors will require additional food and other goods). Figure 62 Freight services capacity and demand analysis (Source: Condor analysis) As can be seen above, there is sufficient capacity on freight services, provided these are not also used for passenger cars (as a contingency for high speed passenger services). As a result of this modelling, the Review concludes that this need is met. In order to ensure that it continues to be met, alignment should be reviewed at the next Comprehensive Service Review as population projections will begin to translate into actual numbers. Strategic Need Priority Alignment A ferry service which can accommodate predicted levels of population and economic growth Key 111 November 2016

113 5.7 A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) The Review found that there is extremely limited tolerance amongst customers for cancellations to services other than those imposed by weather or other external factors. This creates a need for a service that is capable of operating with virtually no cancellations other than those imposed by external factors such as extreme weather. Reliability was the dominant theme during the consultation exercise, and customer satisfaction with reliability is shown to correlate strongly with overall satisfaction. Despite some of the more vociferous feedback received during the consultation period, and social media commentary, the statistical analysis set out in Section 3 shows that the service is generally well aligned to the need for a reliable service, particularly given the improvements in 2016 over service levels in Condor Liberation has seen a particularly strong improvement in reliability in 2016 with performance in April, May, June and July consistently above 90% and two months at 98% (against an average across the term of the Operating Agreement of 89%). Condor Rapide reliability over the term of the Operating Agreement has been 98%. Commodore Clipper, which also carries passengers, has operated at 95% reliability. Weather remains a major factor for HSC service cancellations, accounting for 85% of Condor Rapide and 38% of Condor Liberation cancellations. 7% of the cancellations to Commodore Clipper s service were weather related, however this number is distorted because of the number of sailings cancelled in August 2014 following the grounding incident in July When these are discounted from the figures, it is found that 27% of Commodore Clipper cancellations were due to weather. An independent review of Condor s operational processes, conducted by the Jersey Harbour Master found that the company s processes, procedures and decision-making is both formal and recognisable as comparable with a Person seeking in good faith to perform its contractual obligations and, in so doing and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in the same type of undertaking under the same or similar circumstances and conditions. In reviewing the reliability of Condor s services between the introduction of Condor Liberation and the end of September 2015, the Harbour Master found that operational performance has been down on 2014 and the average achieved in recent years. This is largely based on weather (and in particular its incessant nature) 112 November 2016

114 although teething issues with a new vessel are also attributable. The Liberation has still achieved nearly 90% of its scheduled arrivals and the overall schedule achievement rate of 97% is only slightly down on Nevertheless, there are undoubtedly opportunities to raise reliability levels and deliver more consistently high levels of service. The service is therefore concluded to be largely (rather than fully) aligned with this Strategic Need. Strategic Need Priority Alignment A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) Key 5.8 Sufficient resilience and contingency to minimise the impact of service disruption Cancellations are relatively rare occurrences; over the term of the Operating Agreement, taking into account all factors (including weather), just 4% of services were cancelled. Nevertheless, having in place sufficient back up plans and resources to minimise the impact of such cancellations (and also delays) is a vital part of the service. Condor uses clear processes to deal with unexpected outages. These include: identifying the next available time the ship can sail (i.e. when the weather improves, when a repair will be completed) scheduling additional sailings to provide additional recovery capacity re-routing other ships in the fleet to offer additional / alternative sailings inter-lining with another operator 62. Planned service outages, usually for annual maintenance, often involve chartering another ship. Condor has excellent arrangements with charter ship brokers and has a proven track record of sourcing additional ships against short timescales (for example, when two backup ships were brought quickly into service following the Commodore Clipper incident in July 2014). Resilience is inevitably impacted at such times and so additional planning is undertaken. Figure 63 is an example of a contingency plan produced in case one of the passenger ships is in dry dock and the other is unexpectedly out of service. 61 Jersey Harbour Master Benchmarking Review Report, 15 January Where the company organises and pays for alternative travel under a special intercompany contract. 113 November 2016

115 Figure 63 HSC Contingency Plan (Source: Condor) The reduction in the fleet from five to four vessels inevitably led to a reduction in options at times of disruption. However, it should be noted that additional vessels do not necessarily provide as much resilience as might be expected and only by having high levels of redundancy (e.g. running extensive amounts of unused capacity or through having a shadow fleet) could disruption be eliminated. Therefore, the objective of contingency planning is to reduce, rather than eliminate, disruption. An extreme example of service disruption was in September 2015: when Commodore Clipper was in dry dock, Condor Liberation suffered a fault with the exhaust system, meaning she was out of service for two days (both of which had scheduled double rotations). Substantial numbers of passengers were affected and all aspects of Condor s contingency planning were enacted. Once Condor Liberation returned to service, it took 48 hours to get all passengers to their planned destination. On other occasions, disruption is more modest. When high speed services from the UK are cancelled due to weather disruption, the decision is made in time to give customers sufficient notice to enable them to travel to Portsmouth and travel via conventional services instead. If technical or weather factors mean a ship cannot call into either Jersey or Guernsey, passengers can travel on alternative services operated by one of the other ships in the fleet. On the vast majority of occasions 114 November 2016

116 when disruption does occur, passengers are able to travel to their chosen destination on the same day, even if is at a different time and/or on a different ship. There are, however, clearly opportunities to improve resilience and contingency still further, and so it is concluded that the service is moderately well aligned to this need. Strategic Need Priority Alignment Sufficient resilience and contingency to minimise the impact of service disruption Key 5.9 Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors The Review found that there is general satisfaction with the range of destinations offered, and that the strategic need is for a limited set of destinations which have appropriate facilities, effective onward travel links and a broad catchment for visitors. As noted in Section 4, there was a consistent view through the consultation exercise that the current mix of routes is broadly right. There was no appetite to explore other European destinations, or other UK destinations beyond the south coast, due to the long journey times. A number of people consulted expressed an interest in sailings returning to Weymouth, and this view was supported by the survey conducted by a member of the Guernsey Condor Facebook Group. However, this contradicts with research undertaken by Condor in 2011 which found that customers from the Islands and UK preferred Poole over Weymouth 63. Although there remains some Island appetite for services to Weymouth, in Section we outline the significant external (i.e. non Condor) changes which would need to be made in order for services to operate to and from Weymouth. The service is concluded to be fully aligned with this Strategic Need. Strategic Need Priority Alignment Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors Key 63 Condor Ferries, Port preferences research 115 November 2016

117 5.10 A service offering that balances value for money and high levels of service The Review found that customers have increased expectations of receiving high quality services at low prices, and that there is therefore a need for a ferry service offering that balances perceived value for money and high levels of service. There was a view expressed across the consultation exercise that the service had become more expensive, particularly when compared to other modes of travel and previous prices. Recent pricing strategy changes At least some of this can be attributed to changes made by Condor in its pricing structure in Spring Previously, the price paid by many customers varied depending on the time which would elapse between their outward and return journeys. This pricing technique, known in the travel industry as durational pricing recognised that customers are generally willing to pay a higher price for a journey involving a longer stay, since it is usually part of a more significant purchase such as a major holiday. On shorter stays or daytrips however, there is generally less tolerance for a premium price, since it cannot be absorbed as part of a larger expense. Under durational pricing, longer stay customers effectively subsidise cheaper travel for shorter stays and daytrips. Condor moved away from this model partly in response to concern from the travel industry that durational fares were discouraging visitors from staying longer in the Islands, and partly to introduce a fairer and simpler pricing structure which is based on the popularity of a sailing and, if appropriate, how much space a vehicle occupies on the ship. These changes meant that some customers who were previously paying the subsidised shorter stay fares saw their prices increase. Experience shows that those whose fares had reduced, typically those purchasing longer stay products, rarely expressed as much public delight at their consequent reduction. Coverage and feedback was therefore bound to be skewed. Historic price analysis During the consultation process, some participants commented that they felt Condor s pricing had risen over time and that travel, in general, was not as cheap as it used to be. In order to investigate the facts behind these contentions, the Review team investigated historic sea travel pricing using Sealink prices from 1977 which were shared on a social media discussion site about Condor Ferries Charles Gabriel on Condor Liberation and Condor Ferries Good & Bad, 10 October November 2016

118 The data shared showed off-peak travel prices for sailings between the UK and Channel Islands and inter island. Between 1977 and 2016, UK inflation has seen prices rise by 498% 65, and it is therefore possible to calculate the Sealink fares at today s prices. 65 These calculations were done using Hargreaves Landsdown inflation calculator, which uses ONS source data November 2016

119 Figure 64 UK to Channel Islands fare comparisons 1977 vs 2016 (Source: Sealink data and Condor analysis) UK to Channel Islands (single ticket) Car + 2 Passenger (car up to 4.72m) Car + 2 Passenger (car up to 5m) Car + 2 Passenger (car up to 5.49m) Sealink off peak fares (1977) Condor fares (2016) Sealink fares (1977) Condor fares (2016) 1977 fare After inflation Prices start from Maximum regulated fare n/a Adult Foot Passenger Figure 65 Inter-Island fare comparisons 1977 vs 2016 (Source: Sealink data and Condor analysis) Inter-Island (single ticket) Car + 2 Passenger (car up to 4.72m) Car + 2 Passenger (car up to 5m) Car + 2 Passenger (car up to 5.49m) Sealink fares (1977) Condor fares (2016) 1977 price After inflation Prices start from Maximum regulated fare n/a Adult Foot Passenger Notes: Sealink prices are off-peak and would not have been available in school holidays and at weekends, which it can be assumed would have cost more. Condor s 2016 maximum regulated fare 66 is only paid by c.3% of customers. 66 In accordance with the Operating Agreement, Condor s maximum regulated fares are subject to annual approval in both Jersey and Guernsey and are never exceeded. 118 November 2016

120 This analysis shows that the cost of sea travel has fallen considerably over time: For Channel Islands to UK travel, the off-peak fare charged for larger cars in 1977 is more than three times the Condor entry level fare and 17% above Condor s maximum regulated fare (which is paid by only around 3% of customers) For smaller cars on the Channel Islands to UK route, the 1977 off-peak fare is more than twice the level of Condor s current entry level fare and only just below the maximum regulated fare. Inter-Island, even the 2016 maximum regulated fare for car+2 passengers is considerably lower than the equivalent 1977 flat fare Competitor price analysis Condor undertakes continual market analysis of its pricing to ensure that fares remain competitive. This analysis is done every two weeks using airline websites and price aggregator sites (e.g. Skyscanner). Prices used for comparison purposes are the cheapest available and include booking fees (where charged) and a 20kg hold bag (where charged). The Condor fare is based on two adults travelling in a 5.0m car. Car hire prices are based on hiring a smaller car than would be carried via the Condor comparable fare. Figure 66 Price comparisons (Source: Condor analysis) 119 November 2016

121 Figure 67 Price comparisons (Source: Condor analysis) 120 November 2016

122 Figure 68 Price comparisons (Source: Condor analysis) These examples show that Condor is consistently cheaper than comparable fly drive products. It has been suggested that perceived high prices could be a barrier to travel. However, analysis shows that the sailings where the highest prices are charged popular sailings on peak days are generally very well used. It is important to consider the positive impact of being able to generate revenue at peak and popular times of the year; put simply, busy summers mean that year round services can be provided, even when demand plummets. Since there will always be opportunity for improvement, with customers always seeking better value fares, the Review therefore concludes that the service is largely aligned to this Strategic Need. Strategic Need Priority Alignment A service offering that balances value for money and high levels of service Key 121 November 2016

123 5.11 A ferry service which is able to facilitate predicted levels of visitor growth As has been outlined, the Islands have ambitious plans to grow visitor numbers, leading to a need for the ferry service that can accommodate an appropriate proportion of that growth. Jersey 67 Guernsey 68 Tourists Growth Tourists Growth , , % 320, , % 326, % , % 332, % , % 338, % , % 344, % , % 350, % , % 360, % , % 370, % , % 380, % , % 390, % , % 400, % Therefore, future capacity has been modelled against an average tourism growth of 2% annually across both islands. This modelling demonstrates that, on the Northern route, capacity is available until at least 2020, although some summer peak days become a pinch point for conventional and high speed services (noting that there are double rotation options to manage this). 67 Visit Jersey: A Destination Plan 68 Guernsey Tourism Strategic Plan November 2016

124 Figure 69 Northern route capacity and demand analysis (Source: Condor analysis) 123 November 2016

125 On the Southern route there is considerable capacity until Figure 70 Southern route capacity and demand analysis (Source: Condor analysis) Given the potential need to add double rotations on the Northern route should growth exceed current projections or should sea travel capture an increased share of visitor numbers, it is concluded that this need is fully met in the short to medium term, however, in the longer term it may be largely met. This should be a consideration for future Reviews. Strategic Need Priority Alignment A ferry service which is able to facilitate predicted levels of visitor growth Key 124 November 2016

126 5.12 Effective communications through the supply chain to support just in time operations The Review found that reliance on a just in time freight service creates food resilience issues for the Channel Islands and communications challenges throughout the supply chain. This creates a need for effective communications through the supply chain to support just in time operations The Condor freight team now communicates directly with all logistics providers and some retail clients to increase operational and situational awareness. However, there were some views expressed during the consultation that more could be done here. In particular, timely information is important to help retailers plan their own resourcing, and to set expectations with customers. It was noted that this is not always within Condor s control. A consultation participant stressed the need to consult on arrangements for the Christmas holiday period. It is concluded that the service is reasonably well aligned to this need, but that there are opportunities to improve. Strategic Need Priority Alignment Effective communications through the supply chain to support just in time operations Important 5.13 A service that recognises the differing needs of the Islands The Review identified that Jersey and Guernsey have some differing priorities when it comes to sea links, and that the service needs to balance these different needs. The Channel Islands require sea connectivity services that enable island life to function as optimally as is possible bearing in mind the natural and external constraints that impact on the operational delivery of a year-round ferry service. Each island has some differing specific needs or preferences aligned to their unique realities, however overall the ferry service also needs to deliver sea connectivity for the Channel Islands generally and provide freight, tourism and lifeline services equally to both Islands. The current service offering recognises that freight deliveries have equal importance to both islands, particularly the Monday to Saturday overnight freight sailing from the UK which ensures that fresh and chilled food products reach both Guernsey and Jersey supermarkets within the JIT supply chain necessary to ensure residents have access to essential food products. The schedule provides efficient timed deliveries to island logistic hauliers who themselves have timed deliveries into each supermarket, governed by on-island constraints of traffic and access. 125 November 2016

127 Route scheduling has been developed to provide a tourism proposition which supports each islands hotel industry in terms of day and time of ferry service arrivals, accommodating the constraints of any harbour access and ramp utilisation. This applies both for visitors from the UK and from France/Europe, where the capacity provided on each route and sailing reflects each destination s priorities. Jersey has always naturally had a much greater level of travel to and from St Malo bearing in mind the close proximity and short travel distance, compared to Guernsey. The Southern route scheduling has therefore developed to reflect the high numbers of Jersey residents (and French homeowners in particular) who wish to travel, often coupled with high day trip visitor numbers from France due to the short crossing time compared to that with Guernsey. The service is largely aligned to these different needs. Strategic Need Priority Alignment A service that recognises the differing needs of the Islands Important 5.14 A passenger service which operates with minimal delays The Review found that, similar to cancellations, there is extremely limited tolerance for delays to services other than those imposed by weather or other external factors, creating a need for a service that operates with minimal delays. Satisfaction with punctuality correlates strongly with overall customer satisfaction, as can be seen from the data in Section 3.5. If media coverage is a metric of public opinion, there appears to be higher tolerance of air travel delays than of sea travel delays. For example, a recent open letter from the Channel Islands Competition Regulatory Authority noted that 25% of Flybe Blue Island recent flights operated with a delay of >15 minutes. Given that these flights are typically under an hour in duration and some (inter Island) are just 20 minutes, even a fifteen minute delay represents a very significant proportion of the overall journey time. In 2016, Condor services have operated at an average punctuality of 86% based on a much more stringent delay threshold, yet tolerance of ferry disruption appears to be lower than that attached to air. One impact of determination to operate with virtually no cancellations is that punctuality will suffer. For example, Condor s commitment to maintaining conventional passenger ferry services in the very stormy weather of the winter meant that services continued to operate but were regularly delayed. 126 November 2016

128 The reasons for delays over the course of the Operating Agreement on the high speed services are as follows. With both Condor Liberation and Condor Rapide experiencing relatively high proportions of technical delays, the importance of Condor s work on Asset Health and preventative maintenance is once again highlighted. Figure 71 Reason for delays on high speed services (Source: Condor analysis) Condor Liberation Condor Rapide Technical 36% 30% Other External Events 25% 31% Sailing time 11% 7% Vehicle Deck Load 10% 12% Tidal 10% 1% Weather 4% 14% Berth Clash 2% 5% Held for Connecting Service 1% 2% Medical Emergency 0% 1% Port congestion 0% 1% If technical issues continue to be well managed, the introduction of Condor Liberation is likely to aid improved punctuality: in its Independent Report into the Safety, Suitability and Performance of Condor Liberation, Houlder noted that the ability of the Condor Liberation to maintain average speeds over 30 knots in seastates with a significant wave weight over 3m is exceptional. Given the conditions experienced in the English Channel on a regular basis this capability is advantageous to her operation. Overall, passenger services are operating to a relatively high level of punctuality: Figure 72 Punctuality of passenger services (Source: Condor analysis) Within 30 minutes Condor Rapide 92% 98% Condor Liberation 83% 94% Commodore Clipper 81% 91% Within 60 minutes In conclusion, whilst punctuality performance across the fleet is not as strong as reliability performance, given the impact of factors outside Condor s control (such 127 November 2016

129 as weather) and recognising the trade-off between reliability and punctuality, the service is concluded to be largely aligned with this Strategic Need. Strategic Need Priority Alignment A passenger service which operates with minimal delays Important 5.15 Port facilities and immigration services which support an excellent end to end customer experience The Review heard that port facilities in the Islands are poor compared to Island airports, and this impacts on customer experience and visitor perception. The aspiration to deliver an excellent customer experience is one which Condor shares with its port partners, however, the extent to which equivalence with airports can be achieved is limited by the lower number of passengers travelling by sea than by air. Section 4 outlines some of the issues currently faced by customers, and customer views on the facilities and services. Whilst many of these issues are outside the direct control of Condor, they are viewed by customers as being part of the overall experience of the journey and will affect their satisfaction and propensity to use the service again. The relative investment which has been made by the States of Jersey and States of Guernsey in air and harbour facilities (as outlined in Section 4.14) is evident to users. The harbour dues charged by Guernsey and Jersey are the highest in Condor s network. For example, the due per adult is 57p (41%) higher in Jersey than in Poole, landing a car and caravan in Guernsey costs Condor whereas the charge in Portsmouth is Condor s current annual total harbour dues are c. 5.5m in Jersey and c. 4.2m in Guernsey. These dues cover a range of facilities and services, including infrastructure, navigational aids (such as lighthouses and buoys), dredging and surveying, pilotage and, indirectly, the cost of Coastguard services. Given the feedback received during the consultation process, and declining customer satisfaction with boarding as evidenced by MindMover, it is concluded that there is currently partial alignment against this need. Strategic Need Priority Alignment Port facilities and immigration services which support an excellent end to end customer experience Important 128 November 2016

130 5.16 An inter-island service that enables day trips for business, leisure or tourism The Review found that inter-island travel is a growing concern for residents and the business community, creating a need for a regular, reliable, inter-island service that enables day trips for business, leisure or tourism. The move from two HSC to one in 2015 and the removal of double rotations from the schedule in 2016 have clearly impacted on the number of people, if not the number of vehicles, travelling inter-island as shown below. This is consistent with a reduction in daytrips, since staying visitors tend to take their car. Figure 73 Historic inter-island travel volumes (Source: Condor analysis) as at 03/11/16 Total passengers 95,649 98,927 99,126 95,888 69,658 Total vehicles 8,477 9,308 9,236 9,509 8,529 The reduced opportunities were highlighted throughout the consultation exercise with participants commenting that the current timetable makes it difficult to undertake daytrips between the Islands for business, tourism and leisure. In its schedule for 2017 Condor has begun to address this with a total increase in inter-island sailings of 12%, with daytrips from Guernsey to Jersey up by 59% and daytrips from Jersey to Guernsey up by 94%. However, these levels will still not entirely meet the identified need and it is therefore concluded that the service is only partially aligned. Strategic Need Priority Alignment An inter-island service that enables day trips for business, leisure or tourism Important 129 November 2016

131 5.17 Service Considerations Morning departures from the Channel Islands to the UK and afternoon departures from the UK to the Channel Islands The Review found that some Islanders find the current schedule for UK-Channel Islands travel unappealing and inconvenient. It was suggested that morning departures from the Channel Islands to the UK, and afternoon departures from the UK to the Channel Islands would be more convenient, particularly for Islanders. This is not currently part of the service and so forms part of the Service Considerations analysis in Section 6. A simple service delivered excellently The Review found very little demand for a premium level service if this would mean higher prices. The view expressed consistently throughout the consultation was that the service is at an appropriate level (i.e. pitched suitably between basic and premium). However, people consulted did identify some issues around execution particularly food service. There were high levels of complaints regarding Condor s customer service during the 2015 disruption. Section addresses how Condor might better meet this Service Consideration. Service enhancements to meet the needs of 21st century travellers The Review found that some enhancements to the service could increase the appeal of ferry travel, these include on-board Wi-Fi, seat allocation and consistently delivered real-time passenger information. Section addresses how Condor might better meet this Service Consideration. 130 November 2016

132 5.18 Summary and Alignment Conclusion Strategic Need Priority Alignment A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) A reliable, year round freight service A ferry service which can provide a just in time service for essential food and other freight deliveries A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. A ferry service which can accommodate predicted levels of population and economic growth A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) Sufficient resilience and contingency to minimise the impact of service disruption A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors A service offering that balances value for money and high levels of service A ferry service which is able to facilitate predicted levels of visitor growth Effective communications through the supply chain to support just in time operations A service that recognises the differing needs of the Islands A passenger service which operates with minimal delays Port facilities and immigration services which support an excellent end to end customer experience An inter-island service that enables day trips for business, leisure or tourism Critical Critical Key Key Key Key Key Key Key Key Key Important Important Important Important Important 131 November 2016

133 Conclusion In summary, this Review concludes that Condor s service is fully aligned with all of those Strategic Needs which have been prioritised as Critical. With the exception of Sufficient resilience and contingency to minimise the impact of service disruption the service is either fully or largely aligned with all of the Key Strategic Needs. Where Strategic Needs have been identified as Important, the service is moderately or largely aligned with the exception of An inter-island service that enables day trips for business, leisure or tourism. 132 November 2016

134 6 Maintaining and improving alignment to Strategic Needs 6.1 Maintaining Alignment with Critical Strategic Needs Continuing to meet Critical Strategic Needs must remain the overarching objective for ferry services This review has established that there are two Strategic Needs which are of critical importance. These are: A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor) A reliable, year round freight service Condor s service is currently fully aligned with these two critical needs. Ensuring that the service continues to be fully aligned with these is critical to national infrastructure; that is, it is essential to the continuation of life and, if they are unmet over an extended period of time, there are likely to be serious consequences. Below, we consider how alignment against other Strategic Needs might be improved. In some cases improvement may rely upon making changes to the fleet or the operating model. However, as we have established, different elements of the Channel Islands ferry services are interdependent, therefore achieving improvement in one area might have a negative knock-on effect on another. The Review is therefore mindful of the importance of not undermining the extent to which Critical Strategic Needs continue to be met in attempting to improve alignment against other Strategic Needs of a lower priority. These might include applying pressure to make investment where there is no reasonable prospect of a return (therefore imperilling financial viability); or, in response to public opinion / media / political pressure, prioritising passenger services at the expense of freight. Recommendation: When considering any future changes to ferry services, Condor, the States of Jersey and States of Guernsey should ensure that Condor s continued delivery of the Critical Strategic Needs is not imperilled. 133 November 2016

135 6.2 Maintaining alignment with Key Strategic Needs which are fully met In addition to full alignment with the Critical Strategic Needs outlined above, the Review found that the service is fully aligned with four of the nine Key Strategic Needs A ferry service which can provide a just in time service for essential food and other freight deliveries Just in time freight services operate out of the UK every night, arriving into Guernsey around 3am and into Jersey around 6am. As outlined in Section 2.1.3, this schedule is part of a complex supply chain. Maintaining alignment against this need means protecting the operating schedule of Commodore Goodwill (or whichever ship operates this schedule in the future) and ensuring that other services are not given a higher priority. Recommendation: Condor must prioritise and protect the operating schedule of the overnight UK to Channel Islands freight service. Compromises should only be made in extreme circumstances and only for short periods A ferry service which, in addition to resilient lifeline services, includes high speed travel from the Channel Islands to and from the UK and France. As a result of the high speed services provided by Condor Liberation and Condor Rapide, Condor is currently fully aligned with this Strategic Need. Condor Rapide came into service in 2010, having previously operated between Dover and Boulogne-sur-Mer and with the Australian Navy. With continued good maintenance and robust engineering support, Condor Rapide is expected to continue to operate until All high speed ferries require annual maintenance in dry dock to maintain their legal certification as well as to ensure they operate safely, reliably and efficiently. In order to facilitate this maintenance, Condor operates a winter schedule where the remaining in-service HSC operates to both the UK and France, albeit on a reduced service. At present, Condor operates four ships of different design and specification. This means four completely separate sets of spare parts and four distinct engineering 134 November 2016

136 regimes. Looking ahead increasing commonality is likely to increase the resilience of the fleet. Additionally, each ship is custom built for its specific purpose. This has the advantage of optimising performance in each sector, for example Condor Rapide is highly suited to the Channel Islands France route, but does not have the capacity to meet the needs of the Channel Islands UK route. Similarly, Condor Rapide is more weight limited on the light freight it can carry than Condor Liberation. Resilience and contingency within the fleet would be increased if each ship were better able to deputise for at least one other within the fleet. Condor Liberation is currently meeting the need for high speed services between the Channel Islands and the UK. In order to maintain adequate passenger capacity, particularly at holiday periods, so long as the current fleet configuration continues, there should continue to be high speed services on a year round basis, even if frequency is reduced during the winter period. Recommendations: In due course, Condor Rapide should be replaced with a vessel which will enable the continued provision of high speed passenger and car services between the Channel Islands and France. When selecting the replacement ship, Condor should bear in mind the desirability of flexibility across routes and between sectors (i.e. North and South, passenger and freight). Within the current fleet configuration, in order to maintain capacity, there should continue to be year-round high speed ferry services between the Channel Islands and the UK A ferry service which can accommodate predicted levels of population and economic growth As outlined in Section 5.6, Condor has modelled capacity against population and economic growth projections. This has enabled the Review to conclude that Condor s services are fully aligned with the need to accommodate predicted levels of growth. However, it is acknowledged that actual growth might outstrip projections and so it is important that Condor keeps under review the extent to which projections are realised. With the next Comprehensive Service Review due in 2019, this will give ample opportunity to adjust service planning should actual growth be significantly ahead of expectations. 135 November 2016

137 It is also important that Condor reviews areas of its schedule where demonstrably excess capacity exists. At the moment, 48% of all high speed ferry services operated by Condor across the four-month winter period (1 November to 28 February) are loss making. Given that this period includes Christmas and February half term, and therefore family travel to the UK as well as ski holiday travel to France, it is apparent that a very high proportion of other sailings are very poorly utilised. Utilisation is particularly poor on the Southern route between the Channel Islands and France. Across the year, vehicle decks are, on average 63% empty, and less than half the passenger capacity is used. Some realignment of capacity with demand was undertaken in reviewing the schedules for summer 2017, where the number of direct Guernsey-France sailings were reduced in response to very low utilisation. Despite this, and as set out in Figure 61, predicted utilisation levels on the southern sector are very low. There may be advantages to reviewing the alignment of capacity and demand, particularly if doing so could increase Condor s ability to invest in other areas of its service and/or support the overall viability of lifeline services. Recommendations: Condor should keep capacity and utilisation under review, including monitoring actual levels of population and economic growth. Where demonstrably excess capacity exists in some sectors, Condor should consider reducing service frequency, if this would facilitate improved service levels in other sectors, or support the viability of, or investment in, the service as a whole Destinations which have reasonable crossing times, appropriate facilities, effective onward travel links and a broad catchment for visitors This Review has concluded that Condor s service is full aligned with this Strategic Need. However, there is remaining interest in services from the Islands to Weymouth, which was a destination within the Condor schedule until the introduction of Condor Liberation in The Review team therefore revisited whether it might be possible to sail to and from Weymouth again. The consultation process revealed three major contributory factors in Weymouth s appeal: a shorter crossing time, a historic attachment, and, for certain individuals, easier access to their chosen destination in the UK (i.e. because it is either close to, or west of, Weymouth). 136 November 2016

138 There is also a perception that the market for day-trippers (and indeed staying visitors) is larger from the Weymouth area than from the Poole area. Historically, when Condor operated from both Weymouth and Poole the Weymouth service operated on more days of the year than the Poole sailings and with the 86m ships tended to operate double rotations more often. Reasons for Condor switching operations between Weymouth and Poole are complex and explained elsewhere in this report however, a comparison between main summer 2013 (when sailings were operated from both Weymouth and Poole) and the same period in 2012 when only Poole operated makes clear that Poole is an attractive port particularly to mainland visitors. In main summer 2012 (when Condor operated solely out of Poole as a result of the Weymouth harbour wall collapse) the number of passengers including daytrips was more than 61,000, compared with 68,000 in 2013 (when Condor operated from both Weymouth and Poole). Furthermore, in 2013 more UK visitors to Jersey and Guernsey chose Poole than Weymouth as their preferred port. Nevertheless, for Condor too, the shorter crossing time associated with Weymouth is attractive: it would increase the buffer time within the schedule, meaning less pressure on crew hours when services are disrupted or for double rotations. There would also be a small fuel saving; however the reduction in fuel usage would be less than might be expected because, although the crossing to Poole is longer, this is largely because of the long slow approach to port, and sailing at slower speeds burns less fuel. However, despite the shorter crossing time, the overall journey time to the final destination is unlikely to be shorter for many customers. This is because the road network in and around Weymouth is poor. Following the 2012 Olympics, the traffic system in the town was reconfigured, with traffic flow and speed along the seafront substantially reduced; this meant that, in the summer of 2013, it sometimes took customers an hour to get from the back of the ship to the clock tower in Weymouth. The onward road connections are also largely single carriageway, meaning much longer journeys for many customers. Condor has a long association with Weymouth, having first sailed there in Following a major harbour collapse in 2013, which meant Condor had to relocate all services to Poole with immediate effect, the current available Weymouth berth was rebuilt by the harbour owner, Weymouth and Portland Borough Council, and Condor refurbished the terminal at its own expense. Although it had initially been thought possible to operate the new larger Condor Liberation from Weymouth, it quickly became apparent that major work would be required, with Weymouth and Portland Borough Council deciding that the investment was not a viable option 69. Since then, the Council has decided to pursue leisure, rather than commercial, options for the harbour Condor Ferries future in resort remains uncertain, Dorset Echo, 18 Aug Leisure park vision for Weymouth s harbour gateway, Dorset Echo, 14 Sept November 2016

139 Modern approaches to risk assessment mean that the current berth layout is considered inappropriate, even for a ship similar in size to the previously operated Condor Express and Condor Vitesse. Once an approach is made, complete commitment to berthing is required, as there is no viable escape route (for example if a steering problem occurs). A lower risk option would be to convert No 1 berth to include a self-supporting linkspan of sufficient width to accommodate two lanes of traffic. However, the most significant factor would be the necessary dredging to give sufficient depth to navigate in and out of the harbour. Whereas in the past navigable depth of as little as 0.5m was considered appropriate, this would no longer be acceptable. Dredging works would require an Environmental Impact Assessment to be undertaken; the associated research, reports and legal processes would cost several million pounds, with no certainty of outcome, and a likely timeframe of between three and seven years. Nearby Portland has fewer issues with the harbour and berths, indeed its deep water approach has many attractions. However, road connectivity (with just one road in and out) is a significant disadvantage, and there would need to be a new linkspan and terminal building. Recommendation: Condor should retain its current route network, whilst continuing to keep under review the viability of alternative ports (including Weymouth and Portland) if they would enhance the appeal of its services. 138 November 2016

140 6.3 Grouping opportunities for improved alignment The Review identified a number of Key and Important Strategic Needs where there are opportunities to improve service alignment. Below, we have grouped Strategic Needs of similar themes to aid discussion of how improvement might be achieved: Strategic Need where alignment relies on effective capacity management A ferry service which is able to facilitate predicted levels of visitor growth (Key Strategic Need largely aligned) Strategic Need where alignment can be improved by Condor within the existing operating model. A service offering that balances value for money and high levels of service (Key Strategic Need largely aligned) Strategic Needs where alignment could be improved by changes to operating practices, fleet management or fleet configuration: A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) (Key Strategic Need largely aligned) A passenger service which operates with minimal delays (Important Strategic Need largely aligned) Sufficient resilience and contingency to minimise the impact of service disruption (Key Strategic Need moderately well aligned) A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times (Key Strategic Need largely aligned) An inter-island service that enables day trips for business, leisure or tourism (Important Strategic Need only partially aligned) Strategic Needs where partner support will be required to improve alignment: Port facilities and immigration services which support an excellent end to end customer experience (Important Strategic Need moderately well aligned) Effective communications through the supply chain to support just in time operations (Important Strategic Need moderately well aligned) A service that recognises the differing needs of the Islands (Important Strategic Need largely aligned) 139 November 2016

141 6.4 Strategic Need where alignment relies on effective capacity management A ferry service which is able to facilitate predicted levels of visitor growth (Key Strategic Need largely aligned) The Review concluded that this Strategic Need is not fully met because, it is possible that, if tourism growth targets are exceeded or if sea travel captures an increased share of visitor numbers, there could be insufficient capacity from the Channel Islands to the UK on a small numbers of peak days during the summer holidays. In order to address this, Condor could add double rotations to the schedule (effectively doubling capacity on affected days). Figure 60 showed how these additional rotations would provide ample headroom and maintain alignment with this Strategic Need. Recommendation: Condor should keep under review whether, in future summer periods, double rotations should be reintroduced to the schedule on some key days in order to provide the necessary capacity to support growth in the visitor economy. 6.5 Strategic Need where alignment can be improved by Condor within the existing operating model A service offering that balances value for money and high levels of service (Key Strategic Need largely aligned) Condor monitors closely the variable and seasonally fluctuating fare price range of both comparator ferry operators on other route networks and more importantly against airlines providing flight to and from the Islands. The balance between the total cost of passenger fares plus their car on the ferry service (providing the ability to carry greater personal items and baggage) versus the total cost of flights and a hire car (fly drive option) is continually analysed to ensure value for money ferry fares are offered. Revenue management to deliver a sustainable business model balances with a flexible approach to fare pricing that reflects peak season and high demand sailings and off season or quiet periods with capacity/utilisation fluctuations. Staircase pricing endeavours to provide fare pricing that reflects demand elasticity and to encourage off peak bookings where capacity exists. Revenues are generated through passenger and car fares coupled with freight tariffs; together these revenues enable the overall ferry service provision with profits 140 November 2016

142 to enable capital reinvestment. Flexible passenger fares to stimulate increased bookings by both island residents and visiting tourists is balanced to cover capacity/utilisation/service/value. Condor will continue to invest in improving service provision and the customer service experience itself; recognising both Island resident expectations of value for money in providing their lifeline sea connectivity, and the competitive tourism destination main markets of the UK and France. Service provision of the route scheduled timetable and more general service delivery will be monitored versus the cost of sea travel within the value for money framework. Recommendation: Condor should continue to monitor closely competitor pricing, aiming to balance the need for sufficient returns to maintain continuous investment in its service with the need to ensure travel is attractive and accessible in order to support resident and visitor travel. 141 November 2016

143 6.6 Strategic Needs where alignment can be improved by fleet changes or practices There are opportunities to improve alignment with the following Strategic Needs: A reliable passenger service (i.e. which operates with virtually no cancellations other than those imposed by external factors such as extreme weather) (Key Strategic Need largely aligned) A passenger service which operates with minimal delays (Important Strategic Need - largely aligned) Sufficient resilience and contingency to minimise the impact of service disruption (Key Strategic Need moderately well aligned) A service with fleet flexibility across routes and between sectors to facilitate effective prioritising of different needs at different times (Key Strategic Need - largely aligned) An inter-island service that enables day trips for business, leisure or tourism (Important Strategic Need only partially aligned) Improving alignment within the current fleet As outlined in Section 3, Condor has successfully improved both punctuality and reliability. This has primarily been the result of an enhanced asset health programme which has been successful in predicting and identifying the root cause of technical problems. Embedding this programme within normal operating practices will be important to ensuring continued improvement. Effective contingency planning, to cover planned maintenance and dry dock periods, as well as unexpected outages, is also vital. At present, this planning includes: Adjusting the timetables of other ships in the fleet either on a planned or responsive basis Scheduling extra sailings as required Chartering ships when a ship is out of service for an extended period. Recent schedule changes have seen increased numbers of inter-island daytrips being added to the timetable. Whilst the reduction to one ship on the Northern route inevitably limits the extent to which these can be facilitated, Condor should continue to offer these journeys within the schedule wherever possible, so long as this does not negatively impact the alignment of the service with other Strategic Needs of higher priority. 142 November 2016

144 Recommendations: As part of its normal operating procedures, Condor should continue the current high level of focus on improving reliability and punctuality. Forward planning should continue to include contingency plans to minimise the impact of planned maintenance or unanticipated disruption to services. The timetable should continue to be reviewed to optimise opportunities for inter- Island daytrips Considering short term changes to the fleet Earlier in this report, we outlined that many respondents to the consultation process, including leading politicians in both Islands, felt that Condor should make changes to its fleet configuration in order to increase service levels as well as to improve resilience and contingency. The three key suggestions were: Replacing Commodore Goodwill with a RoPax (i.e. retaining a four-ship fleet) Purchasing a second RoPax to operate between the Channel Islands and the UK (i.e. increasing the size of the fleet from four to five ships) Purchasing a second high speed ferry to operate between the Channel Islands and the UK (i.e. increasing the size of the fleet from four to five ships) It was also suggested by some that Condor should replace Condor Liberation with a different high speed ferry. The Review could find no objective reason for considering this option, particularly in light of the favourable independent reports from the Jersey Harbour Master and Houlder Ltd 71. In addition, there is no reason to expect that a different ferry would be more reliable than Condor Liberation, indeed introducing another new ferry would be likely to cause some service disruption. This suggestion has therefore not been explored further. However, as part of the Review process, Condor has undertaken detailed modelling to ascertain whether the other fleet changes outlined above could be viably made within the short to medium term. The lead time for ordering a new ship is typically around two to three years, and, as outlined in Section 2.3.1, the inherent operating constraints of the Channel Islands ports mean that a bespoke fleet is required. It is therefore unlikely that a fleet change in the immediately foreseeable future would be possible. 71 Houlder Ltd: Independent Report into the Safety, Suitability and Performance of Condor Liberation 143 November 2016

145 Replacing Commodore Goodwill with a RoPax Commodore Goodwill currently provides the lifeline overnight freight service from the UK to the Channel Islands. As established above, this is a Critical Strategic Need which must not be compromised. Therefore, and setting viability issues aside, replacing Commodore Goodwill with a RoPax ship (in order to satisfy passenger needs, or to increase fleet flexibility) would need to be done with great caution. Additionally the following factors are important considerations: There would need to be a change to shipping methods for hazardous goods 72 since passengers cannot travel when such goods are carried. The introduction of such a service would add additional unneeded passenger capacity into the market; as outlined in Section 5.6, there is no shortage of existing capacity to meet current or future levels of demand for passenger services. As a result of freight meterage being almost fully utilised on the southbound (overnight) service, there would be very limited capacity for passenger vehicles on this leg of the route. The 3am arrival into Guernsey necessary to maintain freight services would be unappealing for many customers. Nevertheless, it is undoubtedly the case that having a ship more akin to Commodore Clipper operating the schedule would, at the very least, offer increased fleet flexibility. The change would therefore provide an element of increased contingency, particularly during periods of planned maintenance, for northbound passengers and for southbound passengers who were willing to have their car shipped separately (since the majority of southbound meterage would be allocated to freight). Initial modelling has been conducted to assess the return on capital which would be required to finance the balance between the residual value of Commodore Goodwill and a RoPax. In addition, incremental crew costs would be incurred since many more crew members are required for a passenger ship than a freight-only ship. In order to make such a purchase viable, it is estimated that there would need to be a c.25% overall growth in travel. However, as there would be very limited on the southbound leg (for the reasons outlined above) this would equate to an increase of 60% on the northbound Channel Islands to UK leg. These growth levels are well above current business projections. 72 Which are currently shipped within mixed trailers, and which can include items as apparently benign as paint. 144 November 2016

146 Purchasing a second RoPax ferry to operate between the Islands and the UK Protecting the overnight southbound freight service whilst adding substantial additional resilience could theoretically be possible if a second RoPax ferry were added to the fleet. This second RoPax would operate a reversed timetable from the Commodore Clipper schedule. The timing of such a service would be likely to increase pressure on berths in the Island ports in particular, since it would be running a substantially similar timetable to that currently operated by Commodore Goodwill, leading to potential clashes with Condor Rapide (note the comments in Section regarding a reversed HSC north schedule). An additional ship would not only need capital investment (and the associated return through increased revenue) but also would add to operating costs (crew, fuel, maintenance, berthing etc.). Financing this would mean a need for either new freight revenues and/or new passenger revenues. On the assumption that the revenue growth would come from passengers (since freight growth is historically linked to economic growth), an increase of at least 60% on current levels would be required. These growth levels are well above current business projections. Purchasing a second high speed ferry to operate between the Channel Islands and the UK The move from two to one HSC on the Northern route was the result of a declining market due to air competition for holidays and off-island travel (see Section 2.2 for more details). There is no reason to think that the Channel Islands market will materially defy the world-wide trend of air growth at the expense of sea travel and so, whilst some growth can be (and has been) assumed in line with the Visit Jersey and Visit Guernsey plans, and as part of Condor s own business growth strategy, the market shift which would warrant a second high speed ferry on the Northern route cannot be envisaged. Generating the return on capital required to purchase an additional HSC would require additional revenue equivalent to an 80% increase in UK-CI customer travel. These growth levels are well above current business projections. Conclusion Current growth projections do not point to the levels of increased revenue which would be required to cover the operating costs and generate a return on the capital required for a new ship. It is therefore concluded that, to introduce an additional ship to the fleet would require a level of capital investment and increased operational expenditure which 145 November 2016

147 would imperil the viability (and therefore sustainability) of the service. This would therefore undermine the continued alignment of the service with the Critical Strategic Need: A safe, compliant and sustainable lifeline ferry service for both freight and passenger (resident and visitor). Recommendations: Whilst there would be some improvements to fleet flexibility and resilience from replacing Commodore Goodwill with a RoPax ship, market growth analysis does not indicate a reasonable expectation of generating a return on the investment required for early replacement, and therefore doing so would imperil alignment with the Critical Strategic Needs. As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional RoPax for the fleet, as well as to cover the increased operating costs, it may be that the States of Jersey and States of Guernsey wish to explore with Condor other changes to the operating model (e.g. a longer Operating Agreement or an operating subsidy) which would make such an investment viable. As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional HSC for the fleet, the high speed service between the Channel Islands and the UK should continue to be provided by one ship Shaping long term changes to the fleet This Review has found that the current Condor fleet has been shaped by a diverse range of factors including inherent operating constraints, changes in the market, and levels of current and predicted demand. It is a bespoke fleet, with four individual ships of individual design. Each ship is ideally suited to its own purpose however, recent experience has shown that, as a result of this fleet profile, resilience is reduced when one ship is out of service (whether on a planned or unplanned basis) because not all ships within the fleet can effectively deputise for one another. In particular, as outlined above, Commodore Goodwill has no passenger capacity and Condor Rapide does not have sufficient capacity to operate on the Northern Route. Contingency and resilience within a smaller fleet would be considerably enhanced if the fleet were more flexible. The current fleet is expected to be replaced broadly according to the following timescale: Condor Rapide November 2016

148 Commodore Goodwill 2030 Commodore Clipper 2033 Condor Liberation 2035 In each case, when considering the specification of the replacement ship, the advantages of fleet flexibility should be borne in mind, so long as these do not compromise the alignment of the service with other Strategic Needs of higher priority. Recommendations: Future fleet planning should take account of the benefits of flexibility across sectors and routes. In particular, when the time comes to replace Commodore Goodwill, the new vessel should not only protect the delivery of a reliable just in time freight service, but should ideally also have passenger capacity in order to enhance contingency plans and improve resilience Considering adding a new inter-island service Inter-island passenger services do not currently form part of Condor s Operating Agreement with the States of Jersey (which Condor also observes in relation to its services to and from Guernsey). Any operator is therefore free to launch a dedicated inter-island passenger service at any time. However Inter-island fares, as provided as part of the overall service, are regulated under the maximum regulated fare, and Condor s inter-island schedule forms part of its consultation with the States of Jersey and States of Guernsey. As part of the Comprehensive Service Review, Condor conducted a detailed feasibility study into the possibility of launching a dedicated inter-island passenger service. The study was based on: Chartering 73 a ship suitable for the challenging inter-island waters (i.e. one which would be weather resilient and suitable for passage in these waters A charter which would include crew Four rotations a day Harbour dues at current levels A Monday to Friday business return flat fare of 75 A weekend leisure return flat fare of The operating costs of chartering a ship are substantially similar to those involved in purchasing and generating a return on an owned vessel. 147 November 2016

149 Based on these assumptions, in order to break even the service would require 750 passenger legs per day (273,750 per annum). An increase in the maximum regulated fare would also be required. Inter-island passenger numbers in previous years have been as follows: Figure 74 Historic inter-island foot passenger volumes (Source: Condor analysis) Total Passengers 95,649 98,927 99,126 95,888 It is therefore highly improbable that the passenger levels required to support a new dedicated service could be achieved. Recommendations: As there is no reasonable expectation of being able to generate sufficient income to support a dedicated inter-island service, the States of Jersey and States of Guernsey should explore with Condor whether other changes to the operating model (such as an operating subsidy) would facilitate such a service. 6.7 Strategic Needs where partner support is required to improve alignment Port facilities and immigration services which support an excellent end to end customer experience (Important Strategic Need moderately well aligned) Effective communications through the supply chain to support just in time operations (Important Strategic Need moderately well aligned) A service that recognises the differing needs of the Islands (Important Strategic Need largely aligned) Port facilities Improvements to port facilities are a matter of the Ports of Jersey and States of Guernsey to consider as part of their investment plans. It is recognised that the higher levels of investment enjoyed by airports is commensurate with the much larger number of passengers using air services than sea services. Nevertheless, the importance of maintaining an attractive environment for arriving and departing passengers was a clear finding of the Review. 148 November 2016

150 Based on feedback received during the Review, and other feedback from Condor's customers, the following specific areas for improvement have been identified: Both Islands Covered Walkways from ship to terminal, either over linkspan or scissor lifts. Facilities for automated announcements by upgrading/replacing current systems Air conditioning in the terminal Improved seating for customers within the terminal building. Covered areas for both cyclists and motorcyclists Blazer boards for departure status. Jersey Second baggage belt at foot-passenger check-in Replacement car check-in booths Increased size of baggage belt. Guernsey Re-surfaced walkway by Berth 2 to the terminal for foot passengers. Replacement waiting room in car lanes. Immigration services The particular difficulties faced by passengers arriving into Jersey from France can only be addressed by a different approach to the resourcing of immigration services. Extended and regular delays, such as those experienced by participants in the consultation process, will reduce the appeal of sea travel for residents and visitors alike. Supply chain communications Communications through the supply chain are currently addressed via bilateral engagements, that is, Condor informs its logistics customers of any changes, and those logistics customers in turn share that information with their end customers, usually the retailers. As commented during the consultation process, this can lead to a disconnect, or at least a delay, in sharing of information. Recognising the differing needs of Jersey and Guernsey Condor s understanding of the differing needs of the Islands are currently addressed via discussions with a range of stakeholders including Visit Guernsey and Visit Jersey, States members, customers, business groups, the Jersey Consumer Council Condor Group, the Guernsey Condor Facebook Group. The FSSG is the forum at which Condor meets formally with representatives of the States in order, amongst other things, to discuss matters relating to schedule, pricing, maintenance and service, all of which involve consideration of the differing needs. Maintaining the appropriate 149 November 2016

151 balance is an ongoing process, best addressed by continuing focus on information gathering and open discussion. Recommendations: Ports of Jersey and States of Guernsey should consider what improvements can be made to port facilities to support an excellent end to end customer experience. Immigration services should review resource prioritisation in order to address the considerable delays regularly faced by passengers arriving from France. Condor should work with its logistics customers, and their end customers, to improve communications through the supply chain to support just in time operations. Condor should continue to engage widely with the Channel Islands communities in order to understand the differing needs of Jersey and Guernsey. The FSSG should ensure that it continues to provide an effective forum for discussing how the service can best recognise these differing needs. 6.8 Service Considerations Morning departures from the Channel Islands to the UK and afternoon departures from the UK to the Channel Islands As outlined in Section 4.15 there is considerable appetite amongst some Channel Island residents for morning departures to the UK, and afternoon departures from the UK; in other words for a reversed HSC schedule with the port of origin being the Channel Islands rather than the UK. A timetable which operated this way round would be attractive for hoteliers and self-catering operators, since it would give them an extended changeover time between guests (although so long as guest are not arriving very early in morning or departing late in the evening changeovers are generally manageable). For visitors, however, this would mean less time in the Islands for the same number of nights, as they would arrive late and leave early on travel days which may be a particular issue given the move towards short breaks rather than a week s stay. An unarguable downside for the visitor economy would be the complete loss of daytrips to Guernsey from the UK. Customer research by Condor has indicated that day trips to Guernsey are worth approximately 900k annually to the Island (85% of this being spend in restaurants, shop, attractions etc. and the remainder being harbour dues). 150 November 2016

152 There are, of course, practical operational considerations too, including crewing, berth access, alongside mooring, maintenance and spares. Facilitating such a change would include addressing the following points: Refuelling facilities: At present, Condor Liberation is refuelled overnight in Poole. While it would be possible to refuel mid-rotation in Poole, this would lengthen the turnaround time and therefore the whole rotation beyond legal crewing hours. Therefore there would need to be a ready and reliable supply of fuel. Overnight mooring, a suitable layby berth, and sufficient operational berths: An appropriate overnight mooring would be required and, in order to avoid tidal issues, if the ship were berthed overnight in Jersey, a layby berth may be required to avoid clashes. This may require harbour dredging. In addition, operational berthing would need to be planned to avoid clashes with other ships. In particular, it would be essential to ensure there was still an available berth for Commodore Goodwill s early morning freight arrival (c.0615 in Jersey). Similarly, there would need to be a berth for Condor Rapide s early arrival from France (c.0850). Available and trained crew all ranks: Options regarding crewing would need to be carefully explored. The options would be to provide overnight accommodation for existing crew, to relocate existing crew, or to hire new Island-based crew. All of these would inevitably add cost. Resident licences may be required. As there would likely be a loss of a significant proportion of existing crew members, the resulting knowledge and experience drain would need to be mitigated. Higher ranks would have to be relocated to ensure service continuity. It is estimated that a full transition would take 5-7 years. Shore based technical teams: In addition to relocating crew, shore based Condor technical teams would also need to relocate to a new home port in the Islands. This could have inefficiencies (and therefore could increase the company s cost base) as, at present, technical teams can work across multiple ships in the fleet. Access to expert suppliers and trades: At present, Condor is able to draw on the wealth of technical expertise which exists in the extensive maritime community on the south coast of England. When a technical issue arises, it is normally possible to return to Poole (even if slower sailing speed means a delayed arrival) and to call on expert external support which can arrive within a matter of hours, allowing even complex work to be undertaken overnight before a return to service the next day. Stores: a range of storage facilities would be required including technical, catering and bonding (duty free). Economic Impact. Whilst there may be some economic upside to a reversed timetable, the potential downsides should also be considered. In particular, research conducted by Condor Ferries into the value of the day trip market 151 November 2016

153 to Guernsey 74 (which would be lost with an Islands-based HSC) found that this sector is worth almost 900,000 per annum to the economy. A further important consideration is that, basing Condor Liberation (or indeed any ship in the fleet) in the Islands would mean that, in the event of a significant technical issue, it could take longer to return to service than at present. This is because there could be a need to fly (or ship) in specialist parts and technicians, after which arrangements would need to be made for surveyors from the appropriate classification or regulatory body to attend and conduct the necessary sign-off. Recommendations: The FSSG should discuss whether, taking into account both the benefits and potential disadvantages, it would be attractive to base a ship in the Islands. States of Jersey and States of Guernsey should consider whether it would be practical and affordable to provide the infrastructure and support which would be necessary to support basing a ship in the Islands. Condor should assess the financial viability of basing a ship in the Islands A simple service delivered excellently As outlined in Section 5.17, the style of service being delivered by Condor is felt to be appropriate. The Review found very little demand for a premium level service if this would mean higher prices. The view expressed consistently throughout the consultation was that the service is at an appropriate level (i.e. pitched suitably between basic and premium). However, people consulted did identify some issues around execution particularly food service. It is noted that there are restrictions imposed on high speed craft which can make catering more difficult. There were high levels of complaints regarding Condor s customer service during the 2015 disruption. As a result, Condor is prioritising improving the customer experience. Work done includes a major strategic review (completely in January 2016), a range of quick win tactical actions (the impact of which were outlined in Section 3.5.1) 74 Condor Ferries research with 553 daytrippers who travelled in 2015 and 2016 found an average spend of per passenger compared with average spend of per cruise passenger coming ashore. 152 November 2016

154 and the recruitment of a new Customer Services Experience Director. This focus demonstrates Condor s determination to raise its service levels to meet, and indeed exceed, the expectations of its customers. It is concluded that the service is largely aligned with this need, with opportunities to improve the execution already being addressed. Recommendations: Condor should maintain its focus on improving customer service, monitoring closely ongoing levels of customer complaint and responses to customer satisfaction surveys to ensure that interventions are having the desired impact on service levels Service enhancements to meet the needs of 21st century travellers The Review found that some enhancements to the service could increase the appeal of ferry travel. At present, Condor does not provide the service enhancements which the Review found could increase the appeal of ferry travel. These include on-board Wi-Fi, seat allocation and consistently delivered real-time passenger information. However, plans are now underway to implement a pilot of on-board Wi-Fi, and seat allocation functionality is under review by the designers of the booking system used by Condor. Whilst the service is currently only partially aligned to this need, it is anticipated that the innovations in Wi-Fi and seat allocation will increase this alignment to moderate. Recommendations: Condor should continue its programme of implementing service enhancements. 153 November 2016

155 6.9 Summary of Report Recommendations 1 When considering any future changes to ferry services, Condor, the States of Jersey and States of Guernsey should ensure that Condor s continued delivery of the Critical Strategic Needs is not imperilled 2 Condor must prioritise and protect the operating schedule of the overnight UK to Channel Islands freight service. Compromises should only be made in extreme circumstances and only for short periods 3 In due course, Condor Rapide should be replaced with a vessel which will enable the continued provision of high speed passenger and car services between the Channel Islands and France. When selecting the replacement ship, Condor should bear in mind the desirability of flexibility across routes and between sectors (i.e. North and South, passenger and freight) 4 Within the current fleet configuration, in order to maintain capacity, there should continue to be year-round high speed ferry services between the Channel Islands and the UK 5 Condor should keep capacity and utilisation under review, including monitoring actual levels of population and economic growth 6 Where demonstrably excess capacity exists in some sectors, Condor should consider reducing service frequency, if this would facilitate improved service levels in other sectors, or support the viability of, or investment in, the service as a whole 7 Condor should retain its current route network, whilst continuing to keep under review the viability of alternative ports (including Weymouth and Portland) if they would enhance the appeal of its services 8 Condor should keep under review whether, in future summer periods, double rotations should be reintroduced to the schedule on some key days in order to provide the necessary capacity to support growth in the visitor economy 9 Condor should continue to monitor closely competitor pricing, aiming to balance the need for sufficient returns to maintain continuous investment in its service with the need to ensure travel is attractive and accessible in order to support resident and visitor travel 10 As part of its normal operating procedures, Condor should continue the current high level of focus on improving reliability and punctuality 11 Forward planning should continue to include contingency plans to minimise the impact of planned maintenance or unanticipated disruption to services 12 The timetable should continue to be reviewed to optimise opportunities for inter-island daytrips 13 Whilst there would be some improvements to fleet flexibility and resilience from replacing Commodore Goodwill with a RoPax ship, market growth 154 November 2016

156 analysis does not indicate a reasonable expectation of generating a return on the investment required for early replacement, and therefore doing so would imperil alignment with the Critical Strategic Needs 14 As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional RoPax for the fleet, as well as to cover the increased operating costs, it may be that the States of Jersey and States of Guernsey wish to explore with Condor other changes to the operating model (e.g. a longer Operating Agreement or an operating subsidy) which would make such an investment viable 15 As there is no reasonable expectation of being able to generate a return on the investment which would be required in order to purchase an additional HSC for the fleet, the high speed service between the Channel Islands and the UK should continue to be provided by one ship 16 Future fleet planning should take account of the benefits of flexibility across sectors and routes. In particular, when the time comes to replace Commodore Goodwill, the new vessel should not only protect the delivery of a reliable just in time freight service, but should ideally also have passenger capacity in order to enhance contingency plans and improve resilience 17 As there is no reasonable expectation of being able to generate sufficient income to support a dedicated inter-island service, the States of Jersey and States of Guernsey should explore with Condor whether other changes to the operating model (such as an operating subsidy) would facilitate such a service 18 Ports of Jersey and States of Guernsey should consider what improvements can be made to port facilities to support an excellent end to end customer experience 19 Immigration services should review resource prioritisation in order to address the considerable delays regularly faced by passengers arriving from France 20 Condor should work with its logistics customers, and their end customers, to improve communications through the supply chain to support just in time operations 21 Condor should continue to engage widely with the Channel Islands communities in order to understand the differing needs of Jersey and Guernsey. The FSSG should ensure that it continues to provide an effective forum for discussing how the service can best recognise these differing needs 22 The FSSG should discuss whether, taking into account both the benefits and potential disadvantages, it would be attractive to base a ship in the Islands 23 States of Jersey and States of Guernsey should consider whether it would be practical and affordable to provide the infrastructure and support which would be necessary to support basing a ship in the Islands 155 November 2016

157 24 Condor should assess the financial viability of basing a ship in the Islands 25 Condor should maintain its focus on improving customer service, monitoring closely ongoing levels of customer complaint and responses to customer satisfaction surveys to ensure that interventions are having the desired impact on service levels 26 Condor should continue its programme of implementing service enhancements 156 November 2016

158 Appendix A. Glossary The following terms are used in this report. Comprehensive Service Review Critical Strategic Need CSR Finding FSSG Guernsey GDP IMDG Important Strategic Need Jersey GVA Key Strategic Need Leg Strategic Needs which are critical to national infrastructure; likely to be essential to the continuation of Island life; over an extended period of time, un-met critical needs are likely to have serious consequences. Comprehensive Service Review as defined in Clause 9 of the Operating Agreement Findings are conclusions are a result of the data collation and consultation exercise undertaken during the Review. Finds have bene used to identify the Strategic Needs of the States and Service Considerations The Ferry Services Steering Group as defined in Clause 15 of the Operating Agreement Guernsey's Gross Domestic Product (GDP) is the value of island output (wages plus profits and other local income) and can be viewed as the total of consumer and States spending plus business investment. Goods classified under the International Maritime Dangerous Goods Code. Strategic Needs which are important for choice and growth; likely to support convenience and comfort; over an extended period of time un-met important needs are likely to impact on usage of ferry services and affect dependent sectors on the Islands Jersey Gross Value Added (GVA): shows the value of economic activity taking place in Jersey and permits a breakdown by each sector of the economy A Strategic Need which is key for economic health and social wellbeing; likely to support a prosperous Island society; over an extended period of time unmet key needs are likely to impact on quality of life on the Islands. A single journey between two ports 157 November 2016

159 Linkspan LoLo Northern Route Operating Agreement Operator Review ROACE RoPax RoRo Rotation Service Consideration Southern Route Strategic Need The boarding ramp which connects a ship to the shore Load on/load off or lift on/lift off in which freight is loaded on and off the vessel with a crane, rather than driven on The routes between the Channel Islands and the UK (presently Portsmouth and Poole) The Operating Agreement between the Jersey Harbour Master and Condor Limited, as signed on 15 August 2014 The party undertaking the provision of ferry services under the Operating Agreement (in this case, Condor Limited) The Comprehensive Service Review Return on Average Capital Employed. A measure of the profit that Condor is making, and is regulated by the Operating Agreement. A RoRo vessel that can accommodate passengers (rather than just freight) Roll on/roll off in which vehicles (for example cars or wheeled freight) are driven directly on or off the vessel The round-trip journey of a ship from and back to its home port, with one or more stops Something which may help to optimise the attractiveness of ferry services in the future, identified as the result of a Finding from the Review. The routes between the Channel Islands and France (presently St Malo) A Strategic Need of the States as defined in Clause 9 of the Operating Agreement, identified as the result of a Finding from the Review 158 November 2016

160 Appendix B. Operating Agreement Extract Clause 9 of the Operating Agreement sets out the requirements for the Comprehensive Service Review as follows: 9.1 The Operator acting in good faith and in co-operation with the Harbour Master shall, in accordance with this clause, undertake periodic Comprehensive Service Reviews covering: the strategic needs of the States as regards to ferry services (having regard to any market consultation); 9.1. the alignment of the Services offered by the Operator, including product, price and service structure, with such strategic needs; and Operator performance (by reference to the Performance Measures), in each case as against the then current financial model for the Services, which may accommodate key alternative economic and service assumptions (a "Comprehensive Service Review"). 9.2 The outcome of each Comprehensive Service Review shall be presented to the FSSG. 9.3 A Comprehensive Service Review must be conducted: by 31 January 2017; and by 31 January For the avoidance of doubt, any changes suggested as a result of a Comprehensive Service Review shall only be implemented in accordance with the Service Change Procedure. 9.5 The Harbour Master shall share his plans and proposals in respect of any proposed or anticipated investment into the ports of Jersey (including but not limited to infrastructure development and the entire experience of the end to end customer journey to and from either port that impacts the provision of the Services) in order to optimise customer experience throughout the Duration. 9.6 The terms of reference for each Comprehensive Service Review, to include process, criteria and costs, shall be mutually agreed by the Parties prior to each Comprehensive Service Review. 159 November 2016

161 Appendix C. Performance Assessment This Appendix considers how Condor Ferries is performing against the Performance Measures in the Operating Agreement and is the result of PA Consulting independently reviewing Condor Ferries performance against the Performance Measures. The Performance Measures framework was designed to provide a means of ensuring that the Operator provided a sufficiently high standard of service. It put in place means by which the FSSG could agree Remediation plans to address any shortcomings, enabling the FSSG to monitor progress thereafter. The Agreement recognises the importance of enabling the Operator to address any diminution in service levels over a reasonable time frame, recognising that the ongoing substantial investment made by an Operator should not be imperilled by relatively short term operational or technical problems. Nonetheless, the measures are included to ensure that the States are protected from sustained under performance by the Operator. Condor Ferries provides monthly reports to the Harbour Master, and quarterly reports to the FSSG. Each year the FSSG also conducts an annual review of performance against the Performance Measures. The Operating Agreement outlines three types of Performance Measure: Cancellations (reliability) Schedule performance (punctuality) Customer satisfaction This section considers data since the implementation of the Operating Agreement (August 2014) until July 2016, all of which has been previously shared with the Harbour Master and published on Condor s website. Fault and No Fault events For the purposes of the Operating Agreement, all cancellations and delays are measured and reported. The root cause of a cancellations or delay is referred to as an Event. Events are categorised either as No Fault Events or Fault Events. A Fault Event is defined as any event or occurrence where the majority cause arises from: the negligence or default (including acts or omissions) of the Operator; or a material breach by the Operator of the terms of the Agreement; or a failure by the Operator to act as a Prudent Operator to effectively avoid or manage the event 160 November 2016

162 Some non-exhaustive examples of No Fault Events are set out with Annex 4 of the Operating Agreement: Cancellation or delay cause by weather conditions endangering the safe operation of the ship Any health and safety, internal Ship Management System or environment issues that could not be reasonably managed by a prudent operator Scheduled maintenance in accordance with a maintenance programme Unforeseeable or unmanageable events for example attending an SOS call or the blocking of major access routes. All Events (whether Fault or No Fault) are reported to the FSSG as part of the quarterly reporting schedule. In addition, a detailed schedule of Events is reviewed annually. The Operating Agreement (Appendix C) sets out the levels above which Fault events will trigger either a Remediation process or, in extremis, Termination. Reliability (cancellations) Cancellations are defined in the Operating Agreement as the measure of adherence to the published schedule. A Cancellation is a sailing that is not completed on the day it is scheduled to complete, or before 10am the following day. The Operating Agreement sets the following thresholds for Cancellation Events: Remediation Trigger Termination Trigger RoPax 1 Cancellation Event in any quarter 12 Cancellation Events in any rolling 1 year period HSC > 5 Cancellation Events in any quarter 30 Cancellation Events per annum for two consecutive rolling 1 year periods Freight > 2 Cancellation Events in any quarter 12 Cancellation Events in any rolling 1 year period Reliability is measured across all services on a monthly basis and Condor shares this information monthly with the Harbour Master, the FSSG and on its website. Cancellation No Fault Events The number of No Fault cancellation events recorded since the implementation of the Operating Agreement is as follows: 161 November 2016

163 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 RoPax Freight HSC Total As would be expected, performance is worse during the winter months due largely to weather conditions. Figure 75 No Fault Cancellation Events (Source: Condor performance data) Conclusion: There is some vulnerability to services due to conditions outside Condor s control which cause cancellations, particularly during the winter months. Cancellation Fault events There were no Cancellation Fault Events in Condor only experienced one Cancellation Fault Event in 2015 the initial berthing incident with Condor Liberation on 28 th March. There have been no Cancellation Fault Events to date in November 2016

164 Conclusion: Condor s low levels of Fault Cancellation Events are compliant with the Operating Agreement Punctuality (schedule performance) Scheduled Performance (Punctuality) measures punctuality across all Passenger and Vehicle Sectors against the Material Delay and Moderate Delay Performance Measures. The Operating Agreement quantifies Material and Moderate Delay Events as follows: Journey Time Material Delay Moderate Delay Up to 4 hours (i.e. routes Jersey to/from St Malo or Guernsey) 1 hour overdue minutes overdue More than 4 hours, but not exceeding 8 hours; (i.e. routes Jersey to/from UK, in HSC) 90 minutes overdue minutes overdue More than 8 hours, but not exceeding 24 hours (i.e. routes Jersey to/from UK in the RoPax vessel 2 hours overdue minutes overdue The Agreement then sets the following thresholds for the number of Delay Events: Remediation Triggers (any of) Termination Trigger RoPax > 5 Moderate Delay Events in any 1 year rolling period > 1 Material Delay Event in any one year rolling period HSC > 4 Moderate Delay Events in the Winter Season > 20 Moderate Delay Events at other times outside the Winter Season > 2 Material Delay Events in the Winter Season > 7 Material Delay Events at other times outside the Winter Season 30 Material Delay Events per annum for two consecutive rolling 1 year periods 150 Moderate Delay Events per annum for two consecutive rolling 1 year periods Freight > 5 Moderate Delay Events in any 1 year rolling period > 1 Material Delay Event in any one year rolling period 163 November 2016

165 Material Moderate Comprehensive Service Review Punctuality is measured across all services on a monthly basis and Condor shares this information monthly with the Harbour Master, the FSSG and on its website. Monthly reports enable the FSSG to monitor performance. As with reliability, reports split delays into those caused by Fault Events and those attributable to No Fault Events. Delays No Fault The number of No Fault Delays recorded since the implementation of the Operating Agreement is as follows: Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 RoPax Freight HSC Total RoPax Freight HSC Total As would be expected, performance declines during the winter months largely due to weather conditions. 164 November 2016

166 Figure 76 Material No Fault Delays (Source: Condor performance data) The relatively significant number of material freight delays observed during winter months are primarily the result of Condor focusing on maintaining lifeline services, rather than cancelling sailings, during poor weather, which impacts sailing times. Figure 77 Moderate No Fault Delays (Source: Condor performance data) 165 November 2016

167 Material Moderate Comprehensive Service Review Conclusion: The punctuality of services is affected by a range of external factors, which contribute to No Fault delays. Material delays experienced by freight services are often the result of focusing on maintaining lifeline services in poor weather. Delays Fault The number of Delay Fault Events recorded since the implementation of the Operating Agreement is as follows: Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 RoPax Freight HSC Total RoPax Freight HSC Total Condor experienced a total of 57 Delay Fault Events during The majority of the Material Fault Events suffered in 2015 occurred in May with the introduction of Condor Liberation and were principally due to slow port turnaround. As staff became more familiar with the vessel and more practised at loading, these delays decreased. In the second half of 2015, Moderate Fault Event numbers began to decrease and stabilise, with a total of 8 incurred between Sept and Dec There have been four fault events to date in 2016: One material delay event due to a scheduling error with Condor Rapide One moderate delay event due to a berth clash in Jersey Two moderate delay events due to vehicle deck loading issues. 166 November 2016

168 Conclusion: Condor is generally performing to the punctuality requirements of the Operating Agreement. There have been instances where remediation is required, largely due to the very low number of material freight delays which trigger remediation. With the resolution of the start-up issues surrounding the introduction of Condor Liberation, which had knock on effects to the rest of the fleet, Delay Fault Events have reduced to their previous low levels. Customer satisfaction Customer Satisfaction measures the general satisfaction of Condor s passengers and is measured across all Sectors on a monthly basis. The results are reported monthly to the Harbour Master, FSSG and published on Condor website. The monthly report is used by the Harbour Master to monitor Customer Satisfaction. Condor conducts a continuous customer satisfaction survey, sent to every passenger who books directly with the company shortly after travel by or post. The survey is managed by MindMover, to ensure Market Research Society standards and confidentiality. The survey includes numerous structured questions which explore satisfaction with matters such as reliability, punctuality, value for money, staff and on board services. Over 10,000 customers participate in the survey each year, making this the largest piece of continuous consumer research in the Channel Islands. Individual scores are aggregated to achieve an overall customer satisfaction rating (out of 10). Data from the previous year is then collated to produce the 12 month rolling average. This gives an indication of long term trends in satisfaction levels. 167 November 2016

169 Figure 78 Customer Satisfaction (12 month trailing average) (Source: MindMover survey and analysis) The graph illustrates how satisfaction fell during 2015, following the introduction of Condor Liberation in March. Scores have begun to improve during Q The Operating Agreement requires that ratings are not included where they relate to circumstances that would be outside the control of a Prudent Operator (including but not limited to No Fault Events and Force Majeure events). The present research methodology does not enable the exclusion of these ratings. 168 November 2016

170 Customer satisfaction with reliability and punctuality correlates with actual reliability and punctuality performance, as shown in Figure 79 below. Figure 79 Customer Satisfaction vs Actual Performance (Source: MindMover survey and analysis, Condor performance data) 169 November 2016

171 Similarly, Condor s overall customer satisfaction ratings strongly correlate with ratings for reliability and punctuality as shown below. Figure 80 Customer Satisfaction Measures (Source: MindMover survey and analysis) It can therefore be assumed that, if Customer Satisfaction relating to delays and cancellations caused by No Fault events were excluded, customer satisfaction ratings (as measured for the purposes of the Operating Agreement) would be higher. Conclusion: Customer satisfaction is significantly influenced by circumstances outside Condor s control as well as by operational matters such as the difficulties associated with the introduction of Condor Liberation and the installation of scrubbers in Recovery is being seen in November 2016

172 Appendix D. Roundtable Consultations General Roundtable Meetings Two general roundtable meetings were held on each island. The meetings were each 90 minutes long, and were structured around the main consultation themes. The following people attended: Name Guernsey Chris Bligh Barry Cash Graham Chester Gail Clark Tony Creasey Harry Dick-Cleland Mandy Eulenkamp Patrick Firth Ant Ford-Parker Larry Granger David Harry Ian Milner Lynn Ozanne Kevin Stone Jonathan Le Tocq Peter Walters Luke Wheadon Jersey Sid Brown Helen Hart Nikki Holmes David Kennedy Robert Mackenzie - Tony Moretta Murray Norton Representing Guernsey Kennel Club (president) Guernsey Chamber of Commerce, Director Guernsey Sports Commission Guernsey Kennel Club (treasurer) Creasey s department store Cleland and Co ABTA Guernsey Guernsey International Business Association Outdoor Guernsey Confederation of Guernsey Industry, Chairman Guernsey Sports Commission CEO Sark Shipping Guernsey Kennel Club (registrar) Waitrose Policy & Resources Member Guernsey French Homeowners Association, Chairman Guernsey Chamber, hospitality & tourism St Brelades Language School Jersey Hospitality Association, Manager Jersey Sports, EDTSC Sports Development EDTSC Sports Development MD of Channel Island Travel Group Digital Jersey Deputy Minister 171 November 2016

173 Michael Renouard Andrew Sugden Jersey Royal Jersey Sports Shadow Board / EDTSC Sports Development Notes against the consultation themes are as follows: 1. Speed vs certainty of journey There was a general preference for reliability over speed with people noting that flying will give speed if required. It was noted that leisure travellers will be less concerned about speed. It was felt by some that both speed and certainty had been delivered in the past It was reported that reliability issues had led to a reduction in visitor numbers It was felt by some that in the past a slow ferry used to be part of holiday on island, but the new style of boat upset the rhythm, with some passengers not enjoying the experience The needed for certainty for important sports events was noted even if this means travelling earlier than necessary The importance of certainty to freight services was recognised, particularly for fresh produce Customer expectation is that information provided on disruptions should be the latest and live, with comparisons made to other services (for example the EasyJet mobile app) 2. Where, when and why people travel It was noted that reliability and schedule are more important than port location The use of Weymouth was debated extensively, with some people preferring this, but concerns about viability There was a view that a more frequent service to existing destinations would be better than introducing new destinations It was suggested that an occasional fast service from Portsmouth or Southampton would be good. There was broad satisfaction with the southern routes It was noted that the removal of double rotations mean that day trips to/from the UK are now difficult It was reported that there are large numbers of inter-island sports travellers, for whom the timetable is not always aligned It was agreed that Portsmouth is the most appropriate port for freight with suitable facilities/infrastructure 172 November 2016

174 3. Schedule It was noted that onwards travel needs to be considered, and that this is particularly an issue on the northern route It was noted that the current timetable is much less suitable for day trips 4. How weather and season change behaviour & expectation Some people do consider certainty when travelling to the UK, and book Clipper as a result It was suggested that Islanders should be able to take advantage of spare capacity with reduced fares for last minute travel It was also suggested that Condor should charge more for booking early as this gives certainty There was acceptance there is seasonality in travel, with the highest demand for services by sea in the summer Even with seasonality, it was suggested that certainty still the priority It was noted that once travel is booked weather is irrelevant, It was accepted that there can be some weather conditions where ships cannot dock 5. Change to the timetable It was felt that timings for day trips to France currently don t work It was felt that the timetable on the high speed northern service did not work well, and that this could be improved by basing the boat on the Islands. It was noted that inter-island day trips are not very practical with the current timetable It was also noted that some of these inconveniences are the price of living on an island 6. Type and style of service Many peoples agreed that paid for seating (pre-selected) would be a good selling point (e.g. e.g. front, forward, window) There was little appetite for a cruise like service There were various comments on the food on Liberation. A few people had issues with the menu, but there were more comments about the quality and speed of service (leading to queues and congestion on board) Some people stated that they had enjoyed a good journey on Liberation, although others noted the lack of space for the standard seats Comments on loading / unloading varied with some describing it as very impressive but others having had issues It was noted that in the past there was a proper dinner services on the Jersey St Malo route that was popular. It was noted that the on-board service is secondary to a reliable service, supported by good communications, which people have trust in. 173 November 2016

175 Wi-Fi is expected as a service now, and is expected to be free, although people may not recognise the technical constraints at sea. A more family friendly departure lounge was suggested Various shortcomings in harbour facilities were noted, including opening times of cafes, insufficient parking and lack of space to meet passengers. 7. Balancing the priorities of freight, tourism, residents etc. It was noted that reliability has an impact on the tourist industry It was note that a lack of tourism would impact freight and Islander travel, and therefore this could be considered the priority Others noted that tourism and residents complement each other, while others noted that all three are dependent. It was noted that tourists may be more sensitive to an effective timetable, whereas islanders using the ferry as a lifeline service will be more willing to travel at less convenient times. The essential role of the ferry in bringing freight for food was recognised 8. Changes in consumer behaviour Discussions here primarily focussed on freight. Internet shopping is changing freight patterns with more goods coming through parcel channels. People are reverting to food shopping little and often rather than a bulk weekly shop leading to increased turnover of fresh foods. Increases in non-bulk pre-packed foods also means lots packaging is shipped to the Islands. States Members Roundtable Meetings A roundtable meetings was held on each island with States Members. The meetings were each 90 minutes long, and were structured around the main consultation themes. The following Guernsey States Members attended: Name Michelle Le Clerc Mark Dorey John Gollop Shane Langlois Representing Employment & Social Security, States Assembly & Constitution Environment & Infrastructure, States Assembly & Constitution Development & Planning, Employment & Social Security, Transport Licensing Authority Employment & Social Security, Environment & Infrastructure 174 November 2016

176 Jennifer Merrett Barry Paint Robert Prow Gavin St Pier Heidi Soulsby Emilie Yerby Economic Development Transport Licensing Authority Health & Social Care, Home Affairs Policy & Resources Health & Social Care Overseas Aid & Development Commission, Employment & Social Security, Health & Social Care, Transport Licensing Authority Due to the somewhat fluid nature of the meeting a record was not taken of the Jersey States Members that attended. Speed vs. certainty There was a general preference it took longer if in the winter to be assured of a service with a focus on Clipper. However there was also a view that a daytime sailing from Portsmouth on Clipper takes too long. Fast ferry to Poole impacted by potentially longer onward travel and road congestion to get out Poole If fast ferries were abandoned as concept, the Islands would lose tourism market as a consequence Public prefer reliable time, punctual arrival/loading/departures. It is an issue when travellers have made a long journey to the port without having been made aware of issues. Perception of reliability has suffered due to issues with Liberation. The old mail boat was always considered the most reliable, ferries used to be considered much more reliable than air services Priorities freight/tourism/islanders Freight is most important due to essentials (food on shelves) needed to survive and live, and the short amount of storage facilities on island Some perception that Condor focus on tourism at the cost of lifeline, and that this should be other way around All three services should pay for themselves, one should not be subsidised by other services Destinations Priority should be reliability and scheduling, rather than adding new destinations Weymouth is seen as a desirable destination by some (perception of better onward rail travel and easier road links if travelling north or west), although restrictions (e.g. e.g. on freight) are understood A suggestion of exploring Exeter/Exmouth 175 November 2016

177 The is some interest in Cherbourg, although it is important to get St Malo right first Daytrippers from the UK only visit Guernsey for a couple of hours, which brings little benefit Product There is a view that on Liberation the standard seating is tight and narrow, and the children s area very small. There could be a larger area, potentially with separate areas for different age groups and on board crew to manage these Some would like to see mix of luxury and affordable options, with a balance between fares and experience Liberation, food area narrow, poorly designed flow There was previously some round table seating which was nice for families, now airline style seating; matters more if journey longer Foot passenger loading seems slow, particularly with a shuttle bus, and some passengers wanting to take luggage on board There was a view that Condor do not say anything to customers (welcome, thank you and sorry) Terminal facilities are an important factor. For example when waiting at Guernsey you are penned in and cannot get drinks Miscellaneous Schedule: arrival/departure times in Poole, additional hotel accommodation required, cost impact on families, The perception is that Condor service have become an expensive option for travel particularly the French route Condor no longer provides competitive or varied price packages for different customer needs There s a perception that Condor has monopolised the market and is exploiting that The flexibility offered by airfare isn t reflected in Condor s prices E.g. E.g. it s cheaper to fly and hire a car than take the ferry with your own car. Condor demonstrates no urgency in offering alternative means of travel this is compounded by the move to a 4 vessel fleet of different services. The expectation is that you arrive to the time advertised, customer confidence is low as this is not consistently the case. Reliability has improved but customers are unaware. Timetables are such that customer s plans are severely inconvenienced when there s an issue (E.g. E.g. arriving in France at 9pm) Consider more Clipper ferries which arrive at more convenient times Clippers are also more reliable. Focus should be on winning back the customer confidence Offers and promotions that have been distributed shouldn t be difficult to find 176 November 2016

178 Connectivity between the sales teams and customer service teams is poor Public should be made aware of improvements that have taken place (improved reliability metrics etc.) 177 November 2016

179 Travel Trade Roundtable Meetings A roundtable meetings was held on each island with invited representatives of the travel/tourist trade. The meetings were each 90 minutes long, and were structured around the main consultation themes. The following people attended: Name Guernsey Ken Baker Carla Bauer Hannah Beacom Sandra Berry* Tony Brouard Andrew Coleman Karel Harris Lukas Laubscher Martin Ozanne Paul de SteCroix- Hanson Peter de Sausmarez Alan Sillett Simon Vermeulen Jonathan Watson Jersey Oliver Appleyard Stewart Barrow Alan Blanchet Margaret Devoy Chris Evans Pat Houghton Vici Martin Adrian Rossell* David Seymour Lynda Tanguy Representing World Travel Victor Hugo House Island Coach Ways Selfcatering in Guernsey Vaugrat Campsite La Barbarie Hotel Sarnia Hotels The Duke of Richmond Hotel Les Buttes Holiday Cottages Ziggurat Hotel Sausmarez Manor and Park Duke of Normandie Hotel La Grande Mare Hotel, Golf and Country Club Herm Island Greenhills Hotel (Seymour Hotels) Delta Racing Signature Coaches Destination Specialists CI Travel Group Freedom Holidays Mayfair Hotel Macole s Self Catering Pomme D or Hotel (Seymour Hotels) Premier Holidays 178 November 2016

180 John Vibert Hotel de France * - Unable to attend meeting, but were subsequently consulted Reliability The Condor fleet consists of four vessels that are all different, which means if there s a need to swap a vessel when an issue arises the result for customers is a different, unexpected service Is it practical to offer the fast service during the winter months when people will be hesitant given the weather? Could Condor not orient its service offerings around the forecast year s weather? Service agreements may be too binding There exists no flight connections from France so the only option is through the ferry. Scheduling The Island tourism industry needs to be informed as early as possible of Condor s schedule in order to manage the customer changeover programmes and holiday offers/ packages Any change to the schedule during seasons has a massive impact on the industry; small businesses will suffer if they are not given time to prepare To move to double rotations, the schedule needs to be optimal as customers travelling from afar face challenges if there are no contingency options or the times are not convenient With weekend customer s predominately wanting to bring a car, Condor currently does not offer enough capacity, and customers will not be prepared to compromise as it is not value for money (renting a car on the island and parking fees in the UK) Condor should consider more ferries during peak scheduling times Southern service and schedule seems to cater more to the French market, killing off the day-trip market from Islanders to France. Customer Profiles Families are more inclined to travel on the weekend and will consider the convenience of the airlines if Condor doesn t cater for enough capacity / services The holiday market is forecast to be difficult to manage next year due to political climate (Brexit). The French and German market will open up as the Euro compares better with Sterling. For the English market, parity will make the biggest impact. Potential dangers / threats could deter travellers, but also encourage the UK market to holiday more locally Scandinavian and German markets enjoy tripping over both Islands, but are inhibited by the ferry scheduling they cannot go from Jersey to Guernsey for 179 November 2016

181 the day (only on Tuesday), which reduces the attractiveness of the short stay market The expectation is that the service should be similar to the Dover to Calais trip, which also offers a better customer experience There is a push for more short stays, but ferries cater more towards the longer stay market (except for from France which is not heavily marketed to). The Island hotel industry is not geared towards budget customers. Customer Service Condor should integrate with local car hire services to provide packaged offers Condor should consider investing into electric car facilities on-board Overnight options are only viable if there is cabin capacity available customers would consider this more desirable as it is a better experience and arrival time can be early, but it would be difficult for the hotel owners as check-out time would need to be later and it would be difficult to clean and turn-around rooms (which can be mitigated with more information on the schedule earlier). However, the growing market is more in faster more reliable ferries. Customers expected a lot more (Wi-Fi is essential to customers these days) New system splits couples/ families seating together on board. Seating should be intuitive, together, and more tables would be preferable Consistency of communication if customers are notified one way they should be notified the other way or it could generate confusion. Customers will expect catering appropriate to the time of day. Jersey Consumer Council Condor Group Speed vs certainty Reliability and punctuality are more important than speed Could two conventional ferries alternating instead be considered? The French route runs more regularly, sometimes it is better taking the ferry to France and the tunnel back to UK Seasonality There is a perception that Liberation is always having technical issues Most people understand when services cancelled due to weather. Reliability issues are less acceptable It was not clear why Liberation cannot operate in bad weather It was recognised that there have always been teething problem when introducing new vessels into service 180 November 2016

182 Where when why people travel, and destinations Onwards travel needs to be considered when planning timetables (for example, an overnight stay in Poole can be necessary to avoid driving overnight) An overnight conventional ferry would be good for some, although some families prefer day time travel Issues of trust and perception over the last year or so mean that minor issues tend to get inflated The priority should be to deliver a good service on existing routes rather than new routes Service There is a broad consensus that on-board Wi-Fi for the entire crossing would be a benefit and is increasingly expected. The was not a consensus on whether this should be absorbed into the ticket price or should be an extra charge The quality of the catering is variable, and there are often queues. The selection of food on the southern service is felt to be better There are mixed views on the loading and unloading process ranging from amazing to issues with getting access to cars, not finding staff to help and intense fumes There can be a customs backlog at Jersey port, due to diversion of customers staff to the airport There was a view that s/letters are not responded to, or if so with a cut and paste response Twitter was considered very good, with prompt responses and action Other If prices reduced frequent travellers would travel more and still spend same in duty free every time. There is a perception that fares expensive for both routes Availability of offers or discounted fares is felt not always to be well advertised. 181 November 2016

183 Appendix E. Individual Submissions The following people have submitted individual submissions, either by engaging directly with Condor, or by ing the address set up during the Review. Name Christine Babbé Paul Baguet Sandy Burnside Colin Campbell Stephen Clipp Jo Cottell Michael Frain Mike Graham Tony Holland Rob Lihou Kim and Nina Marquis Ruth Robinson Paul le Tisser Simon Vermeulen Richard Young Channel to Paul Luxon to review team to Via to Senator Farnham to Paul Luxon Via s to Peter Ferbrache and Paul Luxon Via to Senator Farnham to Paul Luxon to Paul Luxon to Via to Peter Ferbrache Via to Peter Ferbrache Via to Peter Ferbrache to to Feedback from these submissions has been organised into a number of themes. To improve clarity we have generally summarised the comments received although some verbatim comments are shown in quotation marks. CSR Survey / Process Some respondents felt that the questions in the survey were misleading, were pushing people towards an answer that was convenient to Condor, or were to justify a decision that has already been made. There was also a view that there should have been an opportunity for respondents to make general comments (for example on levels of customer service). Some people experienced technical difficulties completing the survey. In places people would have preferred to be able to skip a question, or explicitly select none of the available options. It was noted that there was no opportunity to comment on what people felt were already high prices. 182 November 2016

184 Fares Two correspondents commented on fares perceiving them to be expensive, and that this would deter visitors who have a choice of destination. It was commented that a cabin on Clipper is twice as expensive as the Southampton airport Premier Inn. Benefits were felt to have been removed from the Condor Frequent Travellers Club. It was noted that working people often cannot travel mid-week when apparently cheaper fares are available. One respondent did not like how late bookings are charged more than early bookings, believing that this discourages spur of the moment travel. Communications One respondent had had no response from an to Condor Customer Services after two weeks (beyond a standard holding response). One respondent noted that over Christmas 2015 there was difficulty getting access to reliable information on sailings either through calling various offices (outside normal office hours) or the Condor website. It was suggested that Condor should have had office telephones in all ports manned until late in the evening and early morning and their website constantly updated during the night. Another respondent noted similar issues with obtaining reliable information during a summer disruption. On Board Experience appalling service in that the upstairs bar was unable to serve anything other than black coffee as 'the machine was broken and there was no milk whilst downstairs both the Bistro cappuccino machines were broken resulting in it taking over 20 minutes to purchase a couple of croissants and coffee!! On the whole, I have found the staff both polite and helpful, the ship clean. One respondent reported an issue around booking seats where they were allocated rear facing seats, having previously advised that this causes motion sickness. They were able to change as the boat was not full. Reliability Two respondents stated that they will only go to France on the few days that the Rapide sails directly to and from Guernsey. One respondent felt that it was not acceptable to have delays and cancellations as much as we do. Another noted that we cannot rely on the Liberation service. Schedule 183 November 2016

185 It was noted that a day visit to Jersey is not practical, and that the stay needs to be at least five hours to be useful e.g. e.g. 10am to 3pm as an absolute minimum. It was also noted that sailing times to the UK are not very user friendly, usually incurring the additional expense of overnight accommodation either one way or the other. A further example was given of the current difficulties of inter-island travel for a golf tournament with the participants needing/choosing to fly instead. One responded noted that it is no longer possible to do a day trip from Dorset. I was always under the impression that Condor was a service set up to serve the needs of both Jersey and Guernsey residents as well as the tourist trade. Sadly this is no longer the case. Due to costs and timings it just doesn't make sense to use Condor, even if day trips were available. One respondent gave an example of a trip where flight plus rental car were cheaper than ferry and more convenient due to timetable. There was a request to introduce the double rotation on Liberation to allow effective day trips from the UK (even if weekly or every other week). For one individual, timetable was the reason why regular travel has halved. It was noted that Guernsey residents need to leave work at lunchtime for a Friday sailing to France (whereas Jersey is later in the afternoon). And it is necessary to return midday on Sunday (whereas for Jersey this is later in the afternoon). There was a perception that the winter timetable is biased towards Jersey. The possibility of you operating a designated ship for inter-island is a very exciting development. To make it work for the leisure market I strongly believe you will need to operate a late afternoon, early evening service on Sunday's so weekend breaks can be offered which is the what that market demands. Loading/Unloading One respondent reported regularly experiencing bottle necks at the initial vehicle check-in booth, suggesting that this continually seems to be under resourced. One responded requested getting rid of the tags on the rear view mirror showing destination as they tended to fall off or obscure visibility. Another responded noted the long delays in unloading foot passengers. Booking One respondent requested that it should be possible to book with different numbers of passengers in each direction (rather than having to make separate bookings). 184 November 2016

186 Liberation Two respondents expressed the view that Express and Vitesse should have been replaced with two more fast ferries, and that this would have retained the link to Weymouth. They noted that two boats would provide greater resilience, and easier unloading for vehicles and foot passengers. It was felt by two respondents that the open car deck was not appropriate for Channel waters, and that the cabin area was very claustrophobic. Two respondent mentioned the motion on Liberation (stating that this has been mentioned by other people). The airline style seats were also unpopular with this respondent, and the fact that it is not possible to book a specific seat. One respondent stated that Condor Liberation has suffered an unacceptably high number of mechanical breakdowns since she entered service and this, coupled with her inability to cope with sea conditions frequently found around the Islands, has resulted in an unreliable and unacceptable service. The concerns are of the technical and sea worthy ability of Liberation despite independent claims that it is otherwise fit for purpose. Liberation seems to be the catalyst of all problems since its arrival. Solution - Get Rid and replace!" Routes I would like to see a regular conventional ferry re-introduced on the Channel Islands - Weymouth route (even if this means obtaining subsidies from the Governments of Jersey & Guernsey & Weymouth Borough Council, or by gaining an alternative Ferry Service Provider). Other / General One respondent made the following comment after a disrupted sailing: A ship, any ship can break down and when that happens when you have only one ship on the route chaos occurs. Having one ship is another debate, but one thing that can be done is treat passengers with respect and recognise that they should be given no reason to complain. Every passenger we spoke to accepted the fact that mechanical failings do affect travel, but it was the customer service or lack of it, that made them say never again ". One respondent complained about Clipper, believing the journey time to Portsmouth to be unacceptably long (in comparison with previous journey length to Weymouth) and citing two uncomfortable journeys in rough weather. It was suggested that Jersey needs to wise up and pressure put on the island to change harbour depth, noting the impact that this has on the timetable. It was asked if a separate boat could be considered for interisland and servicing France, and whether northern and southern schedules could be 185 November 2016

187 separated so that UK weather patterns do not impact on sailings to and from France. My end comment would be: Channel Islanders want a reliable (not necessarily fast), regular, affordable Ferry Service to and from the Islands which does not operate to the detriment of Our Tourist Industry and keeps our Traditional Trading Routes open all year round, including the facility for Day Trips both between the Islands and to and from the UK/France (this may even include adding a link to Cherbourg or Roscoff) 186 November 2016

188 Appendix F. Organisational Submissions Organisational submissions were received from the following: Guernsey Committee for Economic Development Guernsey Condor Consumer Group Guernsey Sports Commission Jersey Consumer Council Condor Group The submission from the Jersey Consumer Council Condor Group summarised the roundtable meeting that was held to discuss the Review, and this is therefore covered by the notes in Appendix D. The observations and suggestions from the other three submissions are summarised below according to the consultation themes. Speed vs certainty Businesses and individuals need a robust, reliable and reasonably priced ferry service to and from the islands Fleet configuration needs to provide: regular and reliable shipping of freight to meet just in time delivery models, a reliable and robust service, adequate backup and resilience in terms of breakdown or adverse weather, provision of fast ferry services at peak times, sufficient capacity to meet peak demand and with room to grow A fast ferry and a conventional ferry is essential to meet the needs of consumers with a specific requirement for a for a three hour crossing for the summer tourist market. There may be scope to replace fast ferry services with a conventional ferry in the winter months Where when why people travel, and destinations The lack of day returns to Jersey for sports groups at weekends, whether by sea or air, is an issue, as is the cost (particularly of flights. The typical group size is The size of the aircraft (typical capacity of 46) means that charter is uneconomical. All routes to and from Guernsey are import especially the links to the UK and to and from Jersey The northern route is of strategic important both for freight traffic and for passenger carryings Links to St Malo will become more important, especially in the content of developing and promoting the tourism sector The current route network appears to meet the needs of islanders well The loss of the route to Weymouth has been missed by some islanders and there should be an open mind should the opportunity to return arise in the future Portsmouth is very suitable for freight traffic given the road networks leading to the port, but because of the longer sailing time to this port, it should not become the only port for Condor on the south coast 187 November 2016

189 The removal of double rotations during July and August has reduced the scope for day trips from Guernsey to and from Jersey with an impact on tourists and islanders. The provision of a fast ferry service on the southern route should continue beyond the lifespan of Condor Rapide. Current schedules for passenger services are not optimal. Ideally departure time from Guernsey to the UK would be around 10:00, with a late afternoon arrival time on the return journey. Consideration for additional services / capacity / flexibility to meet demand during school and public holidays and key island events should be part of scheduling for all routes. Scheduling is a key concern from industry, individuals and visitors. Service The lack of an ability to book specific seats is a particular issue. Balancing the priorities of freight, tourism and residents Services should be of sufficient quality and frequency to meet the travel needs of island residents, the business community and tourists Other Purpose-built vessels suited to the islands small and tidal 19 th century harbours, and that can cope with choppy seas and Atlantic swells, should be considered A move back to public ownership should be considered Pricing is becoming a sensitive issue, reflecting current economic conditions and increased competition (of mode of travel as well as destination) Condor needs to be transparent about how it applies prices to services, and what the travelling public can expect. There is the perception that prices have increased considerably following the introduction of the new booking system. If this is not the case, Condor need to demonstrate why. Availability and flexibility of rates for the tourism trade and industry is a concern, as is a lack of availability of Saturdays during the peak season. Consideration should be given to a more objective means of measuring performance. Consideration should be given to the introduction of an additional (probably RoPax) vessel on the northern route Consideration should be given to a passenger-only fast ferry service on the inter-island route 188 November 2016

190 Appendix G. Freight Consultation A structured questionnaire was sent out to major freight customers, seeking their views on the consultation themes from their perspective as freight operators. The following people responded: Name Kevin Banner Rupert Erskine Crum Nigel Irving Andy Jehan Adam Prosser Paul van der Tang Representing ITV Weyhill International Horse Transport Limited ECM (Vehicle Delivery Service) Limited Jersey Post Lucas Freight Offshore Electronics Limited The following points summarise the responses received. Where and when do customers wish their freight to travel? Mainly between Jersey and Guernsey, but at times to France and the UK too Daily between Guernsey and Portsmouth preferably overnight A requirement for freight to be available from 06:00 so as to comply with Jersey P3O restrictions Destinations for unaccompanied trade cars are Jersey/Guernsey from Portsmouth. Seven day week service required. Exploring the trade-off between speed and reliability The service must be reliable to ensure deliveries are on time as required by end customers It is important to know that when something is booked to go somewhere, that it will go. It is possible to plan for a journey that is slightly slower as long as there is assurance that it is going to get there Reliability is key. Shortening acceptance windows would help i.e. time trailers have to be at quay There is a preference for at least one reliable daily sailing, ideally two. A damage free service is also important The two vessels offer a more than adequate service for both the islands. How can Condor balance the (sometimes conflicting) needs of freight and passenger services? As long as a vessel is shared between freight and passenger services, that is going to be an ongoing balancing act 189 November 2016

191 Adequate backup is vital to ensure that both passenger and freight services are maintained in the event of unforeseen cancellations There is a perception that the trade car service takes a back seat to the passenger service and that trade cars are shipped only when there is space available, resulting in delays during holiday periods. Trade cars are year round offering Condor continuous business, this should be recognised by offering at least equal priority with the passenger service. What differences are there between the two islands with regard to freight services? Jersey appears to be open longer, making it easier to move freight at weekends Guernsey appears to benefit from the early morning arrival of Commodore Goodwill. Could these alternate weekly? There is no difference for Trade car service shipping is to both Islands Jersey need to dredge their port so it is not dependent on tides. How might changing consumer behaviour (e.g. e.g. changes in the way people live and shop) affect demand for freight services? The islands aren t known for huge amounts of manufacturing, so everything needs to be brought to the islands, whether by shops or as individual purchases if bought online. Encouraging people to buy locally will probably help plan those deliveries and put them into fewer but bigger deliveries Food grown on the island should be sold locally and not go to UK for packaging first. Again, encouraging people to buy local produce will help limit the freight deliveries needed With more online shopping there is likely to be less stock held on the island. This should create demand for unique or one off smaller orders primarily for retail Not much effect for trade car business other than the peak periods when new registrations are released in March and September. What is the perception of value of the service currently offered, and how might this be improved? It is crucial to the islands. There simply has to be a service like this for freight in order for the islands to function The current service works very well with a goods in boat in the morning and a goods out one in the afternoon. The value for money is always an issue but at this point we are not unhappy provided the service remains reliable Currently buy service from a third party. Pricing from Condor for regular users looks good The service as a freight user is excellent problems only arise when the MV Arrow comes on line for any particular reason. 190 November 2016

192 Other views/points The main issue for Condor at the moment is to prove that they are a reliable service. Whilst people can accept, to a point, delays and cancellations due to weather, to have continual technical troubles would suggest they have either bought the wrong type of vessel or are not maintaining it well. They need to put together a run of uninterrupted services to regain the trust of their users. It cannot be stressed enough that reliable regular sailings are absolutely vital to our [freight] business. A suggestion would be to discuss with industry more frequently. Contingency planning causes some problems but these are understood. Christmas arrangements would benefit from dialogue. The shipping of horses requires good subject knowledge by Condor s staff. This subject knowledge is very inconsistent amongst the freight staff and booking passage is a very hit and miss affair. Ultimately over the last three or four years it has been necessary to go to director level within Condor numerous times to get bookings sorted. 191 November 2016

193 Appendix H. Survey The intention of the survey was to provide quantitative data against the consultation themes set out in Section to complement the qualitative data that would be gathered through the other consultation events (e.g. e.g. roundtable meetings). Survey Design The consultation themes were used to generation the question set, together with a number of supplementary questions. These supplementary questions were used: To allow segmentation of the results (e.g. by island) To allow validation of the results (e.g. that views on the service were by those who had travelled recently) To calibrate responses To reinforce results by asking the same question in different ways. In line with the objective of collecting quantitative data, the survey was designed mainly with multiple choice questions, and there were intentionally limited free text questions to avoid receiving a large amount of unstructured data. The only exception was an option field for people to enter an address for entry in a prize draw (Amazon vouchers) to drive up participation. Two distinct versions of the survey were used: One targeted specifically at island residents (even if non-travellers), and accessed by a link on the Condor website and widely publicised on the Islands (and on board) One targeted at customers both on and off Island and accessed via a link ed to a sample of customers. This sample was weighted towards mainland travellers 192 November 2016

194 The survey asked the following questions: Island residents Customers 1. Thinking back, when did you FIRST travel with Condor Ferries? 2. When did you LAST travel with Condor Ferries? 3. Thinking about the journeys you made with Condor Ferries in the last 12 months, please tell us how you travelled most frequently? Between Channel Islands and UK (or vice versa) Between Channel Islands and France (or vice versa) Between Guernsey and Jersey (or vice versa) Between the UK and France 4. In the last 12 months, what has been your main reason for travel on each of our routes? Holiday Visiting friends and relatives Leisure day trip Attending an event or sporting fixture Business Medical or other appointment Didn t use this route Other 5. In the last 12 months, what was the most important factor you considered when booking to travel on each of our routes? Expected weather for the time of year Choice of other travel options (flights, passenger ferries etc.) Prefer the service on offer Reliability of the service compared to alternatives (e.g. air) Want to take more stuff luggage / pets / specialist equipment Didn t use this route Other 6. How satisfied are you with Condor Ferries overall on a scale of 1-10 (where 1 is completely dissatisfied and 10 is completely satisfied) 7. In the last 12 months, how often have you travelled by air on each route 8. What is your normal country of residence? United Kingdom Guernsey Jersey France Sark, Alderney or Herm Other 193 November 2016

195 9. Please tell us how you feel about the following statements Good passenger ferry services are very important to my family's way of life There are lots of other options to travel to or from the Channel Islands by air, so ferries aren't that important to me The future of our tourism industry relies on ferry services Most holiday makers want to fly to their holidays these days The quality of services on the ferry routes to France are most important Good quality ferry services to the UK are vital Inter-island ferry services should be more frequent even if fares go up A choice of sailings on the route is more important than the price of the trip I would like basic no frills ferry services at a lower prices I would pay more for a more luxurious on-board experience with better seats and services I would be prepared for our government to increase my taxes to subsidise ferry services and reduce fares or increase sailing options Ferry services should be run on a commercial basis with timetables and fares set accordingly The most important part of our ferry services is regular and reliable delivery of urgent freight like food and other daily essentials During winter storms and at other difficult times, the right thing for our Islands is to prioritize freight services over passenger and I 9. Please tell us how you feel about the following statements I prefer to travel by sea when I can, it's more convenient to me There are lots of other options to travel to or from the Channel Islands by air, so ferries aren't that important to me I would like basic no frills ferry services at a lower prices I would pay more for a more luxurious on-board experience with better seats and services It makes sense to cut back on services over the winter when people don't want to travel as often to help keep costs and fares lower There should be a choice of regular ferry services on all routes throughout the year even if some have few passengers I would prefer a conventional ferry service travelling at half the speed instead of a fast ferry to the Channel Islands (approx 8-10 hrs at sea) I want to be able to travel by fast ferry to the Channel Islands - the shorter the journey time the better (approx 3-4.5hrs at sea) 194 November 2016

196 understand that this may my affect travel options It makes sense to cut back on services over the winter when people don't want to travel as often to help keep costs and fares lower There should be a choice of regular ferry services on all routes throughout the year even if some have few passengers I would prefer a conventional ferry service travelling at half the speed instead of a fast ferry to the UK I want to be able to travel by fast ferry to the UK - the shorter the journey time the better 10. If you could change one thing about Channel Islands ferry services what would it be? Buy another fast ferry to add a second to the services between the UK and Channel Islands Buy another custom built conventional RoPax ferry like Commodore Clipper so that there were overnight services in both directions between the Islands and the UK Improve ferry service between Jersey and Guernsey with new passenger shuttle services at affordable prices Introduce new services to other Islands such as Alderney and Sark I don't believe that Government should invest in ferry services and so accept the services that a commercial provider can justify providing taking into account the costs I would prefer no development if it would lead to higher fares 195 November 2016

197 11. Are you Employed full time (29hrs or more a week) Employed part time (Less than 29hrs a week) Student Retired Not working 12. Which of the following best described the sector in which you work? (if you have more than one job, please answer by telling us about your main job) Agriculture and fishing Finance including legal work Construction and tradesman Wholesale and retail Transport and communications Private education or private health Hotels restaurants and bars Electricity gas and water Public sector Other - please specify Not in work - e.g. student, homemaker or retired Agriculture and fishing Please tell us your full postcode, for example Condor Ferries' Guernsey postcode is GY1 2LL and our St Malo port terminal postcode is If you'd like to be entered into our prize draw please tell us your address. Your address will only be used to fulfil this draw and you will not receive further marketing s as a consequence of participating. Survey Results In total there were 2,061 responses to the Island residents survey, and 662 responses to the customers survey. The survey tool records the IP address associated with each response. A check was made for duplicate IP addresses, to provide assurance that the results were not compromised by multiple spurious responses. Whilst some duplicate IP responses were found, there was sufficient diversity in the associated responses to suggest that this was due to people using the same internet service provider (or working at the same organisation). 196 November 2016

198 In the following sections, the results have been filtered so that the Island residents survey shows only responses from those who live on the Islands (1,528 responses). Island Residents 197 November 2016

199 198 November 2016

200 199 November 2016

201 200 November 2016

202 201 November 2016

203 Customers 202 November 2016

204 203 November 2016

205 204 November 2016

206 205 November 2016