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A drowning industry reaches for its lifebelt
John Mulligan



EVENTS last week underlined how the decline of the ferry industry continues. Figures released by Irish Continental Group (ICG), which operates ferries such as the Ulysses and Jonathan Swift across the Irish Sea under the Irish Ferries moniker, said that passenger car volumes on its vessels had fallen 9% in the first four months of this year compared to the same period last year. The company also sails to Cherbourg.

By now, a pattern has been firmly set.

Ever since low-fare airline carriers, particularly Ryanair, began aggressive expansion and price reduction, ferry companies have seen their share of passenger business steadily dwindle. Irish Ferries hasn't been helped of course by labour disputes that ate into its profits, sparked a national workers' rights march, and saw its ships temporarily out of action late last year.

Holidaymakers have flocked to the airlines, leaving ferry companies fighting to bolster their passenger business.

Tony Kelly, marketing director at Irish Ferries, knows it's a tough challenge.

"We had anticipated a decline in passenger car volumes, but maybe not as bad as it was, " he said, citing continued pressure from airline competition for the drop. But reversing the trend may be possible, he argues, while agreeing that there hasn't to date been any major campaign to sell Ireland as a driving destination to largely British travellers.

"People who bring their cars to Ireland spend about 50% more time here than air passengers, and they spend more money too, " explained Kelly. Importantly, they bring their cars for one main reason: to escape Dublin and visit the regions. Areas outside the capital have been complaining for years that the number of tourists visiting them is showing a marked decline. The head of the Irish Hotels' Federation, John Power, said recently that the decline in the 'brought car' market from the UK is of "great concern", while he pointed out that bednights by overnight visitors outside Dublin have fallen by 9.2m since 1999. That's despite a growth in the number of hotels in the country in the intervening period.

Kelly said he feels "frustrated" that there is consistent promotion of new air routes to and from Ireland, while there is "no such support" for the ferry sector.

"Ferries do have a tough fight and that's a fact, but we have to deal with that, " he said. "The ferry companies tend to take care of the marketing campaigns themselves, but I think what's been absent in a broader tourism marketing sense has been a campaign about why it's good to take your car to Ireland."

That may change. Tourism Ireland recently announced that it is spending 1.4m on a direct marketing campaign in Britain that will target members of the Automobile Association, hoping to entice them, with their cars, to Ireland. It has also launched a book of Irish touring routes with contributions from some homegrown celebrities.

Tourism Ireland chief executive Paul O'Toole said that 500,000 holidaymakers chose to come to Ireland with their cars last year and that the business remains vital to the industry.

"We have no complacency that any ferry company can indefinitely retain high passenger capacity, " he said.

Irish Ferries has already cancelled one high-speed sailing a day, leaving it with two midweek return-trips daily to Dublin, and three a day at weekends. Merrion Stockbrokers' analyst John Mattimoe noted that overall ferry capacity this summer will be 10.1% down on the same period in 2005, as Stena has also cut some capacity, while Liverpool-based start-up Irish Sea Express, which began operations last year, has since ceased business.

"It is a very competitive marketplace and the ferry companies are more than aware of that, " said O'Toole.

"I think that we have to make people more aware of the quality of service available on ferries and that's part of the work needed to turn around the tough times that the companies are having on that front." Overall, he expects this year to be a good one.

"We're still very positive about the tourism sector for 2006 and the signs are quite good."

Stena Line's spokesman Eamonn Hewitt said that events such as the European Rugby Cup have helped the company, while the upcoming Ryder Cup being held in Kildare is also expected to be a boon to the firm's business.

He admits, however, that while such events may be welcome blips on the calendar, they are just that: blips.

"I remember the time when you could fill ships in June, July, August, at Christmas and at Easter, " he said.

"That trend is probably still there to an extent, but we are trying to even out the trough during the rest of the year and stimulate business in the off-season, and it's a difficult thing to do. The whole holiday pattern has changed." That means people taking more, but shorter breaks, rather than more generally opting for what might have been a traditional annual two-week holiday.

He added that ferry companies have to prove that they can be as competitive as airlines and offer as good a product.

"Whatever we say about the low-fares airlines in terms of quality of service, they have provided accessibility to places that you wouldn't have had years ago, " he said.

"That's what we're trying to compete against."

Hewitt said it is a "long, hard slog" to attract customers with their cars.

"You have to prove their is value in the service and in what's on offer in a wider sense in terms of hotels and other factors, " he said.

Rising fuel costs do little to help the ferry companies.

ICG's fuel bill rose 44% last year, while rises this year force ferry operators to keep a close eye on capacity issues and whether all sailings are viable. ICG said that it spent 2.5m more on fuel in the first four months of 2006 compared to the same period in 2005.

The beacon of hope for both Stena Line and ICG has been their freight business, which has shown improvement year-on-year. ICG said last week that volumes on its roll-on/roll-off services were up 4% in the first four months of this year. Stena Line has seen volumes grow about 7% year-on-year. The carrier will introduce an additional freight vessel for use on the Dublin-Holyhead route, probably towards the end of the summer.

"That indicates, I think, where we see the market growing, " said Hewitt.

"Tourism may be the sexy end of the market, but the freight business is our bread and butter. It's all-year-round traffic and it's more than offsetting the loss in tourism, but that doesn't mean we're complacent about it."




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