The Government’s deal with DFDS has been published – revealing that the fee the ferry operator has to pay for its exclusivity is performance related, mean average fares are capped, and prices can only go up by inflation.
Ministers hope that publishing the “concession agreement” signed with the Danish line last January will calm choppy waters stirred by many elements, including retailers arguing that a new “flat-rate” freight charging structure has hiked prices for consumers.
The agreement contains a number of obligations that were not in the Government’s previous arrangement with Condor, including granting DFDS exclusive access to the Elizabeth Harbour ramps, a commitment to introduce new ships, the updated fee structure, maximum fares and set staffing arrangements.
Economic Development Minister Kirsten Morel said: “Publishing this agreement in the way that we had published the last one [with Condor] is the right thing to do.
“It shows the transparency that perhaps you don’t see elsewhere. From that perspective, I think islanders will, at the very least, be able to make a comparison and see that the new concession agreement is far better than the last one.”
Asked if he accepted that the new arrangement had pushed up prices, Deputy Morel replied: “No and yes, and the reason I say that is because, firstly, we had no transparency over previous pricing, so the retailers can say what they want, and we have no way of pushing back.
“But secondly – and this is fundamental – by demanding discounts out of the single ferry operator, whoever that ferry operator is, they put pressure on the ferry operator to be a safe ferry service and to be an investable ferry service.
“And we saw that come to pass with Condor: they weren’t operating, it seems, safely, and they weren’t operating in a way that meant they could invest in new vessels.
“The ferry service is not the place to compete on cost; where you need to compete on cost is at the freight forwarders level.
“That should be a highly competitive market with different businesses doing different things. But what instead we saw was an almost monopoly created in the freight forwarders area, while cost pressures were being pushed down onto the ferry service, diminishing that service.
“Jersey can’t afford not to have a ferry service but it can afford to have changes in freight forwarders. If any one freight forwarder disappears, other freight forwarders will step in.
“We need to protect the ferry service, and if that means a slight increase in prices, I say that that is a price worth paying. The certainty is that we’ve got a safe and investable ferry service; what we cannot do is protect freight forwarders, where we should be having competition.”