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Impact on the economy of RET ferry fares

In 2008, a pilot scheme was introduced on specific ferry routes in Scotland, to evaluate the introduction of Road Equivalent Tariff (RET) fare structures for passengers, cars and commercial vehicles on publicly operated ferry services. This survey was to determine the impact of RET fare structures. 160 telephone interviews were undertaken among businesses on the islands and the results provided a quantified measure of impact on the local economy.

Key benefits:

  • Engagement of local businesses in the evaluation process
  • Understanding of how businesses have changed their use of ferry services
  • The contributory effect of RET to service use and business performance
  • A measure of cost savings being passed on to consumers
High quality service with outputs delivered to the original programme despite a small delay in the work commencing.
Pamela Gidney, Senior Consultant - Halcrow Group

Our Assigment

In October 2008 a pilot scheme was introduced on specific ferry routes in Scotland, to evaluate the introduction of Road Equivalent Tariff (RET) fare structures for passengers, cars and commercial vehicles on publicly operated ferry services. Two potential effects of the scheme on local businesses are considered to be of significance:

  • Lower transportation costs will assist local businesses to be more competitive and consequently increase their presence in mainland markets. The reverse to this of course is also true, in that it may also facilitate mainland firms to penetrate island markets;
  • Lower fares for commercial vehicles will result in lower prices for goods at the point of sale, assuming that transport cost savings are passed down through the supply chain.
The scheme has been subject to continuous monitoring since its inception, and anecdotally there is an impression that RET has been very positive for both the local economy and the population. For this study the assignment was to explore four key issues:
  • Change in the use the ferry services since the introduction of RET;
  • Change in behaviour, its characteristics and to what extent, if any, RET has been a factor;
  • Change in business performance and to what extent, if any, RET has been a factor;
  • Whether savings through RET are being passed to customers

Results

There was widespread use of ferry services among the businesses surveyed. A notable increase in usage was evident since the introduction of RET, some of which was a result of switching from flying to using the ferry.
The participating businesses were very positive in their assessment of the impact of RET on the performance of their business. Considerable savings in haulage costs were evident with a significant proportion of these savings being passed on to consumers. Additionally more goods are now being transported by businesses themselves.
Businesses offering accommodation had noticed an increase in their operating season, higher occupancy levels and a change in the origin of visitors.

Benefits

The survey helped engage local businesses in the evaluation process, giving an opportunity to provide feedback on the scheme and its impact on them and their business. The interviewers engaged with the respondents and gave them the time and opportunity to express their views. The results provided a number of key measures in order to facilitate the evaluation of the pilot scheme. In particular it provided: an understanding of how businesses have changed their use of ferry services; the contributory effect of RET to service use and business performance; and a measure of cost savings being passed on to consumers.

Our Approach

The sampling frame was constructed from both commercial databases and desk research, in particular to supplement the data on the accommodation and art/craft sectors. Pre-notification letters were issued to all businesses within the sampling frame. 160 telephone interviews were undertaken among owners/managers of businesses on the Western Isles, Coll and Tiree.
One of the key challenges was determining impact of the scheme that now spanned a time period of two years. The questionnaire was carefully designed to facilitate respondent recall and to provide an accurate picture of change over this period.

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