Ferry operators face stormy times

RISING fuel costs, cheap air fares and stiff competition from Brittany Ferries is making life on the high seas very difficult for other operators.

P&O posted serious losses for its operations yesterday while life on the ocean wave has not been so difficult for Stena Line since 1998 when the government ended Duty Free to comply with EU regulations.

Stena Line said yesterday in an update of current trading, passenger and car that volumes on its Irish Sea routes were ahead by 4% for the first six months of the year. It carried an extra 50,000 passengers and 10,000 more cars.

Head of the group’s Irish operations Fredrik Lantz said the period had been successful in spite of “intense” competition from ferry operators and airlines.

However the bottom line is that, like P&O, Stena is losing money on its Irish operations. It has made losses since the end of the Duty Free that robbed the company of 100,000 day traveller’s per year who used the day trip to top up on cheap booze and cigarettes.

Irish analysts argue that the fuel crisis will hit the companies harder.

In the first six months of this year P&O ferries lost €37 million, well up on the first half losses of 2003.

P&O sold off its Irish operations in the middle of the half year period, and was glad to forsake the Irish market where subsidised competition from Brittany Ferries is an added headache for those serving Ireland/France routes in particular.

Irish Continental Group saw passenger numbers fall from 1.76 million in 2002 to 1.72 million last year.

Chief executive Eamonn Rothwell said margins came under pressure in a difficult environment. As a counter measure ICG considered buying Aer Lingus, but analysts have questioned that strategy.

Goodbody Stockbrokers Peter Horgan said such as acquisition would take a few years to bed in and damage the group’s prospects in the short term.

As the cheap airline factor bites harder analysts believe that people in Britain in particular will divert to air transport.