Cowes Harbour and East Cowes — causes for concern for Red Funnel

JAMES FULFORD, CEO of Red Funnel, gives a company view of why the Island should look very carefully at its plans for future economic growth.

"It is over two years since Red Funnel was bought by Infracapital, part of the asset management arm of the Prudential.
To say that this period of ownership has been plain sailing would be to misrepresent a time of unprecedented economic turmoil.
As well as the credit crunch, recession and extremely volatile fuel prices, Andrew Turner, the Island’s MP, was also successful in asking the Office of Fair Trading to undertake a market study into cross-Solent ferry services.
Although much that the OFT asked us to change was, as they acknowledged, already in hand, we are more than happy to accept their central charge that Red Funnel’s treatment of its customers fell below the standards they had every right to expect.
We are actively addressing this and, hopefully, customers will have noticed improvements, particularly in terms of information and the quality of our terminals. But we have more to do and I am confident customers will see the further benefits in years to come.
The OFT enquiry also presented us with an opportunity to dispel some myths. I hope, for instance, it is now better understood that some 80 per cent of our car ferry customers live on the mainland and are, largely, summertime visitors.
Without these visitors and the revenue they bring in summer, it would be difficult to justify the frequency of service that is offered — a ferry touches the Island every eight minutes during the summer and every nine minutes during the winter, quite remarkable for an Island with a year round population of just 140,000.
Our services after nightfall and during the winter months are hardly ever justified on economic grounds alone — on the last Red Jet to and from Cowes the crew of three often outnumber the passengers and the night-time car ferry services carry virtually no members of the public.
The fact we continue to run these services, despite them not being used, is testament to the seriousness with which we take our commitment to the Island’s residents.
Capacity constraints exist on very few days of the year and these few days could not justify the £20 million cost of building a new car ferry.
The OFT’s market study demonstrated there is plenty (about 50 per cent) of spare capacity on all routes across The Solent.
The challenge for us is to find ways to fill the existing spare capacity. Contrary to popular myth, we compete aggressively for market share. We use a myriad of competitive strategies as proved by the fact  Red Funnel has grown its market share consistently over the last 20 years.
But our objective must be to grow the overall market, what we call developing "Brand Isle of Wight". We spend over £1m per annum marketing the IW, through dozens of campaigns like, for example, our 31 Reasons to Visit the IW radio campaign last year. We understand that, in growing the brand, we will also generate traffic for our competitors’ vessels as well as our own.
We will continue to come up with innovative ways to attract new business to the Island on our vessels.
If we are successful in our objectives, at some time in the reasonably foreseeable future, we will need to expand our capacity. This is not a straightforward matter. There is no point in adding capacity to handle more vehicles in Southampton if we can’t add similar capacity shoreside in East Cowes and ensure proper access from East Cowes to the rest of the Island. There is no point in doing either if we can’t build more or larger boats. And there is no point in doing any of the above if we can’t deepen or widen the channel into our facilities at Cowes.
Infracapital is the first long-term investor Red Funnel has had in decades and we need to start planning for the long term now. In doing so, we will need to work with numerous stakeholders on both sides of the water as well as two port authorities which regulate activities on its surface.
It is worth remembering the economic activity supported by the ferries in Southampton is far less significant proportionately than it is to the IW. Nevertheless, in Southampton we are already holding lively discussions with our landlord, the port authority and the city council, all of whom are broadly supportive of our expansion within an overall masterplan for the city’s port and its waterfront.
It isn’t clear to me such a masterplan exists on the IW. Both the IW Economic Strategy (2008) and the Tourism Development Plan (2005) make few references to the ferry companies, despite them being used for transport, and often holiday booking and planning, by all tourists (except those coming by private yacht).
There is no discussion of the future spatial and infrastructure needs of the ferries in either document.
Deep within the Island Plan (2008) lies a reference to relocating the car ferry terminal to the East Cowes Esplanade and the possibility of opening a new port on the north-east of the Island. It isn’t clear that either of these options represents an economic or ecological alternative to expanding the existing deep-water facilities in Cowes.
Decisions taken today could easily shut off opportunities for growth in ferry traffic in the decades to come. It appears to me those decisions are being taken without proper debate or understanding as to their likely impact on the Island’s wider economy.
Speaking personally, I have a preference for planned growth that will support the development of the Island’s key economic sectors (not just tourism). Without growth in employment, pressures on an overstretched public sector will intensify and the Island’s young people will increasingly have to look elsewhere for employment.
But I am only resident on the Island for about half the time. I don’t have a vote here and I accept there is a valid contrary view. The Island is already a crowded place and some will argue there is no need for significant further development.
At Red Funnel, we can live with that conclusion and we can plan for it. In fact, while it isn’t my preference, I think my risk-averse accountants would probably welcome it. If we do not plan for growth we will not need so much space for marshalling vehicles or to build more or larger vessels, though we will, eventually, need new ones to replace the existing fleet. Our marketing budget, already larger than any other organisation promoting the Island, could be significantly reduced. We could avoid any unwanted increase in demand by raising summer prices.
What won’t work is for the Island to come to us in ten years’ time and complain we have made no plans to meet its growth needs and so are limiting its economic expansion.
Assembling the resources and gaining all the consents needed to meet the needs of a growth strategy will take many years of resource allocation and expense. Our shareholders are exactly the right people to make such a long-term commitment.
But, even for them, there is no point in us embarking on such an exercise without knowing there is a reasonable prospect of the Island supporting a strategy for growth.
More importantly, given the decisions currently being made, in ten years’ time there won’t be the ferry capacity to meet likely future growth. This option will have been closed off by a series of incremental steps, particularly at (East) Cowes, that may bring short-term gain for long-term pain. The IW will have sleep-walked into economic stagnation.
While this outcome will suit some, it is far from clear to me this is the view of the majority of residents and businesses on the Island.
So the purpose of this article is to start a debate. At Red Funnel, whatever our personal preferences, we look forward to living with and planning for the consequences. But first, the Island must make a clear decision about which path it wants to pursue."

• What do you think of Mr Fulford's opinions? Email your comments to editor@iwcp2.demon.co.uk