Service StatusCost factors
What factors determine the cost of ferry travel?
Length of route
Red Funnel operates the longest of the 4 cross-Solent routes between the Isle of Wight and the mainland, a distance of 19km or 12 nautical miles (50-70% longer than our competitors). The obvious impact is that our operating costs are higher in order to match the sailing frequency of the competition.
Frequency of sailings
Red Funnel operates just under 14,000 vehicle ferry sailings and 23,700 Red Jet Hi-Speed sailings each year. The combined timetable equates to an annual fleet mileage of 372,000 nautical miles.
Fuel & lubes
Red Funnel uses 10 million litres of low-sulphur fuel per annum at a cost in excess of £5m at current prices. This type of fuel has less impact on the environment compared to the heavier grade but cheaper marine fuels. In addition, the Red Jet service alone uses 14,600 litres of lube oil per annum. The cost of fuel has more than doubled since 2006.
Maintenance
As our fleet utilisation and annual mileage is high, maintenance costs are significant. For example a Red Jet engine requires a major overhaul on average every 15,000 hrs, costing in the region of £250k. Each Red Jet has 2 engines!
Crew & labour
Red Funnel operates class IV vessels that are regulated in the UK by the MCA. The number of crew required for each passenger band and their level of competency are subject to regulatory control. Red Funnel exceeds the minimum standard by employing certificated crew with deep-sea experience. Our Captains are Master Mariners. Crew with such experience inevitably command higher salaries but safety has always been and will continue to be our number one priority.
Insurance
Insurance costs have doubled since the 9/11 World Trade Centre attack in the US.
Onboard income
Income generated onboard from restaurants, bars, games, duty-free etc helps many ferry operators offset the cost of travel, particularly in relation to foot passenger fares. Unfortunately, domestic short-sea ferry routes do not have the same revenue earning potential but it is true, every little helps.
Traffic volumes
The cost of operating the service is relatively fixed i.e. the amount of fuel used is largely the same whether there are 1 or 200 vehicles on board. Cross-Solent traffic volumes are notoriously seasonal. Historically cross-Solent operators have lost money between September and May (when Isle of Wight residents account for 70% of traffic) but have made enough during the summer to offset such losses. Unfortunately a good or bad season is highly dependent on the weather, the economic climate and the Island's ‘offer’ as a tourism destination in comparison to mainland Europe, Ireland, Cornwall, Devon, Wales, the Lake District and Scotland who are all vying to attract similar visitors.
What are we doing to reduce costs?
We are investing heavily in Information Technology (IT) to improve efficiency and streamline our processes throughout the business without impacting on customer experience.
We monitor crossing times to save fuel and "wing tips" have recently been fitted to the ships propellor blades to improve efficiency and save fuel.
Our timetables are continuously reviewed to ensure that we are operating at times when customers want to travel. Getting this right improves utilisation and ensures resources are not wasted by operating at times where there is little or no demand.