Today the Office of Fair Trading (OFT) announces its decision on Isle of Wight ferry services.  News updated with replies from Red Funnel and Island MP Andrew Turner (see below)

Following a two-month consultation on the findings of its market study into Isle of Wight ferry services, the OFT today confirmed it will not be referring the market to the Competition Commission at the present time.

The OFT’s study found limited evidence of problems for consumers that interventions in this market could address, but found room for improvement both in customer satisfaction levels and the amount of information available to users on the performance of the ferry operators.

During the consultation, the ferry operators have told the OFT that they will voluntarily introduce a range of measures aimed at communicating and improving the service they offer their passengers. This includes publishing punctuality, reliability and some pricing information as well as undertaking customer satisfaction surveys.

The final findings of the study include:

In general, average prices have risen at around the same rate as the Retail Price Index over recent years, and overall fares are not obviously out of line with other commercial ferry services across Europe.

However, better fares are available to passengers who book in advance. Passengers who use the ferry services on a ‘turn up and go’ basis are likely to have experienced higher than average price increases in recent years.

Overall, the service is reasonably frequent, comprehensive and reliable.

There are some barriers to entry for new competitors. These barriers are primarily physical, such as limited room on the island for berthing and marshalling facilities for car ferries.

There is some competition between operators running alternative routes. In the last two decades, both Red Funnel and Hovertravel have taken some market share from Wightlink.

There is little same-route competition. However same-route competition is unusual in ferry markets and typically sustainable only on busy routes, such as those across the Channel.

Heather Clayton, OFT Senior Director of Infrastructure, said: ‘Although we have not found competition issues that warrant further investigation, there are concerns around passenger satisfaction that the ferry operators should address. We welcome the fact that they have taken some steps by agreeing to publish information that will help passengers hold them to account.’

Download the OFT’s final decision: Isle of Wight Ferry Services – Market study findings (pdf 2.06mb)

Read the OFT’s provisional market study findings and consultation document from June 2009 here:

Read the market study launched in February 2009 and specifically examined the nature of competition between operators and potential barriers to entry here:

Island Pulse Readers Please Note: this report is as is direct from the OFT.  I would suggest if you require further information you read through the relevant links contained in bold text  and form your own opinion as to the OFT report and conclusions.

News Updated:

The Island’s MP, Andrew Turner, said today that, although disappointed with the final decision of the Office of Fair Trading (OFT) to take no further action at this time to investigate the Cross-Solent ferry market, he is pleased that there will be more information available to the public in future about the levels of pricing and services.  He is also pleased that the ferry companies will be undertaking customer satisfaction surveys.  Read More here: Island MP Responds To OFT Final Decision

James Fulford, Red Funnel CEO said:

“We welcome the OFT’s final conclusion which repeats its initial findings that fares are reasonable, and services to and from the Isle of Wight are both frequent and reliable. The report also concludes that cross-Solent Ferry travel does indeed operate as a competitive market. Consumers can now be confident that the Isle of Wight offers a high quality, good value holiday and leisure destination year round.” Read More here: Red Funnel Welcomes News of OFT Market Study