Scottish Government

Appendix J The Netherlands Case Study

J1. Ferry Legislation and Licencing

Domestic Dutch ferry services

J1.1 There are six domestic Dutch ferry services currently operated by private operators.

J1.2 The first five services are to and from the "Wadden" islands in the north of the country, requiring ferries to cross the Waddenzee. The Waddenzee is very shallow, meaning at low tide it cannot be negotiated except by using specific channels. This means only (expensive) ferries built to a specific design can be used on these routes ( i.e. being able to withstand sea conditions at high tide and able to cope with very low tide conditions). These services are defined as PSO services.

J1.3 The sixth service connects Zeeuws-Vlaanderen (which is land-locked by Belgium) with Vlissingen. All services carry cars and trucks as well as foot passengers and cyclists, with the exception of the Vlissingen-Breskens service which carries foot passengers and cyclists only.

J1.4 The Waddenisland inhabitants number around 25,000 people in total. The Wadden ferry services carry around 4.7 million passengers per year in total. Demand is very seasonal, the islands being a popular tourist destination. Combined turnover of the five island services is estimated to be around â'¬63 million.

J1.5 The following table shows the routes and their respective operators.

Table J1 Island Ferry Services in the Netherlands

Operators

Teso
J1.6 TESO was originally founded by the noblemen of the Texel island. In total there are 3650 shares owned by about 2500 shareholders, mainly island residents. There is no dividend. Share holders can use the boat for free as foot passengers up to fifty times per year.

J1.7 On this basis, monopolist TESO can run its business in a justifiable manner. The company does not aim to make a profit. Tariffs are based on the cost of running the service, including a reservation for guaranteeing the continuation of services to support the economic growth of Texel.

Doeksen
J1.8 Doeksen is a private operator ( www.doeksen.nl ) which historically started services to and from Vlieland and Terschelling. Very little known is known about this operator other than that it is a family owned business. High volumes of tourists use the ferry services in the summer.

Wagenborg
J1.9 Wagenborg is a private operator ( www.wagenborg.nl ) operating to and from Ameland and Schiermonnikoog. This operator used to be state-owned but was privatised in the 1980s. The ferry service forms only a small part of the business as it is mainly an international freight carrier/shipping line.

BBA
J1.10 BBA is a private operator that is part of the Connex group. It replaced the government operator PSD on the Vlissingen - Breskens route following the opening of the Westerschelde tunnel.

Regulator

J1.11 The Dutch Ministry of Transport (Ministerie van Verkeer en Waterstaat) takes overall responsibility in policy terms for the lifeline/ PSO ferry services.

J1.12 The IVW (Ministry of Transport) also takes overall responsibility for vessel safety. There are very strict rules and conditions.

J1.13 Regarding licensing, operators are free, in principle, to start up ferry services as long as they do not conflict with the PSO services. That is, these competing services cannot use the ports or quays half an hour before and after the PSO services. Operators from other EU countries could, in principle, freely operate in Dutch waters.

J2. Lifeline Services

J2.1 The five services to the Waddenislands are considered lifeline services and have been defined as PSOs.

J2.2 They are, however, seen as an extension of the road network, rather than as public transport. Since the opening of the Westerscheldetunnel the Vlissingen-Breskens service has been classified as public transport and is subject to the same legislation with respect to concessions as bus services in the area.

J2.3 These operations have been established for many years and there has been no historical interest by other parties to launch similar services along these routes.

J3. PSO Services: Operations

J3.1 The operators in Waddenislands are free to set their fares and receive no government subsidy apart from free use of port facilities, and maintenance of the navigation channels in the Waddenzee. The Dutch Government is responsible for maintaining the port facilities.

J3.2 Since 1985 two of the services, between Harlingen-Terchellin and Harlingen-Vlieland, are covered by an agreement between the operator, Doeksen, and the central government and local island authorities. The agreement grants Doeksen sole access to port facilities on Vlieland and Terschelling. The state also maintains the navigation channels in the Waddenzee. In return, the operator provides a year-round service irrespective of demand. There are no monetary subsidies involved in the contract.

J3.3 The Ministry of Transport suspects that freight and car transport on ferries are very profitable. Operators have never requested any subsidies.

J4. PSO Services: Financial and Commercial Support

Financial Subsidies

J4.1 None of the operators in the Waddenislands currently receive monetary subsidies - so far the only subsidy is free use of port facilities.

J4.2 The Government is responsible for maintaining the port facilities.

Protection from Competition

J4.3 PSO services currently do not overlap with any other service. In theory, any operator can operate on the PSO routes. There are two potential reasons for the lack of competition along the PSO routes.

J4.4 First, start-up costs are high given the nature of the sea and the specific vessel design required.

J4.5 Second, new services cannot interfere with existing PSO operations, meaning they cannot use the ports/quays within half an hour of the scheduled service's arrival and departure. Tidal conditions and the nature of the ports mean that leaves little room for other services to operate.

J4.6 The Competition Authority is currently reviewing a case where a freight operator wants to call at island ports more often but has been refused access by the local port authority.

J5. PSO/ PSC: Contract and Tender

Changes to Current Arrangement

J5.1 The current situation and agreements are not acceptable as either they are outdated or no formal agreements are in place at all. The Ministry of Transport has commissioned a study to determine how the operation of the lifeline services will be structured in the longer term.

J5.2 In the meantime, negotiations are taking place to arrange the structure for the next four to five years. The aim is to formalise the existing situation. These negotiations involve the local island government, the operators and the Ministry.

J5.3 As part of these negotiations responsibilities, fare levels, timetables (based on existing service patterns) etc will all be formally arranged. This is to formalise the current situation, ensure the agreement in place is acceptable and is compliant with EC rules and regulations. No state aid will be granted.

J5.4 By no means will certain concessions be introduced in the longer term. There is a good possibility that the services will be covered under negotiated contracts.

J5.5 Most people are quite happy with the existing situation - there is an expectation that the intermediate contracts being negotiated may in fact be carried forward into the future, without the need to introduce a concession system. The Ministry of Transport suggested that if possible, all stakeholders are happy to formalise the status quo.

The tendering process

J5.6 None of the current PSO routes have tendered contracts. In the South, however, the Zeeland services are part of the road network and operators receive subsidies.

J5.7 Zeeland services are put out to tender for six years. The regional government owns the facilities and ship. The new operator was obliged to recruit staff from the existing operator ( TUPE type arrangement). The operator bears revenue risk topped up by subsidy.

J6. EU Rules

J6.1 The status quo in the Netherlands is in conflict with EU regulations.

J6.2 New legislation is being prepared to put the operation of the ferry services out to tender but this is not expected to be in place for another four to five years.

J6.3 In the meantime negotiations are taking place with the operators and the state (negotiations are co-ordinated between the various islands) to draw up improved agreements including operators paying for use of port facilities and confirming sole-use of facilities. The legislation is under preparation and nothing has yet been decided.

J6.4 To date, there has been no complaint from the EU. There were several reasons to review the way things are currently organised, one of which being compliance with European legislation.