The boss of Harland and Wolff has accused the operator of ferries between Cornwall and the Isles of Scilly of being “frightened” of competition, after the shipbuilder announced plans for its own service.
Last week, the maritime engineering company - which operates Devon’s Appledore shipyard - unveiled “advanced” proposals to build two ferries for the crossing, as well as one inter-island vessel, which it could then run from Spring 2025.
The Aim-listed firm said it would seek a licence to operate on the route between Penzance and Scilly and would work with local councils to apply for £48m in ‘Levelling Up’ funding, which the Government has already allocated for building new vessels to serve the route.
READ MORE: {}
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
The 100-year-old Isles of Scilly Steamship Group (ISSG), which runs the Scillonian III ferry, is currently the only operator of freight and passenger boat services along the route.
In April ISSG announced it had secured a £33.6m loan from private asset finance provider Lombard to fund its own plans for a new passenger ferry and two new freight vessels, which are scheduled to set sail by March 2026.
The group said at the time it had reverted to its original plan of privately financing the new vessels, after "no tangible progress" had been made in the previous 18 months since the Government made its conditional funding offer, and that "significant changes" had been made to the terms of the offer, with the delay both on and off the islands.
John Wood, group chief executive at Harland and Wolff, told BusinessLive ISSG had “rejected” the funding due to a condition of the offer which could see it have to compete for the route after “five or ten years time”.
Most Read
Mr Wood said: “ISSG didn’t want the monopoly to be broken, and they were frightened about having competition in the future over the routes. So they would rather keep the monopoly, go out, raise debt, pay for the debt, which would ultimately lead to a significantly higher tariff rate for passengers over the period.
“We just took a view, that’s not really how you should be treating island communities who for its a lifeline service for.”
Mr Wood said by choosing to fund its proposed new vessels privately, ISSG had to reduce the spec and “quality” of the vessels, in order to repay debt back, which he added could result in higher fares for passengers using their ferries.
BusinessLIve has contacted the Isles of Scilly Steamship Group for comment.
Mr Wood said Harland and Wolff would seek “100%” of the allocated ‘Levelling Up’ funding to build its new ships and some associated infrastructure. He said the new ships would be built at Appledore shipyard, and the project could support around 800 jobs for an 18-month period, including 450 direct roles and 350 contractor jobs.
The current passenger vessel in operation, the Scillonian III, was built at the Appledore shipyard. The vessel carries more than 110,000 passengers a year, and serves both island residents and the tourist economy.
Harland and Wolff will now consult the island’s residents over its proposed ferries, and while he wouldn’t be drawn on the exact capacity of the vessels he said it would not be too different from the maximum of around 500 passengers that can board Scillonian III per journey.
Don’t miss
Mr Wood said the company would also look to incorporate green technology, including related to propulsion and batteries, into the proposed new ships, and avoid introducing more polluting vessels.
When asked if he thought if there would be enough demand for its proposed ferry service alongside the ISSG’s, Mr Wood said he was “confident” that the company could prevail in a competitive environment.
Mr Wood added: “There’s only a certain amount of customers, I agree. Is there enough clients to deal with two competing services? Well, that’s up to everybody to make up their own minds on whether they think the route can justify two vessels, and it's up to the end clients to vote with their feet, and choose a service that they are comfortable with. That's how free market trade works.”