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Is the increase in Gozo ferry fares justified?
Marvic Fenech Adami is general manager of Gozo Channel
Rising costs are hardly ever good news for anyone. But the real test of whether a service remains affordable and viable is how any increase in its price affects custom. New government subsidies have rightly protected Gozitans who need the Gozo Channel boats to remain in touch with the world. Increases for the remaining passengers, however, had no significant impact on non-Gozitan customers who continue to be attracted by the quality of Gozo as a destination and who are met on the way by the high standard of service and reliability which our boats offer.
On June 1 the fares for passengers with cars increased by 25c. The fares for foot passengers be they Gozitan or Maltese, did not increase. This 25c or 3.7% increase was the last in a three-step increase that started in June 2004. The increases in fares were part of a holistic reform that has been going on at Gozo Channel, built on three main pillars: the commitment by government to sustain subsidised travel for Gozo residents, the cost-cutting that needed to be done by the company and a staggered increase in fares to reflect economic realities. Since 2004, government has been financing Gozo Channel for the difference between the standard and Gozitan discounted fares. This circa Lm1.5 million every year used to be paid from Gozo Channel’s cash flow before 2004 and was thus the main cause of the losses we did before. Management did its part and since 2004, we curbed operating and administrative expenses by over Lm200,000 (5% of total costs), including initiatives to control fuel costs which have increased by Lm 100,000 in the last financial year alone. The careful increase in fares was planned over 3 years so as to mitigate any possible impact on Gozo’s economy.
During the year, following the last increase on June 1 2005, passengers increased by 36,199 and vehicles by 12,405.
This is a small price to pay for a sustainable Gozo Channel which contributes actively to the health of the economy of Gozo. We can only continue to do this if register at least a humble profit. We did so in 2005 and this allowed us to fund initiatives to attract more people to travel to Gozo during the low season. Our ‘Immorru Ghawdex’ scheme encouraged Maltese travellers to travel to Gozo by giving them free trips if they eat in Gozitan restaurants. In those trips included in the scheme we carried 9,000 new passengers and 3,000 new vehicles compared with the previous year. For the first 5 months of the year, Gozo Channel registered an increase of 4.4% in passengers and 6.2% in vehicles. The schemes benefit the industry in Gozo, but come at a cost, covered by the revenues we generated in the busier months.
We have increased trips during the shoulder months and extended the more frequent summer schedule. To do this we cannot go back to the time when we were losing around Lm900,000 a year. Back then subsidies to Gozitans and the reliability of the service were in serious jeopardy. That is the last thing the Gozitan economy needs.
Michael Grech is PRO for the Gozo Business Chamber
In the beginning of June, Gozo Channel Company raised the price for those crossing between the two islands using a car by another 25 cents. This was the third increase in as many years by the company. In the opinion of the Gozo Business Chamber this increase is not justified.
The Chamber’s position against this increase is justified by the fact that in the last financial year the company managed to register a profit. In the words of Minister Austin Gatt earlier this year, the company made a big effort to try to eliminate “inefficiencies and wastages”. The question that comes to mind is, how long have these “inefficiencies and wastages” being going on within the company? Is it the case that previous chairmen and senior members of the management were not taking the right and correct decisions in the running of the company?
In a company announcement dated 17 March 2006 it was stated that the introduction of soft starters to the engines of the ships helped to reduce the overall fuel bill considerably. Whoever was deciding on what engines to put on these boats when they were being built should have thought of this in the first place. Can someone give us a breakdown on what the quantum is on the savings from the introduction of the soft starters and the elimination of “inefficiencies and wastages”?
The company also regularly comes out with statistics showing that more people and cars are using its service to cross between the islands. Do we have any statistics as to whether the increase in passengers and cars is due to the fact that more Gozitans are crossing over to Malta for reasons of work, education and health? If this is so then the increase of prices has definitely not been positive to Gozo’s already fragile economy. One has to laud the initiative with regards to such schemes as that of the winter and frequent travellers and any other good schemes which the company may come out with in the near future.
However the fact remains that it is the duty of any government of the day to keep its commitment to the people of Gozo through the Public Service Obligation. The hardship that people of Gozo suffer due to travelling from one island to the other (for some it is on a daily basis), should at least be smoothened out with the lowest possible fares. You have to live in Gozo to understand exactly what this means.
To my mind comes the offer that the Gozo Business Chamber had made a couple of years ago to all the Maltese MPs forming part of the Cabinet, for them to come to live in Gozo with their families for a month with all accommodation paid. The only condition we made was that they had to commute back and forth for work in Malta every day for the whole month. The result was that none of them wanted to take this opportunity of starting their day with a cruise.
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