Isle of Man Steam Packet Company Chief Executive Mark Woodward:

“We welcome the Select Committee’s Report and listened with interest to the debate in Tynwald. The Company will, of course, be looking closely at the Report and its recommendations, as well as comments made by Members of Tynwald during the debate.

“Much reference was made to freight charges and I feel that some clarification is required. The User Agreement provides a package of obligations for the Company to fulfil, many of which are loss-making. Our freight service helps us provide a sufficient level of income to enable us to carry out those loss-making services.

“The Report acknowledged that freight charges are 20% lower than those in the Channel Islands. However, when making comparisons against other routes, it chose to compare our freight charges with other large volume carriers. Some of these comparisons were misleading, in that those companies operate freight sailings that are typically 95% of capacity – our freight carryings are typically only 25% of Ben-my-Chree capacity.
“The Report also acknowledged that the Company has invested more than £80 million in its vessels and port infrastructure in the past decade, and we have spent many more millions on annual refits of our vessels. The profit figures quoted by the Committee do not take into account the substantial amount of interest payable on that fleet investment or annual depreciation costs.

“In fact, on a like for like and inflation adjusted basis, the net profit today is not dissimilar to the profit levels pre-1995, when the Company was a PLC.

“The fuel surcharge system that has been in place since 2005 is one that allows for a six-monthly review of the fuel surcharge, as regulated by the Department of Transport, and ensures that any fuel surcharge can only be introduced retrospectively on the basis of worldwide fuel costs.

“Looking at the present situation, the result is that we are only now recouping some of the money that we spent on higher fuel charges earlier this year. However, the amount that is being recouped is only a quarter of that which we spent – fuel costs rose by £4.4 million in 2008, whereas surcharge income rose by £1.1 million.

“The Report concluded that the Company is very competitive with regards to passenger fares, and it identified that we are fully compliant with all, and exceed many, of our requirements under the User Agreement.

“It is disappointing that these very positive findings were barely touched upon during the Tynwald debate.

“In summary, I would like to reiterate that the Company welcomes the Select Committee Report and, as was stated following its publication last week, we will work with the Department of Transport to consider the recommendations and how best they can be implemented.”