Graeme Taylor
Action for Public Transport
Ph. 9248-1235
| 25th September 2006 |
Dear Mr. Cox,
This paper responds to the issues raised in the submission by Sydney Ferries Corporation (SFC). We cannot support the fare increases that SFC is seeking as part of this year's review. Action for Public Transport will respond separately to the submission by the Charter Vessel Association (CVA).
2. Executive Summary
Sydney Ferries Corporation has failed to meet the expectations set at last year's review in terms of financial performance. Costs for both recurrent expenditure and capital expenses are expected to rise in the forthcoming year.
Given the negative impact of last year's fare rises on total revenue, further fare rises may result in a further deterioration in SFC's financial performance.
The marketing opportunity presented by the rise in petrol prices paid by private motorists also makes this an inopportune time to increase ferry fares. We therefore recommend
3. Patronage 2005-2006
Most public transport operators across the Sydney metrolitan area have enjoyed patronage growth, due largely to rising fuel prices, over the 2005-2006 period. Sydney Ferries' Inner Harbour services, largely commuter journeys, recorded an increase in patronage of 7.89% in this period. Commuter travel on the Manly JetCat remained stable, but as these runs operate close to capacity there is little scope to increase patronage. Patronage on the Parramatta River services has fallen by 3.44% and this likely reflects a decline in leisure travel. The commuter runs along the Parramatta River are considered to be operating at or near capacity. SFC's most popular service, the Manly Ferry, which is oriented towards the leisure and tourist markets, has experienced a fall in patronage of 7.66% in comparison to 2004-05. The nett result was a slight fall in total patronage of 0.17%.
While Sydney Ferries, on p.37 of their submission, blame service cancellations, we feel a more thorough analysis is required. On p.15 of their submission they give a reliability figure of 98.9% for the 2005-06 year, and we are of the view that this result would make Sydney Ferries one of the most reliable operators of public transport in Sydney.
We would argue, in the absence of any detailed research by Sydney Ferries, that the rising price of fuel has persuaded many motorists to switch to public transport.
4. The Leisure Market
Nearly fifty percent of SFC's patronage is leisure travel. In contrast to the views expressed in the submission by David Barr, MP, Action for Public Transport believes that this market is price sensitive, and argues that the patronage results in 2005-06 support this view. They appear to indicate that the relationship between growth in this sector of the market and rising petrol prices is negative. The implication for SFC is that if the price of petrol continues to rise over the next 12 months, patronage on their leisure services will fall.
5. Cost Recovery Ratio
Last year's increase in fares was granted by IPART on the assumption of a 1% increase in patronage. IPART's report on the determination of fares from December 18, 2005 p.10 notes that Sydney Ferries' cost recovery ration was expected to increase to 58.6% in 2005-06. This year's SFC submission p.9 notes that the actual cost recovery ration over this period was in fact 52.9%. Given projected cost increases of $10 million in 2006-07, unless SFC can increase revenue from fares, which has been stable at approximately $45 million for the last two years, we believe that a further decline in the cost recovery ratio is inevitable.
6. The Need to Focus on Revenue Growth
The cost increases being experienced by SFC relate to fuel, labour and fleet upgrades. These costs are clearly related to achievement of the strategic objectives outlined in the submission. Given this position, SFC must explore ways to grow revenue, other than from fare increases. We believe that there are significant opportunities to grow revenue by better matching timetables to travel demand patterns and by providing more capacity on busy services.
7. Revenue Protection
SFC has a major problem in regard to revenue protection. Many passengers travelling on the Parramatta River services to Darling Harbour and North Sydney use FerryTens. These tickets are rarely checked and the rides are not deducted.
8. Safety Issues
Two major safety incidents have occurred during the 2005-06 financial year. The crash of the Collaroy at Circular Quay in September 2005 and the loss of control of the Betty Cuthbert in January 2006 were major incidents for Sydney Ferries Corporation. The resulting investigations have questioned both the level of crew training and the adequacy of maintenance.
Reports on both incidents are posted on the website of the Office of Transport Safety Investigation (OTSI), and we ask that IPART consider both reports as part of this year's fare review.
9. Customer Dissatisfaction
SFC has a poor reputation for customer service. Interestingly, customer service is a key strategic objective for SFC as noted on p.13 of their submission. Infrequent ferry passengers are confounded by the automatic ticket selling machines at Circular Quay, and regular passengers are offended by the indifference shown by SFC staff when service disruptions occur. Passenger complaints in 2006-06 exceeded the target of 820 by 423 or over 50%.
10. SFC's Fares Proposals
For ease of reference, we show here details of SFC's proposed new fares.
(a) Single Fares
| Current Fare | Proposed 4.7% Increase | Proposed Rounded Ticket Price | Amount Increase | |
|---|---|---|---|---|
| Inner Harbour Zone 1 | 5.00 | $5.24 | 5.20 | $0.20 |
| Inner Harbour Zone 2 | 5.30 | $5.50 | 5.50 | $0.20 |
| Manly/Rydalmere | 6.20 | $6.49 | 6.50 | $0.30 |
| Parramatta | 7.50 | $7.85 | 7.90 | $0.40 |
| Manly JetCat | 7.90 | $8.40 (*) | 8.40 | $0.50 |
Note that although the SFC submission does not specifically mention a Master Fare Scale, the application of a fixed percentage and the rounding mentioned in Section 7.2 (page 45) implies as much. APT therefore expects percentage increases in subsequent years to be applied to the unrounded fare, not to the rounded ticket price.
It is difficult to establish whether a Master Fare scale already exists following the previous year's determination. The table in Section 7 of IPART's determination says that the new fares for 2006 are rounded, but it doesn't say rounded from what. Section 3 says "this increase should be broadly in line with the movement in the Sydney CPI for the 2004/05 financial year", but no precise percentage figure is given.
A history of single ticket prices and increases over the last twelve years is interesting.
| 1995 Fare | 2006 Fare | Proposed 2007 Fare | Increase 12 years | Increase 12 years | Average per year | |
|---|---|---|---|---|---|---|
| Inner Harbour Zone 1 | 2.80 | 5.00 | 5.20 | $2.40 | 86% | 7.2% |
| Inner Harbour Zone 2 | 2.80 | 5.30 | 5.50 | $2.70 | 96% | 8.0% |
| Manly/Rydalmere | 3.60 | 6.20 | 6.50 | $2.90 | 81% | 6.7% |
| Parramatta | 4.80 | 7.50 | 7.90 | $3.10 | 65% | 5.4% |
| Manly JetCat | 4.20 | 7.90 | 8.40 | $4.20 | 100% | 8.5% |
(b) FerryTen Tickets
| Current Fare | SFC Proposed 4.7% Increase | Proposed Rounded Ticket Price | Amount Increase | |
|---|---|---|---|---|
| Inner Harbour Zone 1 | 32.50 | $34.03 | $34.00 | $1.50 |
| Inner Harbour Zone 2 | 34.50 | $36.12 | $36.10 | $1.60 |
| Manly/Rydalmere | 46.60 | $48.79 | $48.80 | $2.20 |
| Parramatta | 52.60 | $55.07 | $55.10 | $2.50 |
| Manly JetCat | 65.60 | $69.58 (*) | $69.60 | $3.90 |
The following is a recent history of FerryTen discounts (from ten times the single fare)
| 2004-05 Price | 2004-05 Discount | 2006 Price | 2006 Discount | Proposed 2007 Price | Proposed 2007 Discount | |
|---|---|---|---|---|---|---|
| Inner Harb. Zone 1 | $30.30 | 36.9% | $32.50 | 35.0% | $34.00 | 34.6% |
| Inner Harb. Zone 2 | $33.10 | 35.1% | $34.50 | 34.9% | $36.10 | 34.4% |
| Manly/Rydalmere | $45.10 | 24.8% | $46.60 | 24.8% | $48.80 | 24.9% |
| Parramatta | $51.90 | 29.9% | $52.60 | 29.9% | $55.10 | 30.3% |
| Manly JetCat | $65.70 | 16.8% | $65.70 | 16.8% | $69.60 | 17.1% |
11. Leisure Market Fares
Leisure travellers mainly pay single fares or use DayTripper tickets. APT believes that to stimulate growth in this market the cost of the DayTripper ticket, which is predominately used for travel on the Manly Ferry, should be reduced from $15.40 to $10.00. DayTripper tickets for a family of two adults and two children cost $46.20, and that is before they start paying for food and the other expenses of a day out.
A cheaper ticket would attract additional patronage, possibly sufficient to erase the revenue loss. Greater sales of DayTripper would also reduce costs associated with selling single tickets.
12. The $10 DayTripper Ticket
We realise that a $10 ticket would not even cover the $12.40 cost of a return ferry trip to Manly, let alone the additional cost of travelling between home and Circular Quay. However, the lower cost would improve sales, not just for the leisure market, but for people wishing to do a day's business or shopping around the city and suburbs, and who do not wish or need to use a ferry.
Such a ticket would not affect the commuter market. These people tend to buy multi-ride tickets which, in most cases, would be cheaper than five times $10, and are always more convenient. Some multi-ride tickets can also be used seven days a week or on other forms of transport.
Examples of some return trips (at current prices)
to compare with a $10 ticket are:
Ferry - Manly to Circular Quay
In any case, the current price of $15.40 is silly from a marketing point of view. Of what benefit is the extra forty cents? A figure of a round $15 would be much easier to market, and the $10 ticket even more so.
13. Commuter Fares
Commuters predominately use multi-trip, multimodal tickets. The TravelPass tickets are linked to bus fares, and in support of the APT submission to the bus review we recommend no increase in the price of these tickets. This would create an incentive for potential passengers to switch from paying high fuel prices for travel by private motor car, to use public transport. The same approach should apply for FerryTens.
The provision of human ticket sellers waterside at Circular Quay in the morning peak would greatly help commuters as they leave the wharf and struggle to use the automatic ticket machines.
14. JetCat FerryTens
These tickets are predominately purchased by commuters. This class of vessel is not used out of peak hours except for a limited weekend service. There is little opportunity to increase patronage on the JetCats as they already operate at capacity in peak hours. The only way to increase revenue is to raise fares. Given that there has not been a fare rise for two years we consider that an increase may be justified.
15. Single Tickets
While APT would like to see a move away from single tickets to other types of tickets, we believe the increased price of fuel for motorists and the consequent marketing opportunity for public transport rrovide adequate reason not to increase these fares.
16. Intermediate Fares
These fares cover journeys between any two wharves excluding Circular Quay. Some years ago these fares were lower than the single journey price charged for travel to the city to recognise that the journeys were generally shorter. SFC now applies the full single fare for these journeys. We recommend the reintroduction of intermediate fares in recognition of the importance of these journeys.
17. Conclusion
We strongly believe that IPART must consider the urgent need for
Sydney Ferries to better meet the expectations of regular and
potential passengers in making this year's fare determination.
Please contact me if you require any further information. APT has no
objection to this submission being made public.
Graeme Taylor
Action for Public Transport
Ph. 9248-1235