ICG boss says ferries subsidy ‘wasting taxpayers’ money’

The head of ferry operator Irish Continental Group (ICG) has warned that any move by the new Government to extend a subsidy scheme to keep certain sea routes going during the Covid-19 pandemic would be a "waste of taxpayers' money" and further distort the market.

The last government committed at the start of April to provide up to €15 million of so-called public service order (PSO) subventions for three months on loss-making ferry routes between Dublin and Cherbourg, Rosslare to Fishguard and Pembroke in Wales, and Cherbourg in France and Bilbao in Spain.

It is understood that officials who report to Hildegarde Naughton, the new super junior minister for international transport, are actively considering an extension of the current PSO, which runs to this middle of this month.

“The department can confirm that a review of the Covid-19 PSO Support Scheme for Maritime Connectivity is under way at present. It would be inappropriate to pre-empt the outcome of that review,” said a spokeswoman for the Department of Transport, which is being subsumed into the new Department for Climate Action, Communication Networks and Transport.

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ICG, owner of Irish Ferries, was due, along with Swedish-owned Stena Line and France's Brittany Ferries, to be the beneficiaries from the subsidy. However, ICG said last month that it had not participated in the initiative, saying the model was "liable to create distortions in the marketplace and could be open to legal challenge".

Speaking to The Irish Times on Tuesday, ICG chief executive Eamonn Rothwell said that his company has written a number of times in recent months to Department of Transport officials campaigning against the PSO.

Alternative proposals

Mr Rothwell said that he has pitched alternative proposals for rebates on port fees or the State making a contribution on the amounts of freight units moved by ferry operators, without success.

“We don’t want the PSO renewed,” said Mr Rothwell. “It is a model that effectively covers the gap between variable revenue and certain variable costs, excluding ship costs. This is distortion because, if you are an inefficient operator or doing a start-up route or own a port on one side, the numbers are a bit grey as to what contribution you need to stay alive.”

Mr Rothwell said the model offers no incentive for ferry companies to carry freight, even though the aim of the subsidy has been to keep food, drugs and other goods moving into and out of the State.

Legal challenge

ICG is reserving its position on whether to mount a legal challenge to the PSO, at a time when Belgian-owned freight operator CLdN, owner of Cobelfret Ferries, is seeking a judicial review of a similar PSO scheme in the UK.

“If they continue to distort the market place, we’ll have to consider the impact it’s having on our staff, our business model and our shareholders,” Mr Rothwell said.

“Normally in Europe you are not allowed to distort the market by giving an operator some assistance if someone is prepared to offer the service without assistance, which we are.”