The battle raging between the good ship P&O and its cross-Channel rivals looks like being a fight to the death. An astonishing 84 crossings each day are made by ferries and hovercraft serving ports between East Sussex and Kent. And this does not include Eurotunnel services, or the Brittany Ferries operation further up the west coast. As a result, you can cross the Channel, even with a car, for next to nothing. Even the man in charge of the Dover Harbour Board believes the current level of capacity cannot be sustained. Whole routes, including Ramsgate-Dunkirk, must be under threat.
Not by the look of it, however, until a great deal more money has been poured down the drain. Ferry firms are planning to pile even more capacity on to the Channel; nobody disputes that for at least one of the operators, and possibly more, this is tantamount to commercial suicide. Operators seem to have decided that the best way to take on Eurotunnel is to grab as much market share as possible by offering tickets at virtual give-away prices. The winner will then have a straight fight with Eurotunnel as it builds up to full capacity.
P&O, Stena Sealink, Hoverspeed, and the recently launched Sea France are already facing almost intolerable downward pressure on yields. The cost of crossing the Channel fell 20 per cent in 1995. This year will be no easier. Le Shuttle aims to take around 5 in 10 cars across the Channel in 1996, against 3 in10 last year. The only way in which the ferries can prevent it is by cutting prices even further. If Eurotunnel actually goes bust, the situation will probably become worse still for whatever happens the tunnel remains open. The likelihood is that the new owners would enter the ticket war with rock-bottom price cuts.
An obvious solution is for ferry companies' to offer joint services, but Stena and SNAT have tried and failed with this approach already. Another approach would be for the operators to carve up the market between them with one or two pulling out of cross-Channel services in return for a quid pro quo on North Sea routes. Even in today's cut- throat conditions, however, such antics would probably run foul of the law. Government clearence would be essential.
The present situation is obviously great for the consumer. But both Eurotunnel and the ferry operators are united in the view that it is also completely uneconomic. Something has to give, and soon.Reuse content