Stormy Seas Ahead for Ferries to the Northern Isles

The operation of the ferry routes to the Northern Isles continues to be problematic.

Ferry Fares

There is a delay in the introduction of a version of Road Equivalent Tariff (RET) reduced fares  for those travelling to and from Orkney to the Scottish mainland. It has also resulted in the full subsidy not being applied to the Shetland route either. This is because agreement has not been reached between one commercial operator in Orkney and Transport Scotland. Pentland Ferries has lodged a petition for a judicial review on the provision of the subsidised routes.

Pentalina Ferry

Pentalina run by Pentland Ferries (K Armet)

Ferry Upgrades but no Resolution to Fare Reduction

The Rural Economy and Connectivity Committee of the Scottish Parliament  has  been advised that Pentland Ferries has lodged a Petition for Judicial Review of Scottish Ministers’ decision to subsidise the provision of public services in relation to Northern Isles Ferry Services. The company has also lodged a related complaint with the European Commission.

Ferry Contract

The next ferry contract is  up for procurement after it was extended by 18 months  allowing Serco Northlink to continue to operate it. The contract  is being offered as a complete package.

Paul Wheelhouse, Minister for Energy, Connectivity and the Islands, , said:

Paul Wheelhouse“We can now publish details of the next contract to operate the ferry services to and from the Northern Isles.

“The documents outline the in-built flexibility of the contract, allowing the services to be amended to reflect future changes in demand across the important sectors of the islands’ economies – tourism, fishing, food and drink, aquaculture and farming.

“Scottish Ministers will retain control of all of important issues, such as fares, timetables and routes to be served, through the public service contract. The services are being tendered as a single bundle.”

You can find details of that here:

Invitation to Tender document: Instructions to participants

2.9. With an upper limit of 5 Participants, Transport Scotland has selected – openly, transparently and without discrimination – suitably qualified and experienced Economic Operators to Tender for the Contract.

2.19. The purpose of the competition is to enable Transport Scotland to appoint a suitably  qualified Operator, who is or will be eligible to be a Community Shipowner, to undertake the Northern Isles Ferry Service (hereafter referred to as the Ferry Service). The responsibilities in respect of the Ferry Service have been stated as the mobilisation period prior to 31 October 2019 and the subsequent operation of the Services for a period of 8 Years, of which the final 2 years will be subject to the satisfactory completion of a mid-term review and base case recalculation, as outlined at 2.52 of this Volume 1.

and Specification of Requirements

The procurement is facing a legal challenge from a commercial operator.

Three potential bidders were announced by Transport Scotland last month:

  • CalMac Ferries Ltd
  • Förde Reederei Seetouristik GmbH & Co. KG (FRS)
  • Serco NorthLink Ltd

Final tenders are currently scheduled to be submitted by the end of April 2019, with a view to awarding the contract on 2nd of August 2019.

The 8 year contract is estimated to be worth around £370m.

The legal challenge is being made by Pentland Ferries.

Paul Wheelhouse said:

“The procurement process will continue as planned, pending the outcome of the Judicial Review and complaint to the European Commission.”


Last year the 3 passenger ferries serving the Northern Isles were bought  by Caledonian Maritime Assets Ltd (CMAL) with loan funding from the Scottish Government. MV Hamnavoe, MV Hrossey and MV Hjaltland, were being leased from the Royal Bank of Scotland in a PFI style deal signed off by Shetland MSP Tavish Scott when he was Transport Minister in the LibDem/Labour coalition Scotttish Government. That deal was at  considerable cost to the taxpayer and it is hoped that the purchase of the vessels will deliver savings.

Reporter: Fiona Grahame

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