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Last Updated: Tuesday, 28 September, 2004, 12:13 GMT 13:13 UK
P&O's stormy waters 'no surprise'
P&O ferry
P&O has announced the closure of four of its 13 ferry routes
Running cross channel ferries is a loss-making business - that is the reality that has forced P&O to cut 1,200 jobs.

Serious problems began for ferry companies in 1994 with the opening of the Channel Tunnel.

Experts say P&O never really recovered from that with the end of duty-free sales and the rise in popularity of budget airlines compounding its woes.

The cuts at P&O will be the first of many in the industry, forecasters warn.

Clearly, the Channel Tunnel has had a major impact on our business and has taken a substantial share

The Dover-Folkestone fixed link offered by the Channel Tunnel with its choice of passenger and freight shuttle trains, as well as the London to Paris and Brussels Eurostar, have proved to be the big attractions they always threatened to be.

Passengers, it seems, have chosen the turn-up-and-go service over the worries of rough seas and cancelled crossings.

No deals

In the late 90s, still reeling from the Channel Tunnel effect, the ferry industry was hit by the end of duty-free sales.

You can still buy things tax free on ships but the deals are not anything like as good as in the old duty-free days
Travel writer Jane Archer
Ferry travel writer Jane Archer said: "The ending of duty-free has taken its toll.

"You can still buy things tax free on ships but the deals are not anything like as good as in the old duty-free days."

But the biggest single factor affecting the decline in the ferry industry in recent years has been low cost airlines, according to former ferry company boss Bill Moses.

Mr Moses, who has been in charge of Stenaline, Hoverspeed and Sallyline, told BBC Radio 4's Today programme: "The airlines have been the biggest factor latterly - there's no doubt about that.

"And if we look at the markets in general, Spain is up as a destination and France is declining now."

Other influences

Referring to Tuesday's announcement, Ms Archer said: "It was still a shock to hear that as many as three Portsmouth routes were being axed today.

"That shows just how much the company has been affected by the budget carriers."

P&O has also blamed other influences on events that led to Monday's cull.

Further drops in passenger numbers have been blamed on fewer people travelling abroad in the wake of the war in Iraq.

Although ferry companies had benefited from the fear of flying of some passengers post-September 11, the war had been a different story, Ms Archer said.

"It had been hoped that people would travel by sea rather than fly during the war but in the end people did not travel at all," she added.

'Smoke screening'

The company also complains about unfair competition from Sea France which is, it says, subsidised by the French government.

Mr Moses dismisses this complaint as "smoke screening".

"That's thin, frankly, because Sea France has been there for a long time. That's not a new one and there are other examples around the coast as well."

The industry really needs to match capacity and demand - something that it's never been good at
Former ferry boss Bill Moses

He said it had been inevitable that vessels would be taken out of service and timetables would be reduced.

"The industry really needs to match capacity and demand - something that it's never been good at," he said.

"In the past, in a rising market, it's not been an issue.

"In truth, P&O is a fat cat and one which needs to tailor its service more to customer needs and customer volumes."

P&O to slash workforce by 1,200
28 Sep 04  |  Business
Union to meet P&O over job cuts
28 Sep 04  |  England
Unions warn P&O over jobs threat
27 Sep 04  |  Hampshire
Job cuts expected at P&O Ferries
26 Sep 04  |  Business
P&O weathers storm in ferry arm
12 Aug 04  |  Business
Job fears over ferry cut rumours
16 Apr 04  |  Humber

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