Ferry operators show little enthusiasm for new tender

PUBLISHED : Friday, 21 March, 2008, 12:00am
UPDATED : Friday, 21 March, 2008, 12:00am

High fuel prices, low profit margins discourage companies

A fresh tender on the four ferry routes to outlying islands has aroused little interest among small ferry operators, despite government efforts to encourage more competition.

At least five of the 11 ferry operators said yesterday that they would not bid for the four routes between Central and Mui Wo, Peng Chau, Sok Kwu Wan and Yung Shue Wan because of high fuel prices and low profit margins.

Two kaito ferry service operators that the industry had believed were potential bidders also ruled out the option for similar reasons.

Only one small operator said he would consider bidding, but admitted he had not even looked into the tender yet.

An industry source said the new tender - revised by the government last month to bring down fares and to attract more competition to the market - had failed to achieve its purpose and had instead put more pressure on potential bidders.

'Anyone interested has to bid for each of the lines as a separate package, even though they are bidding for all of them,' the source said.

'Obviously this minimises economies of scale, and the resulting bidding price will be higher.'

The four routes were previously grouped into two packages - with New World First Ferry operating the two between Central and Mui Wo and Peng Chau, and Hong Kong and Kowloon Ferry running the pair between Central and Lamma Island.

The Transport and Housing Bureau split them into four individual lines in the second tender.

It also reduced the minimum operating requirement, from demanding both fast and slow vessels to accepting only slow vessels.

The Sing Wai Launch Company, operator of kaito services between North Point and Hung Hom and owner of about 10 vessels, said although the new requirement allowed them to enter the ferry business, they would first have to fork out the capital costs for the necessary licences and equipment.

'Why should I risk my money on a route which I already know has little patronage, while I can rent my boats for a few thousand dollars a day for leisure activities?' company owner Lam Kai-chiu said.

Hong Kong and Kowloon Ferry director and general manager Nelson Ng Siu-yuen said he was considering the tender, but said the new one posed more challenges than the last.

'Fuel prices have jumped by another 30 per cent since the last tender, and there are now new requirements we need to meet if we are to bid for the lines,' he said.

Successful bidders are required to survey passengers' opinions on service quality once every two years, and have to outline their business plans and achievement targets.

Chairman of the Hong Kong and Kowloon Motor Boats and Tug Boats Association Kwok Chi-wan said that was bound to put an extra financial burden on operators.

The bureau will not comment due to the ongoing tendering process, which will end on April 14.