Condor looks set for decade deal

Tuesday 15 July 2014

After months of negotiations, the States have reached a ten-year deal with Condor Ferries to offer car, passenger and freight services. And it's hoped that agreement will enable the company to invest £50m in a new 'Austal 102' fast passenger and car ferry to sail between Jersey and the UK, replacing the two catamarans which currently operate that route.

The proposed agreement was announced in the States by the Economic Development Minister, Senator Alan Maclean. He said the new vessel would be more reliable, and Condor would have to deliver what he called "strict performance targets". He said that the deal also included a profit-capping clause which enabled the States to watch out for "excess" profits, and then compel Condor to either reduce prices or invest the "excess" back into the service.

He also said that there were further clauses covering any sale of the company, which would allow the States to claw back up to 5% of the equity, if Condor's parent company took advantage of the ten-year agreement by trying to sell it on within the next two years. 

Condor will be required to deliver a minimum schedule, but the deal is open to competition, as long as any new operator is able to offer a similar service. 

Senator Maclean explained that the ten-year agreement will be split into two parts: "Whilst the permits together will have a total 10 year duration, there will be an effective “break clause” after 7 years. At the end of this first seven year period there is a planned exit period for the last three years of that period. This will give the States the flexibility to either negotiate a new deal with the existing operator or to secure services through a competitive tender. 

"The new permit, when issued, will replace the current interim 5 year permit covering car and passenger services which terminates on 31 December 2018. I have determined that a longer-term period is necessary to attract the investment in new vessels for our key car and passenger ferry links. I am in no doubt that granting a new permit covering car, passenger and freight services will provide the Islands with long-term certainty about such essential matters as freight supplies and all-weather passenger services".

Condor now has to apply to the Harbour Master for the new permits covering passenger, car and freight services, after which there will be a further consultation period, before being finally agreed.