ECONOMY

Ferry operators reorganize to face stronger home competition

A high level of debt and the rise in the price of oil are the two main thorns in the side of the Greek coastal shipping industry. Moreover, the performance of the five listed firms (Attica Enterprises, ANEK, Strintzis Lines, Minoan Lines and NEL) last year left a lot to be desired. In anticipation of the lifting of the ban on foreign operators on domestic routes – which was brought forward to November last year from its initial January 1, 2004 date – Greek ferry companies started as early as 1998 to order new generation, high-speed vessels. For a period, the drive coincided with the stampede of the bulls in the stock market and was largely financed by it. After the crash, the banks stepped in and granted a large number of businesses big loans. Now, coastal shippers hope for a pickup in tourism this year to help them meet obligations. The lifting of the ban on foreign firms (the so-called «cabotage») has not changed anything in practice; no potential competitors from abroad have made their appearance, at least so far. Competition is instead expected to be heightened among Greek companies after the recent announcement by Strintzis Lines, a subsidiary of Attica Enterprises, that it intends to launch its ultramodern Blue Star 2 on the Hania to Piraeus route on March 4. Blue Star 2 was built in 2000, can reach a speed of 28 mph and can carry 1,600 passengers and 700 private cars. It can travel the Hania route in five hours and 45 minutes. The move has antagonized ANEK, the traditional Hania operator, whose officials say that it will not achieve the desired results, just as a similar move by Minoan Lines failed three years ago. In a recent administrative restructuring, ANEK put at its helm Ioannis Vardinoyiannis, who has made increasing the group’s passenger flow a top priority. For this reason, the company has introduced bold reductions in its fares on routes to the Dodecanese islands. Vardinoyiannis recently told the shareholders of affiliate DANE, the cash-strapped Dodecanese operator which has being going through a long administrative crisis, that ANEK, as basic shareholder, has began an in-depth study to overhaul the company in two stages, one short- and one long-term. Minoan Lines is reported to be considering ending its partnership with Italy’s Grimaldi group in Mediterranean Ferries, which has deployed the Ariadne Palace 1 on the Genoa-Tunisia-Malta route. The final decision will be made at Mediterranean Ferries’ general meeting next week. Minoan Lines’ plan to absorb subsidiary Hellas Flying Dolphins (HFD) will be decided near the end of June, after a study has been completed by a firm of business consultants. The debts of HFD, which was badly hit by the sinking of the Express Samina in September 2000, have been restricted to 70 million euros after a rationalization of routes schedules and a trimming of operating costs improved profitability. The company has withdrawn 25 old vessels from service, retaining about 50.