ECONOMY

Ministry shoring up ferry services to Greek islands

Better safe than sorry is the philosophy adopted by the Development, Competitiveness and Merchant Marine Ministry, which is looking at the very real likelihood that within the next few months many Greek islands, including some of the larger ones, may be left without a connection to the mainland as ferry companies find it harder and harder to maintain their regular island routes amid the economic crisis.

In a draft law that will be presented to Parliament this week, titled ?Developing Marine and Fishing Tourism and Other Directives,? the ministry has also included a series of changes to the existing law, which will allow the minister to circumvent the competition procedure and directly assign a ferry service that is not being carried out to another company even if the service is one that is not funded by the state, as is the case for those to some of Greece?s most distant or least populated islands.

The ministry?s addition to the draft law was effectively dictated by the circumstances prevailing in the coastal shipping sector and the losses being incurred by ferry operators, as well as by the need to maintain the connection between the Greek mainland and the islands.

In the first nine months of 2011, listed coastal shipping firms posted losses that are expected to reach as much as 350 million euros by the end of the year. Add to these smaller companies such as Hellenic Seaways, then total losses are estimated to overshoot 470 million euros in total, compared to total losses of around 350 million euros in 2010. The price of fuel, meanwhile, has gone up by 25 percent this year compared to last and constitutes 55-60 percent of the average ferry?s operational costs. Passenger and vehicle traffic moreover has dipped by around 14 percent compared to last year. These factors, in combination with the overall state of the Greek economy, have compelled companies to cut costs by reducing their services or anchoring vessels, meaning that should this trend continue, there is a very real risk that some islands will find themselves cut off in the not-so-distant future.

Sources at the Development, Competitiveness and Merchant Marine Ministry have indicated to Kathimerini that the changes being made to Article 47 of the relevant law for marine tourism are designed to deal with such an eventuality before it appears.

Specifically, the article states that the minister will be able to assign a route to a company of his choosing in the case that the company currently assigned the line reduces or suspends service and puts an island at risk of being cut off without having to call a competition.

The commission will be carried out on a leasing basis, which will remain in effect either until the original company assigned the service resumes operations fully or until it withdraws its interest completely, thereby allowing the new shipping firm to either sign an exclusive service agreement or for the ministry to put the service to tender.