Ambitious SpeedFerries looks to channel its focus on world stage

As it comes to the end of its third summer season of operation between the ports of Dover and Boulogne- sur-Mer, English Channel low-cost ferry pioneer SpeedFerries is at last able to contemplate the expansion which founder Curt Stavis says was always envisaged.

Although the company will remain a single vessel operator until Easter, when it plans to bring into operation a recently acquired but as yet unidentified second catamaran, Curt Stavis says that the possibility has now re-emerged that SpeedFerries could become the "global ferry operator" which, he says, was always part of his ambition for it.

It may yet not happen. All will depend on the propositions the company receives over the next few weeks from the handful of ferry and other shipping companies which have expressed an interest in engaging in some form of co-operation with it. Mr Stavis says that the prospects of a partnership coming out of the talks, which will be taking place between now and the end of the year, are not more than 50-50.

If no agreement is struck, he says, the company will retain the "family and friends" equity structure it already has and embrace with enthusiasm its new life as a two-vessel fast ferry operator between Dover and Boulogne-sur-Mer, comforted by the £10m ($18.7m) of investment capital arranged by its banks.

If an agreement does emerge, however, the company could find itself with a new investment partner, which, subject to the compatibility of its business ideology with that of SpeedFerries, could take a substantial minority stake in its capital or even, in the case of a perfect marriage, a majority position. With the indomitable optimism which is his mark, Mr Stavis says that this could be a "giant leap to what we always wanted to achieve - a concept for the future, a global ferry company". "It could be the start of our expansion to other routes and other waters," he adds.

"It's always been the plan but we have not been moving forward as we would have hoped." Although its pioneering role in the Dover Strait passenger ferry market is widely recognised, albeit grudgingly by its competitors, it has not been followed into the breach by other low-cost operators as has been the case in the air transport industry.

The company has been like a tightrope walker, watched with fascination by its peers but not so far imitated and particularly not on the notoriously tough Dover Strait ferry market which it chose for its launch.

Arguably, existing ferry operators are subject to too many constraints in the form of existing agreements with unions, ports, suppliers and banks to be able to envisage the launch of genuinely low-cost operations, while, for adventurous newcomers, suitable vessels, particularly catamarans of the type used by SpeedFerries, are in short supply compared to aircraft. Mr Stavis himself admits that life on the strait has not been easy. He said that the company had been aiming at break-even in 2005 but had failed to achieve this, partly because of the strictures of UK accounting rules regarding risks and costs and partly because of an unexpectedly poor final quarter.

This year, however, he says that the company should break even and discounts the claims of its larger rival SeaFrance that it is only keeping ahead of its creditors on the back of advance bookings.

Passenger and car carryings at the end of August, at 527,000 and 220,000 respectively, were up 4% and 7% respectively on last year - a modest increase by SpeedFerries' standards but one which reflects the capacity limitation resulting from its inability until recently to find a suitable second vessel. "We don't promise our investors any more than break even," he says. "But they still think it is a fantastic story, looking at the competition and fuel prices." If the company has yet to generate profits, Mr Stavis believes that it has nevertheless emerged from its first two-and-a-half years of existence with a precious asset in the form of its now fully tested low-cost operating model. He believes that this model is applicable elsewhere and it is this belief which he wants to test with the help of any future partner with which he might engage.

He indicated that the model had been more complicated to install and operate than it might appear from the outside but insisted that "this is a model which really works". "The customers are very happy with the product," he adds. In any case, he affirms that he has no plans to try to run more than two vessels on the Dover-Boulogne service and says that trying to take a service into the port of Calais would be "like starting World War Three", given the hostility faced by SpeedFerries from seafarers working for rival SeaFrance.

He revealed that the company has also dropped plans to start a conventional freight service between Dover and Boulogne, arguing that there is no room for a new freight service in Dover at present and that Boulogne currently lacks suitable reception facilities for freight ferries. In this situation, he said, it was more logical for the company to develop its passenger car business but, at the same time, not to seek expansion for its own sake.

The company wants to preserve its business model and, with it, the business philosophy, which has turned many of its customers into supporters and friends.

"We are looking for a construction we still feel comfortable with, which means that we are not thinking about turning into pirates," he says in a reference to the 'Fight the pirates!' slogan emblazoned on the hull of Speed One. Although he has been accused of misrepresentation of the company's real financial situation by SeaFrance, he rejects the claim and insists that he and the company work hard to have an ethical approach to their business. "I don't see any way that we would do something that is unethical," he says, adding in a reference to his favourable public image as the founder and head of the first low-cost ferry operator. "Being seen as a nice person is worth something to me." And, he adds: "I think it is worth telling the truth because it is becoming more and more dangerous to be unethical. You can destroy your image or your relations with the press in a few minutes.

We decided from day one that we would not break any rules." He says he is puzzled as to why SeaFrance is "picking on" SpeedFerries, arguing, surprisingly, that the company lost its position as the cheapest operator in the Dover Strait some time ago, as other operators moved to match its low prices with reduced fare offers of their own. He notes that another relative newcomer, Dover-Dunkirk operator Norfolkline, looked to be inflicting greater damage on its competitors following the introduction of new tonnage which he says promised to double its market share.

"The reality is that the business was ready to change," he claims. "If it hadn't been SpeedFerries, it would have been somebody else." He believes that the evolution of the market is not over by any means, moreover, as the two historic operators each contend with problems. SeaFrance is battling to return to profit and P&O is looking for direction following the takeover of its parent group by DP Ports.

"This market will change in the next couple of years," he says. "If we had some kind of co-operation with a much stronger partner, we would be more able to benefit from it."

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