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Smyril pulls plug on visits
THE Smyril Lines ferry Norröna will stop calling into Lerwick from the end of September after the Faroese company announced it was pulling out of Shetland.
The decision was made at a meeting of Smyril Lines board of directors in Faroe to finalise the Norröna's schedule for summer 2008.
During the meeting the Shetland Development Trust's nominee Bobby Hunter was outvoted by his three fellow directors (two from Faroe and one from Iceland) who wanted to stop coming to Shetland.
The development follows a decision last November to close the company's Lerwick office.
Last year Smyril Lines stopped calling into Shetland during the winter months and this year the summer schedule was reduced to one visit a fortnight into Lerwick. Instead the Norröna has been calling into Scrabster in Caithness.
The changes to the company's schedule are believed to have contributed to an improvement in the company's financial fortunes. Last year Smyril Lines made a modest profit of £150,000 following losses of £4.7m in 2005.
In 2001 the Shetland Development Trust invested £4.2m in the Faroese ferry company to help finance the building of the new 36,000-grt Norröna. Since then the investment has increased to £4.4m, representing 19.5 per cent of the company's shareholding.
Shetland is the only Smyril Lines destination which, with a shareholding in the company, has now been excluded from the sailing schedule.
Mr Hunter said the decision had been taken for commercial reasons. According to Smyril Lines it costs more than £10,000 in harbour dues and extra fuel every time the Norröna visits Lerwick, but last year less than five per cent of passengers got on or off the ferry in Lerwick.
As a result, the company claims it made a loss every time the ferry called into Shetland.
Another issue, according to Smyril Lines, was that passengers from the UK mainland wanting to use the Norröna by sailing to Lerwick from Aberdeen were often unable to obtain berths in the peak summer months on board NorthLink ferries because of the limited number of cabins on the Hrossey or the Hjaltland.
Mr Hunter said that it did not appear likely that the development trust would be able to sell its shares in Smyril Lines in the immediate future.
His duty as the development trust's nominated director on the Smyril Lines board would now be to ensure that the company was run as efficiently as possible.
He said: "My role now is to see that Shetland's investment is being looked after as well as it can.
"Unfortunately, the management team saw that changes in the schedule were essential in order for Smyril Lines to maintain their commercial viability.
"Despite my efforts to halt the decision to remove Lerwick from the schedule, I was outvoted at board level. The trust's responsibility continues, to ensure that we can uphold the security and value of our investment in this company."
Mr Hunter added that there was no connection between the decision to cut out Shetland from Smyril Lines timetable and the resignation last week of the company's managing director Thomas Magnussen
A study published two years ago estimated that the local economy received a boost of between £4 million and £7 million a year from the Norröna calling into Shetland.
Visitshetland boss Andy Steven said that Smyril Lines decision to pull out of Shetland was not unexpected.
"Nonetheless I am bitterly disappointed at their decision," he said. "This shows that Shetland needs more control on its external transport needs.
"There has been a lot of discussion about Shetland's investment in Smyril Lines. I have been supportive of the investment as I do believe it was in the best interests of the Shetland economy.
"We will see the impact on tourism of Smyril Lines pulling out of Shetland when the Norröna is not longer coming here."
Mr Steven added that this year's tourist season appeared to be going well and that the smaller number of visitors arriving on the Norröna was being compensated for by more visitors coming by sea from the UK mainland or through Atlantic Airways' seasonal route to London which got under way last month.
Mr Steven also said that he was keen to find out how many potential visitors to Shetland decided not to come to the islands because they were unable to obtain cabins on NorthLink sailings.
He said: "It is something I absolutely need. We are looking at ways of trying to find that out but it isn't easy to quantify. "Next year will start to see Visitshetland looking very closely at unmet demand." Chairman of the Shetland Development Trust Josie Simpson said: "This outcome was very frustrating for the trust and for Shetland. "We have fought hard to maintain our transport links with Scandinavia and it is disappointing that Smyril Lines has made this decision.
"Our priority is to ensure that we secure the best financial return for the trust on this investment. The trust is also a leading partner with Zetrans in seeking alternative options for transport links between Shetland and Norway."
Hopes of re-establishing a regular ferry link to Norway took a step forward in May this year when the Shetland Development Trust announced that a feasibility study for a year-round shipping link between Kristiansund in mid-Norway, Shetland and the UK mainland is to be carried out.
The decision was made at a meeting of Smyril Lines board of directors in Faroe to finalise the Norröna's schedule for summer 2008.
During the meeting the Shetland Development Trust's nominee Bobby Hunter was outvoted by his three fellow directors (two from Faroe and one from Iceland) who wanted to stop coming to Shetland.
The development follows a decision last November to close the company's Lerwick office.
Last year Smyril Lines stopped calling into Shetland during the winter months and this year the summer schedule was reduced to one visit a fortnight into Lerwick. Instead the Norröna has been calling into Scrabster in Caithness.
The changes to the company's schedule are believed to have contributed to an improvement in the company's financial fortunes. Last year Smyril Lines made a modest profit of £150,000 following losses of £4.7m in 2005.
In 2001 the Shetland Development Trust invested £4.2m in the Faroese ferry company to help finance the building of the new 36,000-grt Norröna. Since then the investment has increased to £4.4m, representing 19.5 per cent of the company's shareholding.
Shetland is the only Smyril Lines destination which, with a shareholding in the company, has now been excluded from the sailing schedule.
Mr Hunter said the decision had been taken for commercial reasons. According to Smyril Lines it costs more than £10,000 in harbour dues and extra fuel every time the Norröna visits Lerwick, but last year less than five per cent of passengers got on or off the ferry in Lerwick.
As a result, the company claims it made a loss every time the ferry called into Shetland.
Another issue, according to Smyril Lines, was that passengers from the UK mainland wanting to use the Norröna by sailing to Lerwick from Aberdeen were often unable to obtain berths in the peak summer months on board NorthLink ferries because of the limited number of cabins on the Hrossey or the Hjaltland.
Mr Hunter said that it did not appear likely that the development trust would be able to sell its shares in Smyril Lines in the immediate future.
His duty as the development trust's nominated director on the Smyril Lines board would now be to ensure that the company was run as efficiently as possible.
He said: "My role now is to see that Shetland's investment is being looked after as well as it can.
"Unfortunately, the management team saw that changes in the schedule were essential in order for Smyril Lines to maintain their commercial viability.
"Despite my efforts to halt the decision to remove Lerwick from the schedule, I was outvoted at board level. The trust's responsibility continues, to ensure that we can uphold the security and value of our investment in this company."
Mr Hunter added that there was no connection between the decision to cut out Shetland from Smyril Lines timetable and the resignation last week of the company's managing director Thomas Magnussen
A study published two years ago estimated that the local economy received a boost of between £4 million and £7 million a year from the Norröna calling into Shetland.
Visitshetland boss Andy Steven said that Smyril Lines decision to pull out of Shetland was not unexpected.
"Nonetheless I am bitterly disappointed at their decision," he said. "This shows that Shetland needs more control on its external transport needs.
"There has been a lot of discussion about Shetland's investment in Smyril Lines. I have been supportive of the investment as I do believe it was in the best interests of the Shetland economy.
"We will see the impact on tourism of Smyril Lines pulling out of Shetland when the Norröna is not longer coming here."
Mr Steven added that this year's tourist season appeared to be going well and that the smaller number of visitors arriving on the Norröna was being compensated for by more visitors coming by sea from the UK mainland or through Atlantic Airways' seasonal route to London which got under way last month.
Mr Steven also said that he was keen to find out how many potential visitors to Shetland decided not to come to the islands because they were unable to obtain cabins on NorthLink sailings.
He said: "It is something I absolutely need. We are looking at ways of trying to find that out but it isn't easy to quantify. "Next year will start to see Visitshetland looking very closely at unmet demand." Chairman of the Shetland Development Trust Josie Simpson said: "This outcome was very frustrating for the trust and for Shetland. "We have fought hard to maintain our transport links with Scandinavia and it is disappointing that Smyril Lines has made this decision.
"Our priority is to ensure that we secure the best financial return for the trust on this investment. The trust is also a leading partner with Zetrans in seeking alternative options for transport links between Shetland and Norway."
Hopes of re-establishing a regular ferry link to Norway took a step forward in May this year when the Shetland Development Trust announced that a feasibility study for a year-round shipping link between Kristiansund in mid-Norway, Shetland and the UK mainland is to be carried out.
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