Wightlink

- the facts -

October 2013

This document seeks to build understanding of the complex range of factors

which Wightlink balances when making decisions about pricing and services.

It also highlights that ...

Wightlink services are highly rated by customers and operate to a high

level of reliability.

Wightlink is Part of Island Life, offering a comprehensive timetable,

discounted fares for Islanders, and support for charities and vulnerable

groups.

Wightlink is investing to secure the future of its services.

This is a competitive market where Islanders enjoy a high level of service from

the three operators.

Wightlink balances a complex range of

factors when making decisions about

pricing and services

At Wightlink we take a rounded approach to planning our services and prices,

and measuring their success.

We know that frequency is important, but it is not the only measure which

matters to our customers, staff and shareholders. As a private business, which

operates with no public subsidy, yet is subject to increased regulation and

legislation as well as rising costs, we must balance the interests of all three

groups.

We monitor closely how customers are using our services and align our

timetables to match with when the overwhelming majority are travelling.

Nevertheless, we run thousands of loss-making sailings and last year ran 500

sailings which were completely empty!

Our customers appreciate our focus on safety and recognise our obligations

towards the environment.

By taking all of these factors into account, we can secure the future of our

services for the benefit of Island and mainland customers, staff and investors.

Year Ending 2012

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

25000

50000

75000

100000

125000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Lymington - YarmouthVEHICLE CEU

Capacity Utilisation Utilisation %

In order to secure the long term viability of our services, and faced with rising costs and a

flat market, Wightlink has to match timetables with customer demand. When services are

consistently under-used, the company has to review whether they are viable.

For example, the services withdrawn from the timetable in December 2012 typically

operated 93% empty for passengers and 80% empty for vehicles.

On the Yarmouth-

Lymington route,

average monthly

utilisation regularly

drops below 40%.

Sailings have recently

been retimed throughout

the day to allow better

connections with trains

from Lymington Pier.

Wightlink matches its timetables with customer demand

2012-13 financial year

Year Ending 2012

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

100000

200000

300000

400000

500000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Portsmouth - RydePASSENGERS

Capacity Utilisation Utilisation %

The high-speed

catamaran services

operate at relatively low

utilisation, reflective of

the high number of

sailings.

Even at peak Festival

times, sailings are only

full on one leg of a

return journey.

Wightlink matches its timetables with customer demand

Wightlink continues to operate thousands of loss-making sailings a year across its three

routes. This is part of our commitment to being Part of Island Life.

However, as a private business operating without public subsidy, we must have the

flexibility to adapt our services in the face of usage by our customers. All operators face

the same pressures. For example, Red Funnel cut more than 1,000 sailings from its

annual timetable from 2011-12, and Hovertravel recently cut the size of its fleet by 33%.

2012-13 financial year

We never compromise on safety, even if it could cut costs.

We invest in more highly qualified crews as part of making safety our priority.

Our standards of certification well exceed the legislative requirements.

We invest in internationally accredited training not required for domestic

operators.

We regularly operate with more crew members than required by legislation.

We maintain our ships to very high standards, even if it costs more.

This means using high quality, and often more expensive, materials.

For major works we always bring in specialist engineers, and wherever

possible use the original manufacturer’s own staff and spare parts.

Running more services means more maintenance and more cost.

Wightlink never compromises on safety

Our CO2 emissions have dropped by almost 25% since 2007.

We are taking a leading role in converting our ships to cleaner fuel.

The new ships we have invested in for two of our three routes burn fuel more

efficiently.

Larger ships operating less frequently burn less fuel.

We operate a pioneering habitat management programme at Lymington in

partnership with a wide range of environmental stakeholders.

We have made outstanding progress on recycling and now recycle over 60% of

our waste.

All of this comes at a cost, and is one of the factors we must consider when

planning our services.

Wightlink takes its environmental responsibilities seriously

Wightlink services are

highly rated by customers and

operate to high levels of reliability

Over 1,400 customers were surveyed in summer 2013.

Over a third rated Wightlink’s service as excellent, and 80% rated it as excellent

or good.

Almost two thirds rated Wightlink’s service as excellent, good or acceptable

value for money.

Around 70% of customers who expressed a preference, said Wightlink was their

preferred cross-Solent operator.

Only 5% of customers said they would not recommend Wightlink to a friend.

A recent survey found high levels of customer satisfaction

Wightlink consults regularly with customers and gains feedback through a wide

range of sources.

It has supported the establishment of ferry user groups:

The recent timetable changes at West Wight were shared with the

Yarmouth Ferry User Group.

The retiming of sailings to dovetail with train times was as a direct result of

YFUG input.

Other valuable input regarding timetabling is currently being considered.

It is hoped that a similar group will soon be established for the Eastern

routes.

Our uniforms now invite customers to provide feedback@wightlink.co.uk.

Managers are regularly onboard speaking with customers.

Directors regularly engage with local businesses and sit on a range of local

boards and committees.

The company invests in Mystery Shoppers to ensure levels of customer service

are constantly improving.

Wightlink regularly consults with customers and other stakeholders

Route Reliability Punctuality

Portsmouth-Fishbourne 99.8% 83.3%

Lymington-Yarmouth 99.5% 88.6%

Portsmouth-Ryde 99.8% 99.4%

Wightlink operates a highly reliable service

Lymington-Yarmouth Reliability Punctuality

2012 2013 2012 2013

July 2013 99.2% 99.5% 91.0% 87.0%

Wightlink operates a highly reliable service to an excellent degree of punctuality. Where

punctuality performance falls, this is often due to matters outside the company’s control,

such as harbour movements and weather restrictions.

2013 year to date information. Reliability refers to the proportion of sailings which actually operated. Punctuality

refers to those sailings which departed within 5 minutes of published departure time. The proportion of on-time arrivals is typically higher as vessels can make up time en-route.

Reliability on the Lymington-Yarmouth route has marginally improved year on year.

Punctuality has reduced; the restrictions of operating in the narrow channel at Lymington

limiting the ability to make up time during busy periods (during 40 minute timetable).

Wightlink is

Part of Island Life

Wightlink operates a 24 hour timetable on its flagship Portsmouth-Fishbourne

route.

Wightlink operates thousands of loss-making sailings ever year, recognising

that Islanders, commuters and local businesses rely on its services.

Last year Wightlink operated more than 500 sailings which were completely

empty.

Wightlink receives no public subsidy for its lifeline services.

Wightlink operates lifeline services

Wightlink’s annual programme offers £350,000 of support to over 100 charities, arts

groups and individuals.

Wightlink is the only Solent ferry operator to have such an extensive programme of

support in place.

17 Island athletes

40 members of the IOW Council ‘Talented Athlete Programme’

35 teams covering a variety of sports ranging from Ice Hockey to Speedway

17 charities including St Catherine’s, Hampshire & Isle of Wight Air Ambulance

and the Earl Mountbatten Hospice

Sponsorship of Festivals

6 arts organisations

Wightlink is one of the biggest charitable donors on the IOW

Wightlink provides discounted travel to support more vulnerable sectors of the Isle

of Wight community who through health reasons require frequent travel to the

Mainland or are more likely to be financially restricted.

Blue Badge Holders receive discounted travel. In 2012, this amounted to

more than 25,000 journeys, which Wightlink discounted by over £100,000.

Isle of Wight Residents who need to make frequent hospital visits to the

Mainland receive a 50% discount. In 2012, over 4,000 journeys were made (a

total discount of around £40,000).

Wightlink offers an unrivalled discount travel scheme

Wightlink provides Islanders with a range of discounted fares. These give savings

of up to 50% in the peak and 30% in the off peak.

Season tickets for foot passenger travel

Student discounts of up to 50% (plus tailor-made annual tickets to cover the

academic year)

Multilink tickets for car and motorcycle travel

Isle of Wight Resident Fares (fixed price bands throughout the year)

Reduced foot passenger fares for Island-originating travel

Full access to Promotional and Economy Fares

IOW Council employee discount

Wightlink offers an unrivalled discount travel scheme

Wightlink is investing to

secure the future of its services

New ‘W’ class vessels on Lymington-Yarmouth

New catamarans on Portsmouth-Ryde

New retail facilities

New terminal facilities

New toilets in ports and onboard

Wightlink has invested almost £60m in the last 5 years alone

Wightlink is owned by the Macquarie European Infrastructure Fund (MEIF), whose investors

are pension funds. This type of capital is well suited to the long-term investment which

companies such as Wightlink need.

Our shareholders have invested almost £60m in the last five years enabling Wightlink to

purchase new ships and improve ports and facilities.

An OFT investigation concluded that Wightlink’s level of return on capital employed was

reasonable. Comparison showed that 75% of FTSE companies achieved a greater level

of return.

In order to secure future investment, including in the new ships needed on the

Portsmouth-Fishbourne route, Wightlink and its shareholders need as much certainty as

possible about the future of the market and the operating environment.

Continuing negative publicity creates uncertainty and threatens investment.

Committed shareholders who make a reasonable return

A competitive market

offering high levels of service

for Islanders

Islanders enjoy a very high level of service with more than 150 sailings a day

from three operators to and from the Isle of Wight.

This compares very favourably to the level of service which was provided when

the routes were in public ownership. Wightlink’s Portsmouth-Fishbourne service

runs 33% more sailings than when in public ownership*.

Wightlink operates 16% more sailings a day (midweek) on its Portsmouth to

Fishbourne route than Red Funnel runs on its comparable Southampton to

Cowes service, and runs 83% more sailings than Red Funnel at busy weekend

periods to meet customer needs. When Lymington-Yarmouth is factored in,

these figures increase to 194% and 272% respectively.

Like Red Funnel, Wightlink’s catamaran offers a twice hourly service to meet

demand at busy commuter periods, and runs hourly during midweek daytime

periods.

* Timetable comparison of 1974 with 2013