 Good morning everyone and welcome to the 17th meeting in 2018 of the Rural Economy and Connectivity Committee. Can I ask everyone present to make sure that their mobile phones are on silent? We have received apologies tonight from the Deputy Convener, Gale Ross The first item on the agenda is a decision of taking business in private. The committee has asked to consider taking item 3 in private. Item 3 invites the committee to consider its future works programme. Are all members agreed to take this item in private? Yes. We are agreed. We therefore move on to agenda item 2, which relates to ferry services in Scotland. This is to take evidence from CalMacFerries Ltd on the Clyde and Hebrides ferry services. I would like to welcome from CalMac Robbie Drummond, the Managing Director and David McGibbon, the Chairman. I would also like to make a special welcome to anyone watching this session on Facebook live. Robbie, I believe that you want to make a short opening statement, so the floor is yours as it were. Okay. Thank you and good morning. I have met most of the committee, but for those of you that have not, my name is Robbie Drummond and I am the Managing Director of CalMacFerries Ltd. I would like to use this opportunity to make some brief comments about the recent disruptions we have experienced. Before I do so, I thought that it would be helpful for the committee if I clarify where certain ferry responsibilities lie, as it is clear from the press comments that this is not widely understood. David McGibbon and my own Scottish ministers is a private company operated on the company's act with its own board of directors. Through our subsidiary, CalMacFerries Ltd, we deliver ferry services to the west coast of Scotland under the terms of a contract awarded and closely managed by Transport Scotland. The contract is managed on a commercial basis with significant financial penalties imposed on us should we fail to meet our contractual requirements, including technical reliability and punctuality. Transport Scotland sets the fares, specifies the vessel fleet we must use and the particular routes and timetables that we must operate. Our vessels are leased from Caledonian maritime assets limited or CMAL for short. While we are responsible for maintaining the fleet and we decide how to deploy that fleet, decisions on vessel obsolescence, life extension or investment in new vessels sits with CMAL and Transport Scotland. With regard to the recent period of disruption, I would like to sincerely apologise to all of our customers for the inconvenience that has been caused. We care deeply about our communities and we understand the economic impact on island residents and businesses, and we are very sorry for the recent disruption. In many respects, however, the current challenge that we face is one of success. Traffic across our network has grown at 37 per cent over the past five years, and wireless has delivered real economic benefit for our communities. It has put our services under real stretch. Last year, we carried more than 5 million passengers, 1.5 million cars and just under 1 million metres of commercial traffic. Our 32 ferries made over 137,000 sailings to 51 ports, and during the summer period we are running around 500 sailings per day. However, to deliver the summer tidal we set our transport Scotland, all of our major vessels are fully deployed. That means that, in the event of disruption, we have no relief vessels available to provide cover. Our priority in the event of such disruption is to ensure that every community receives a lifeline service, albeit one that may be less than the community might expect. That has been the case with the recent disruption from the start of Easter, which has been probably the worst that the company has experienced in eight years. The period has been very challenging for staff who have all worked incredibly hard, working directly with communities to deliver the best services that we can for customers. I would like to reassure the committee that a significant amount of planning goes into how we minimise the impact of any disruption, and such planning always involves locally based operation staff. Given the variability of our fleet, this is a complex task. We have, however, learned a number of lessons through the recent disruption. The first is that, while the situation has been very fluid and challenging, communications has not always been as quick and as accurate as we would have liked, so I am absolutely committed to open and honest communications and we are actually making changes to improve. The second lesson is our ticketing and reservation system, which, as well as managing bookings, the prime source of information going out to customers is life-expired and needs to be replaced, and we are looking at how that can be achieved. The committee will be aware that I have made some reference recently to the challenges of maintaining an ageing fleet. As vessels age and systems become obsolete and therefore harder to repair, we all need to be aware that some impact on the service is likely, no matter how much effort goes into avoiding that situation. Finally, we recognise that the Government has made considerable investment in both vessels and port infrastructure, and we look forward to receiving vessels under construction at Port of Glasgow. That will add much-needed resilience into our fleet, so I am now happy to take any questions from the committee. Thank you, Robbie. Before we move into questions, just for your and David's help, if you want to come in and answer a specific question, if you catch my eye or try to bring you in, once you have caught my eye, if I could just say, do not then look away for the whole of the next 20 minutes while you give an answer, because then I will be forced to cut you off. If we could keep eye contact going, we will keep the questions moving, hopefully, freely. The first question is from John Finnie. Thank you for that statement, Mr Drummond. Can you outline the cause of some of these recent problems and can you see the efforts that you undertook to find a possible replacement for the clansmen, please? The cause of the clansmen. The clansmen has been now out of service and in dry dock for a period of 65 days, while it had its tail shaft repaired. That required parts of machinery going back and forth to Denmark, so it was a significant repair that had to be undertaken. It is now a further period of 10 days while that tail shaft gets further repaired. Regarding future vessels, that is a challenge that we have been looking at in partnership with CML. We have been looking at alternative vessels for a period of the last two or three years on the real depth. Our brokers are under instruction to search for vessels and it is clear that those vessels are just not available. The reasons those vessels are not available is, first of all, the size of ferries that we have are quite unusual in the market. Ferries tend to be much larger or a smaller size. There are plenty of ferries available through Europe and in Greece and Turkey that may be available for lease, but those vessels do not fit particular Scottish waters. They will not operate in the particular size of ports that we have and they do not operate to the shallow depths that we have in Scotland. Our brokers and CML brokers are under instruction for a constant search of vessels and to date there has been no vessels that have come up that have proved suitable. We have been out with CML four weeks ago looking at another vessel in Greece, so we are constantly looking at vessels and brokers are constantly coming to us with options, but those options to date have not been any that we can be taking up. Thank you. I have had, as I am sure that other members have had, various representations made to us. Quite frankly, I could probably be here all morning putting them to you, but the convener would not want that. However, if I give you a flavour of maybe three or four, Mr Drummond, please. The first one is about the lack of resilience and capacity in what is an ageing fleet. The questionable decision making is about the cancellation of the Marlach Boys' Dale on the first half of June, as a scene pitting one community against another. I know that you have commented there, if I noted you correctly, that you work directly with communities and you are keen to improve that. However, again another point made, quoting, is inadequate communications to communities during unplanned interruptions and inability to respond quickly to customers' representations. Can you comment on some of those, please? The first thing that I will probably comment on, and I did cover it in my opening statement, is in the summer our major vessels are 100 per cent deployed, so we have no spec capacity, which means that when we have disruptions of the size that we have experienced, we are then into looking on prioritisation. How do we spread those services across our communities, and what we do is we try to ensure that every community has a service, albeit one that may be less than they would expect. We do that by looking at what is the best fit right across our network. We do it in consultation with communities, so we do have extensive communications with stakeholders. However, given that the solution is less than communities would expect, it will be one that is unsatisfactory. We do extensive communications with stakeholders. In periods of disruption, we work very hard to give our customers the right information through what may be a fluid and challenging situation. Can you ask about the peer attuig and the outage that will be there? Will there be engagement with the community around that, because there are frustrations in any case regarding what is seen as insufficient capacity on the sky triangle, as we call it? Yes. There is an opportunity there that we have had to defer the mallic Loch Voistail service. It is clear that there are options elsewhere in the triangle to get backwards and forwards. We are communicating with communities to make it clear what those options are. All of the passengers who are booked in those services have had their reservations moved to alternative sailings, so they have all been accommodated to date. You cannot be happy with the situation. The organisations or major organisations would ordinarily have some contingency to deal with what is routine maintenance or routine breakdowns. I hear what you say about the challenge, but is this something that would have been apparent at the time of contracts or Transport Scotland to say about that? As I said in my statement, the contract specifies which vessels we must use and that we must take that fleet from CML. The contract specifies which routes and which time tools we must operate, so we are bound by that contract. Clearly, it is not an easy place for us to be at when we are looking at one vessel down and having to prioritise those services across different communities. Clearly, that is a very uncomfortable situation when we do not want to be in and when we have sincerely apologised for that disruption. However, the situation remains that we have no spare vessels to accommodate for this eventuality. That has not been a situation of a minor breakdown. It has been a major vessel. It has now been out for over two months and it is coming back in for another two weeks while we get back on track. It has been a major disruption period. The worst of the company has experienced for eight years and we have managed our best to try and provide the best service that we can through that period. Finally, you are aware of the great frustration that there is in communities. I am aware of that. We are very sympathetic and we understand that. Thank you very much. I want to take the argument a bit further because a particular friend of mine who is not in my constituency has made the point to me that this is the ninth consecutive Easter where ILA has had service disruptions. That suggests—I would be interested in your comments before I ask some other questions—that this problem is not simply one that is related to the failure of a single vessel at present but is a systemic one that is affecting some of our communities. In particular, ILA, where I think the commercial interests in to the island tourism, I was the minister who introduced RET, so I carry some of the blame, but the whisky exporting industry and livestock as well are being affected. We could get some comments on the long-term problems that ILA and I guess other communities have experienced. ILA summit was held a number of months ago and we heard about some of the challenges there. I talked about traffic growth across the network, which is 37 per cent. Actually, traffic growth in ILA for the past five years is approaching 50 per cent. ILA has clearly now got the benefit of a two vessel service, so it is enjoying that benefit. However, the ferries plan does say that those islands have got a two boat service. When there is an issue with the fleet, then that two boat service may have to go down to one boat service to maintain lifeline services across the wider network. Clearly, ILA suffered at the start of Easter due to the clansman disruption, but, again, we worked very hard to move all our bookings. We worked and all customers were accommodated on to new sailings. We are very sympathetic with the issues there. We participated fully in the summit where we heard some of the challenges. Going forward, it is about how we provide more capacity and more resilience into that fleet. Well, let me just go to that. You made the point in contribution so far that you are contracted to only source your vessels via SEMA. First question. Does the contract have a part of it that provides for variation in the contract? Yes, it does. Right. Have you asked for a variation in the contract to allow you to source vessels other than from SEMA? Transport Scotland has instructed both us and SEMA to go out and look for new vessels. It has indicated that, if you can find those new vessels, funding would be made available, depending on budget constraints, to bring those new vessels into service. That instruction is there to us and SEMA from Transport Scotland. Are there other harbours that would accommodate vessels that are not suitable for the main harbour on this subject? I understand that there are at least a couple of commercial operators who have suggested that they could provide a wet vessel service rather than the dry vessel supply that you get from SEMA. As I say, we have been searching and CLM has been searching the market for six years and no vessels have been found that would be accommodated in any work of the network, including Islay. The challenge is that vessels have to be able to operate in particularly challenging Scottish waters and they have to be registered to do so. That is different to the vessel waters that you would operate perhaps in Greece or Turkey or there is a Europe where there is spec-pasti. The other issue that we have is extremely shallow draft and vessels are not just simply outmades to operate with that level of shallow draft, and that is the challenge. If vessels were available, they would be brought up and presented to Transport Scotland as an option. Perhaps finally, on this particular subject, it strikes me as potentially unique that we have a transport provider who has absolutely not a single vessel sitting in the yard to cover difficulties. I cannot imagine that ScotRail operating a successful service without having some spare to cover outages. I cannot imagine airlines not having aircraft to fill in or contracts with other operators to fill in. Is that a unique position and is that a sustainable position in the long term for communities on the west of Scotland? I chose highly, but we have heard of Uist, Loch Boysdale, et cetera, and Malac who are suffering as well. I think that we have already seen that there is a challenge, that our fleet is fully deployed and there are no spare vessels. If you talk to other operators—I am less familiar with Rail—but if you talk to other ferry operators, and I am talking to them constantly across Europe, they operate their fleets and they operate them hard, but they have spare vessels available so that they move vessels in and out in the event of wanting to provide additional volume in periods of peak, they will change vessels around, or in the event of disruptions, they will bring vessels in and out. It is certainly a different situation than it is faced by other ferry companies. I think that it is fair to say that, as far as the fleet is concerned, yes, of course it would be great to have some spare capacity and sometimes the pass that we have had that, but I would ask the committee to remember—again, this is out with our remit—that the two new vessels currently being built in Port Glasgow were due for delivery this year, which would have taken a lot of pressure off and given us some spare capacity, as we have had before. What you will remember is that, when the loxiforth came into service, we had for a while the Isle of Lewis a spare capacity until the decision was made to give Barra a dedicated service. I was up in Barra only a couple of months ago and they see it as a sea change because they have a great service, it is great for tourism and it is great for the island. The quicker we get the new capacity and, again, that is out with our control, the better we will be. Can you just clarify? I am not sure if I have that correctly. Did you say, Robbie, that you have been looking for a ferry for six years? Yes, and intensely, the last two or three years, as we have, as have Seamall on the construction from Transport Scotland, and none has emerged. So you have been looking for six years—maybe it just indicates how difficult it is to find a ferry that meets the requirements. The other question that I had is that you said in your opening statement that you had been out to Greece to look at a ferry. What sort of price was that ferry being sold for? We have not yet got into that. It has been led by Seamall, so it has not yet got into that kind of level of discussion. I am assuming that, if there are very few in far between, you have been looking for them for six years that anything that meets the requirement will be fairly premium price. The expected price of a ferry went to tens of millions. It depends whether you are going to buy it or whether you are going to secure it on a bearable lease basis. However, it certainly will not be a cheap exercise then. I think that that is going to come out later. I just wanted to clarify before we came up to that session. Kate, I think that you have got some questions. Two supplementaries quickly to Stuart Stevens' point about dry docking and the dry docking programme this year. There have been some questions about the dry docking programme for smaller ferries, and that not being completed before the beginning of the summer timetable, as it had been in previous years, particularly the Loch Rooster. Could you comment on that? Yes. We have got 33 vessels, 10 of which are major vessels for medium vessels and the rest are minor vessels, so we have run a very complex dry docking process through the winter period. That lasts from the start of October of right through to March. You think that each ferry, major vessels, are leased in for two weeks and smaller vessels are in for one to two weeks. That is a complex task. If you add up that number of vessels and you multiply that by one to two weeks, that is quite a complex process. We did have challenges with the small vessel fleet, and it was not to do with planning. A number of the smaller vessels were re-engined, so they got new engines put in as part of a programme working with our partner, CML. We had problems when those vessels came out post re-engining, and that caused some of the delays. With reference to the Brewster, that was not a re-engining issue. The issue with the Brewster was an obsolescence problem, which illustrates some of the challenges that we face because there was a failure of a part on the Brewster to do with a hook, which is a very simple part and not very expensive, but that part was obsolete. Rather than being able to go to the manufacturer and get one in two to three days, they had to go and create that part, and that took two to three weeks. A very small part of the failed because it was obsolete meant that vessel was out for a much longer period than it would have done that was planned to provide a bit of extra cover on the Mali group. The dry docking programme this year, was it similar to previous years or was it later this year than previous years? It was very similar to previous years because each vessel has essentially got a date by which that dry docking must take place, and we cannot go beyond that date. The challenge was the smaller vessels had issues when they came out, and then the challenge was with the clansmen that was not a dry docking issue. It was an issue that emerged in dry docking, and what that then meant was to avoid a bigger problem because with the clansmen being out, we were one vessel down, we then delayed dry docking at some of the other vessels, particularly the Hebrides, because the alternative would have been to be two vessels down out of 10. We decided that that was not an attractive proposition, so we decided that having one vessel down for a slightly extended period was a better option for us. That is why the whole dry docking process this year has been extended. It was a deliberate decision to try and have better capacity while the clansmen was out. Do you think that the proposals in the vessel replacement and deployment plan for fleet development and deployment will improve the resilience of the network over the next few years? As David referred to recently, there are two vessels on order. What those two vessels do is potentially create a spare large vessel in the fleet, which is a choice as to what you do with that vessel. Do you utilise it somewhere or do you keep it on a warm lay-up ready to step in should there be a problem? It also allows us to flex the fleet and put more larger vessels on to different routes. It would certainly allow us to bring the cruisk, for example, back to the Maliq service, so it offers more resilience, certainly. In terms of whether that document does what it says it is going to do, it provides more resilience for us, and that will certainly help when those vessels are newer, then it will certainly be more reliable. You are pushing one question into about four here, Kate. I will let you have one more and then we are going to move on to Colin. It is about new vessels. You mentioned that there are obviously two new vessels being currently constructed. How many new vessels have you had in recent years? When the minister was here, he said that we had something like eight in the last 11 years, which I think from my own memory is about right. We have had the three hybrids, we have had the fin laggen, we have had the lock seaforth, we had the lock shearer and, before that, the two were there going butte. There has been a regular investment over the last few years, Kate, but in essence that is making up for a period before where I remember when I first joined the board. My predecessor said to the minister that we need a new vessel every year for the next 20 years, but it has not happened. However, wherever we are and to be fair, the Government is investing, and I believe that the minister when he was here also mentioned a new vessel for Islay that you were talking about, which is good news and is going to help. The more we have in the fleet, the more resilience. However, in a sense, we are victims of the success of the RET that Stuart Stevenson introduced. The RET has been a huge success across the network. Everywhere you go, you see the impact, particularly the height of the summer. Yes, it gives us issues in the sense that we are carrying a lot more people and a lot more cars, but that is great for the economy and great for tourism and great for the island. It gives us pressures, but the RET has been a success. Good morning to the panel. Can I pursue issues around the replacement plan? It is clear from what we have heard today and what we have read that the current fleet is fair to say that it is not fit for purpose. That is a very ageing fleet, and the average age is 23 years. In fact, 15 of your 31 vessels are over 23 years, so the current vehicle replacement development plan has not avoided the disruption that we have seen in recent months and we have talked already about growing demand. How confident are you that the existing plan will avoid a repeat of this disruption in the future? First of all, the VRDP is a process that is led and managed by Transport Scotland, so we work closely with them, as we do with CML, but that is probably a question that you need to put to Transport Scotland. The fleet is fit for purpose now and runs a service. The question that we are looking at is sustainability and where that future investment needs to be to bring more resilience into that. What in your view needs to change in that plan to avoid disruption in the future? That plan needs to look at the long-term future of the service. What I would like to see is, as I am looking forward 20 years to say, what is the investment plan over the next 20 years, both for vessels and ports? When I talk to other ferry operators, that is the length of the time frame that they are examining their fleet, so they are looking 20 years or 30 years ahead and saying, what is the sort of fleet that we want to have in place in 30 years time? What does that infrastructure need to look like and then plotting a path from where they are today to where they want to be over that longer-term time frame? Those are long-term assets, ferry lifespans are on average 25 years, but also the infrastructure that we operate to that, again, is important. They are long-term assets too. One of your main assets, of course, is your workforce as well. Can I ask a very brief question, convener, on one of your ferries, the Isle of Lewis, which is 23 years old. You commissioned a private consultant to look at some of the health risks to see ferrars from vibration on what is an agent vessel. Can I ask what steps you are taking across the fleet to deal with those health and safety concerns given the age of some of those vessels? As a company, we take health and safety as our absolute number one priority. That is health and safety both of our travelling customers, but also of us staff. We take that incredibly seriously. We are looking, again, at where we can improve facilities on board for some of our staff and make sure that they are in the right conditions that they would expect. Specifically on that issue that you commissioned a private consultant on, that the vibration within the Isle of Lewis ferry, what specifically are you doing to address those concerns? I do not want to go into details on that, but that is an issue that the vibration is at that level that is acceptable, so it is not causing a health and safety issue. Thank you, convener. We have already mentioned RET, Roddy Coffin Tariff, and I want to concentrate on the financial side of that, if I can. Can you tell us something about how the finances work? I understand that, while the fares are controlled and inflation increases, we have a figure of £40 million provided by Transport Scotland to compensate for lower ticket income since 2008-09, so that must be about £4 million a year or something like that. Obviously, you have more vehicles and passengers, so they are paying more money. Can you give us an overview of how the RET has impacted on the finances? RET, clearly, is at a reduction in average ticket pricing, but it has led to more volumes, but the net of that is lower revenue coming towards Carmac. That is something that was recognised when we bid for the contract. When we bid for the contract, we took that fully into account, because the RET changes were known about when we bid into this. When we provided our bid, we estimated what our revenue would be. We clearly put a bid in around our costs, and that is what we took forward. It is important to recognise that, on revenue, the way that the contract works is that we are fully on the hook for revenue growth, so we are incentivised to grow passengers and vehicles. We work very hard with local and national tourism bodies to grow that traffic. Can you tell us how much lower revenue you have as a net effect? If you have had 40 million extra from the Government and it is built into the contract, is there still a net effect in there? Yes, there will be. The average revenue will be down, so there is an increase in subsidy, but it is a hard number to detangle because it will require you to identify how much that growth is due to lower RET fares—a pricing impact. There is significant growth in tourism anyway across Scotland, driven by security fears and lower value of the pound. We already know that there is more tourism coming to Scotland, so that has had an impact on revenue that the contract is benefiting from. To answer your question, you need to be able to separate out what is the specific RET impact, and that is not something that we are able to do. Is there any link between that revenue that you are getting, be it more or less, and replacing vessels? Are those two things so completely separate? There is no relationship? From our perspective, there is no relationship. The way that the contract works is that we make a bid to Transport Scotland. We say that we need this amount of subsidy to run the services for the period of the contract, and that is what Transport Scotland pays us. That is completely separate to how they go and fund vessels, which is through CMAL. It is a separate question. Mike, and then I will bring in John in for me. Thank you, convener. When we were in Mull as a committee, several islanders were talking to us about the difficulties of sometimes being stranded, not getting back to the island. My question really is focused. We have information here before us, as a result of Rhodocloffin tariffs, the rise in number of passengers, and then the rise in number of cars or vehicles. It seems from the tables that struck me, if we just look at Oban to Cregnw, Oban to Cregnw passengers up 40 per cent, cars up 43 per cent, Oban to Lismol passengers up 18 per cent, cars up 55 per cent, Oban to Kilcwyn 28 per cent, and 75 per cent. There is obviously a huge uplift in the number of vehicles going across to the islands. My question is really, has there been an increase in the number of passengers unable to board services since there has changed in the fair structure? The challenge that we face is clearly through this summer period, and it is a certain peak sailings, but that challenge is around the car deck. There is no challenge on passengers travelling. Indeed, we are trying to encourage more passengers to travel because that is something that is environmentally sustainable, but there is also an area where we are not capacity constrained, we are capacity constrained on the car deck. That is a challenge. In certain periods in the summer, sailings are full and communities and, indeed, tourists will not be able to go on the sailings. That is not to say that there is capacity during the week, because there is always capacity during the week, but they are at sailings that may be less attractive to people. When you point on growth, an interesting statistic is that, having talked about 37 per cent growth across the network in five years, over the bank holiday weekend of four days, our passenger growth was 17 per cent, so we carried nearly 20,000 extra passengers over the bank holiday compared to the bank holiday last year. We also carried eight per cent more cars than last year, which is an extra 2,000. Over those four days, you can see the level of growth that has been experienced across the network. Remember that is not RET, because RET was in last year, so that is just growth. Do you have statistics? Do you know how many residents of the islands are unable to catch, get on to the ferries and have to stay over? Would you be aware of that? Is there any way that you can collect that sort of information? No, we are not aware, so there is no way of capturing if somebody goes online and is not able to book their favourite sailing and either decides not to or books an alternative sailing. That is not data, it is something that we capture. Before we leave that and go to John Finnie and then Kate Forbes, one of the things that was also mentioned on that trip is that islanders have to make an emergency trip off the island for reasons, could be personal reason, family death or bereavements or whatever, struggle sometimes that they suggested they might struggle to get off the island. Is there a capacity to allow or keep back spaces for people in extremists to get off the island if the case is made? Is there a few spaces kept back just in case a scenario comes up? That is a really interesting question because our contract says that we must operate the services first come first served, so the sailings just get booked up as passengers book it up. We did offer in our bid, when we bid for the services, to create a kind of reserved space and allow communities the ability to manage that space, whether it is five cars or whatever it is. We offered that up as part of an option, that the communities could manage that, whether it is for funerals or access to medical services. That was not something that was taken forward and we now require the contract to manage it on a first come, first serve basis. It is something that could be looked at, but it would require a change in our contract. Thank you. That is very useful. Sorry, John, if I have stood in your question. No, not at all. Thank you, convener. Mr Drummond, I would like to—we have been talking about the availability of ferries, but I want to try and understand the relationship between capacity and the impact that freight has on that. It has been suggested to me that the West Nile's council has been told in relation to the carriage of freight that there have been discussions, and the discussions have been mentioned as some, but the Scottish Government does not want to lease a vessel, which was previously used for the conveyance of freight, on that length of lease. Can you comment on that, please? I am not able to comment on any discussions that you have been having. There is always an option to lease a freight vessel, and that has been done before for the Stonway Ellipoll route. That is an option that Transport Scotland could choose to look at. Again, should a vessel be available, so it requires a vessel to be available that could be utilised on that route? The relationship between the availability—I understand that there is an offer—of a vessel simply to carry freight clearly has the potential to free up capacity. Has there been any work done in the relationship between that and what the impact could be that could be published or made available to the committee? There is a West Nile stag on-going, or just started. That is a process that should emerge, and communities will have the opportunity to comment into that stag process, because that should identify what is the requirements and therefore what is the best vessel configuration to meet those requirements. That stag has been led by Transport Scotland and has started, and I believe that it is due to complete in 12 months' time also. I was going to say that, of course, the frustration that people have is that it is a torturously slow process. That is another year past. Do you have flexibility to deploy freight vessels to alleviate some of the pressure that there is by the carriage of heavy goods vehicles on your ferry? I refer back to my point. We do not have any additional vessels, so if there was a freight vessel made available and Transport Scotland wanted to fund it, we could put that on place. We would have to recruit the crew. The freight vessel would need to make sure that it could be accommodated at the relevant ports, but it could be put in place if there was funding available to do that. Given assurance that the trade unions would be involved in a process like that, because, as you rightly identified, there are issues around crewing and staff terms and conditions. I am absolutely sure that, if that was brought forward, we would do it in the right way and make sure that the right terms and conditions were being paid to staff, because that is very important for us. I think that you pushed that quite a long way, John. Kate, I will not give you so much leeway on that question. I will start quickly. The RET figures—obviously, there are some really impressive figures at 33 per cent. Does it concern you when there are either negative figures or really low figures? Particularly, I can see that fishnish to luchaling is a minus figure on the RET carrying, and, obviously, Malyg to Armadale is 0.3 per cent increase in passenger carrying. The first question is, does that concern you? Secondly, how do those RET figures drive what capacity you provide, because it could be chicken and the egg with more capacity, more demand or less capacity and therefore less carrying? I am clear with the relationship between capacity and demand. What we find is that, as soon as we put another vessel on a route and that provides more capacity, that leads to further growth, which is really positive for our community. If we had more capacity, we would certainly want to deploy it, because that would be great for communities and leads to good sustainability. Does that answer the question? How do you mitigate some of the lower or negative increases in carrying? I am not sure what figures you are looking at, but, clearly, we want to make sure that all of our routes are growing and that we have customers using all of those routes. Our mitigation is that we work very hard with local tourism bodies—national ones and local ones. Our commercial department works with those bodies to try to drive more traffic through routes where there is spec capacity. It will work with promoting those communities as fantastic places for tourists and to try to grow those routes. That is something that we want to continue doing, because that is an area in which we can continue to grow our revenue. It is good for Calamagos business and it is good for generating returns to the Scottish Government, but it is also good for communities, too. The next question is from Peter. Thank you, convener. I want to look a wee bit into the Scottish Ferris plan, the 2013-30 to a 10-year plan. We are halfway through the plan that was launched in December 2012, and its focus is on where investment should be focused on improving reliability and journey times. It is about maximising the opportunity for employment, business leisure and tourism. What progress has Calamagos Ferris made in implementing the requirements set out in the Scottish Ferris plan? My response is that the Ferris plan is a Transport Scotland document that looks at how it wants to provide those services. We have a contract with Transport Scotland that says that we must run those routes and this timetable using those vessels. I am sorry, but it is significant that that plan has been delivered, but it has been delivered by being embedded into our contract that we are now delivering. Your question is how do you look for the rest of it? That falls to the VRDP, which looks at what is that future investment going to be around vessels and ports. To some extent, you are saying that the plan is almost irrelevant because it is embedded in what you do anyway. Is that a fail? I wouldn't say that it is irrelevant because we were asked to deliver service if Transport Scotland wants to ask us to deliver more sailings or to deliver them differently with different vessels that deliver some more of that plan. Clearly, that option is open to them through contact variation or whatever mechanism they want to employ. We would work closely with them to deliver anything different that either they or the communities want to deliver. Do you think that the plan is succeeding then? Meeting its aims have improved journey times, reliability, maximising opportunities for business. That is what is embedded in the plan. Do you feel that five years in, you are ticking some of these boxes now, do you feel that there are improvements? I will pick up some of those things. You talked about opportunities for local businesses. We are carrying significantly more traffic, and that means that opportunities for businesses to get their product to market is increasing. We have seen some of that growth, whether that is the whisky trade or shellfish markets. That trade is increasing and that is opening up more opportunities for businesses. You mentioned reliability. In contract year one, our reliability and punctuality was 99.5 per cent, which, if you compare that to rail, is mid-90s. We are delivering well on that proposition. Clearly, the issues with the clansmen has knocked that back a bit, and we are not happy with that situation. However, if you take out the clansmen situation, our reliability and punctuality of the service is very high. That is up at 99.5 per cent. We have investigated the problems already, but 99.5 per cent reliability on time would be a fantastically good figure, so it would commend you for that. Can I clarify something? You said that you buy into the plan, but it is not your plan, and you cannot influence the outcome. Is that what you said at the beginning, or have I completely got that wrong? It is Transport Scotland's plan. It is Transport Scotland's plan. You cannot influence it because of the contract, and therefore the plan does not really work. Is that what you are saying, or have I got that completely wrong? No, I would not characterise quite in those terms. I am trying to say that it is Transport Scotland's plan. Clearly, we can influence it because we work with Transport Scotland and we work with CML, and we were a key role to play in what that plan looked like. That plan went out and was based on consultations with communities in terms of what they wanted. Transport Scotland has now said to us that this is what you want us to deliver, so that is what we are now delivering. The future of that plan looks like. Clearly, we would work with Transport Scotland and CML in influencing and working where that future plan should go. Okay. Thank you. Kate. Moving on to timetabling, what actions have you taken to increase opportunities for island residents to commute to the mainland? One of the improvements that we have brought forward in this contract is that we have got a much more robust timetable consultation process. The way that the process works is that at the start of each summer and winter period, we start up a consultation programme with communities. Communications is with communities. They come back and say, what concerns or changes would you like to timetable, so we go through then a whole consultation process. We take the outcomes of all that consultation and we take it to Transport Scotland and have a discussion about whether they want to fund those additional sailings or changes to sailings that might be put forward by the communities. The types of things that have been put forward are changes to link up with different transport modes, additional sailings or, indeed, new routes. Those discussions we would take forward and where we are able to do them, then we will put that forward to Transport Scotland. We have made quite a significant number of changes over the last two years that has improved connectivity, certainly. Connectivity with rail and buses is far improved. One of the things that we did in our bid was that we appointed a transport integration manager whose key responsibility is to work with rail and bus companies in improving that connectivity. There have been real changes made in that and making the timetable work better for communities. The options that we have to extend the working day are more limited because we are then restricted by working-time directives. While we can move around sailings, extending them and creating more is more challenging because our fleet is pretty much at maximum capacity. You consider commuting peak times when devising timetables for islands that have a lot of residents that commute to the mainland? Yes, we do. Our timetables are delivered around what communities want and are designed with their consultation. They are not even through the period. They will focus on the areas and times that are most important for commuters. In terms of infrastructure, you will be working with CMAL and passenger groups to improve accessibility of ferries and onshore facilities. Yes. Again, we do not own the ports or the vessels, but we work closely with them to try to improve accessibility. That is not easy with ageing infrastructure, but we work very hard on the operational side for accessibility. We are supporting customers who need additional access or support or often the ability to park their car in areas that are more convenient to them. The operational side works very hard on improving accessibility, but we are also working with CMAL on the changes to physical infrastructure that could make a difference, including lift provision, access gangways and so on. Are all your ferries accessible to disabled passengers? Yes, they are all accessible, but not always in the most easy way, because ferries are not ones that you can put lifts in, for example. However, we always create an operational process by which disabled passengers can access the ferries. Thank you. Thank you, Kate. Richard. Morning. Since I have been here, there has been a number of, since 2011, there has been a number of meetings with CalMac and basically looking at ferries, but can I refer to session 3 of this Parliament? The Transport, Infrastructure and Climate Change Committee undertook a detailed inquiry into ferry services and then made nine recommendations to both you and the Government basically looking at speeding up the process, new innovative working practices to allow timetables to improve, contracts between ScotRail and CFL should allow services to wait where possible for delayed trains, ferries without penalty and the Scottish Government to facilitate discussions between ScotRail and CFL to identify capacity to improve. Are those nine recommendations being implemented and do you have a situation where the Clyde and Hebrides contracts allow CalMac ferries to hold services for late arriving trains or coached services without financial penalty? I can answer that. I slightly covered that before that we've had now a much more robust, we've put in place, much more robust timetable consultation process. We have got a transport integration manager who works directly with train and bus companies on proper integration. Just to clarify on penalties, we are subject to very significant penalties where we are late or where we are not meeting timetables, but we are allowed under the contract to wait for a train. We are allowed to delay the service and not be penalised under that. However, that is challenging because if we delay one service, that means the sixth and the day, then the next five sailings are all going to be late and they may have passengers who are trying to make their own connections. That's challenging because you may help some passengers but the rest of the day you're creating a challenge. That means that other passengers don't meet their connections. While we are not penalised under the contract, it's a difficult balance to try and manage. You can have a knock-on effect. Amongst one of the recommendations was to lengthen the sailing day. Do you do that? When you talk about so that I'll know from my own benefit how much penalty did you pay last year? I'll cover those two points separately. First of all, the majority of our ferries are operating close to the maximum working day. It's set by the amount of hours that the crew are allowed to work. Again, that's an issue. If we delay a first sailing about half an hour, that may mean that later sailings we are not able to meet, which would be really challenging. Those options extending the day and adding sailings are not available to us without bringing on additional crew. Bringing on additional crew means a complete step change in costs. Even to put one sailing on, you're looking at a whole crew and that's really challenging. My last question is, do you now work with ScotRail? Well, you say that you do, but do you really work with ScotRail on bus operators to develop timetables that allow easy transport between public transport modes? I can understand that sometimes ScotRail is late, sometimes a bus is late, traffic etc. That makes you late, but how do you, unlike ScotRail, you can't skip stop? How long would you hold back a ferry for an elite train or an elite bus? Skip stopping on ferries? Robbie, do you want to answer that? You can't skip stop on a ferry, I understand that. You can go a wee bit faster if you want to go. We've got operating protocols in place with rail and buses so that there's contact points, so we know when later-riving trains will be arriving or later-riving buses, and the answer will be different depending on which ferry it is. Clearly, with short routes, we'll take a different response to longer routes, and it's a balance of managing it right across the whole day. Sorry, just to find the benefit committee benefit, do the ScotRail contact you to say the train from wherever is late, go into the open or whatever? Yes, they would do it, so there's operating protocols in place that we would be aware of that. Thank you Richard. Colin, you want to come in on that? One way to obviously improve connectivity between rail and the ferry companies, of course, is to have the same company running both. The Government has enabled legislation to have a public sector bid for the current ScotRail franchise, which runs to 2025 but could be broken in 2020. One suggestion has been made that it could be CalMac and that it could be that public sector bid, so can I ask if you've had any discussions over preparing a public sector bid for the ScotRail franchise? Thanks for that. I too saw the comments in one of the tabloids called Caledonian McTrain, I think it was called. Clearly, yes, we are in the public sector, we're owned by Scottish ministers. We want to expand the group in terms of ports and harbours and ferry services both nationally and internationally. We've noted the comments on rail. As far as rail is concerned, we don't have any experience in rail, but in terms of developing the group, we would be interested in exploring the possibilities and the board has discussed that, but only that. We would need to know enough more about it and what it entailed and what the costs would be and so on and so forth, but we would be interested without any commitment as a public sector body to look at it. The clock is ticking on that. Has there been any involvement from the Scottish Government with the company? As David said, we have indicated our interest in having a discussion with Transport Scotland about the possibility of us operating a rail service, but the key thing for us is what is the shape of that rail service. If there is going to be a contract, what is the nature of that contract? What is the relationship going to be with rail track? What is the relationship going to be around transfer of risk? There are a whole load of questions to be answered about the shape of that before we get into any more deeper discussions. We have not had detailed conversations, but we have indicated to Transport Scotland that we are willing to talk. Jamie, I think that you have a question. Thank you, convener, and good morning, panel. If my ears are not deceiving me, you have just spent the last hour talking about lack of resilience on our ferry services in Scotland, but you have just said that you are interested in running our rail network. Am I correct? We are a company owned by the Scottish Government. We are in the public sector. We are in transport, and we know a bit about transport. We would be interested in at least exploring with the appropriate Transport Scotland people and rail what it would entail. That is all that we are saying at the moment. It sounds to me that that is a bit of a perfect storm at the moment. We have an ageing fleet of vessels. We have a network that is at capacity with absolutely no resilience at all in terms of spare vessels. Yet there is an operator that has absolutely no ability to alter some of the decisions that are key to improving the situation. You are saying to me that these are all decisions for Transport Scotland. You are not in charge of routes, timetabling, fares, you are told which type of vessels to use, you are not in charge of the investment decisions, the plan and the strategy. Are you happy with the status quo? To me, it sounds like something is amiss in the system. What you have described is the nature of a franchise contract. We are running a contract to run a ferry service. Clearly, we work very closely with our communities of what that service needs to look like. We have committed to a whole range of improvements through our bid that will make that a better experience. We are also committed to working with CMAL and Transport Scotland on how to improve that resilience into the future and on what that strategy long-term plan might look like. We are committed to working with them in partnership. We are committed to working and improving the service as we progress through the contract, but it is a contract. Are we happy with the situation? It is a contract that we knew that the situation was my bid into it. We are doing the best that we can with the assets that we have available. Our staff work incredibly hard to provide our bus service. None of this happened overnight. How did we get to where we are in a situation where there is no capacity? All it takes is one large vessel to go offline or delay in the delivery of new vessels, as we have at the moment. Suddenly, we are seeing the knock-on effect of that right across Scotland. People are watching this online. Islanders must be angry and furious about this. Today, the Parliament is discussing the Islands Bill, yet we are asking questions about what has gone wrong and how we fix it. All I am hearing is that it is all outside of our control. What we are saying is that there is a combination of growth. There are vessels there that we are doing the best that we can to deliver the best service that we are able to. I am not sure what else I can say about that. So it is not your fault that we transport Scotland? No, we are not saying that, because we take responsibility for our delivery. However, clearly, we do not own the strategy for the longer-term fleet that sits with Transport Scotland. We only acknowledge that RET has been a fantastic success for the communities. We also acknowledge that there has been significant growth in tourism traffic that has also brought real benefit. The conversation that we need to have with Transport Scotland and CML and our stakeholders is what does that long-term strategy around vessels and ports need to look like for the next 20 or 30 years to deliver the service that we all want? Finally, on the issue of tenders, whose decision is it to put forward a bid for a ferry service? Is it CalMac or is it David McBrine or is it Transport Scotland? The question of who puts who is a bid is David McBrane, which is a private company with its own board of directors. David McBrane, as a business, wants to grow and look at other business, whether it is in ferries or other logistic operations. He will be aware that we want a large contract down in Marchwood to operate the Marchwood military port, but that is a purely decision for the board of David McBrane as to which opportunities it wants to pursue and which opportunities that best fit the purpose of the business. On the basis that the communities of Orkney and Shetland have quite publicly rejected the concept of CalMac running the ferry service up there, is it your intention to put forward a bid to do that? As I said, we are a business that wants to grow. My understanding is that I would not categorise it in those terms. I think that what they said was that they did not want to allocate it to a single operator. They wanted to have a competition, so that the best operator would emerge from that competition. Having won a number of bids, we are very confident about going up against private operators. We believe that we can deliver a better service for customers and one that is more cost effective. We are not afraid at all about going out in competition on any terms. David McBrane made the whole company stated some time ago that vessels have a life-stand of 30 years. Vessels need to be replaced at a rate of approaching one per year. There are several vessels that are coming to you in the next while they have been built at Port Glasgow. What is there for the future? Is there a proposal to have one built every year or what has the Government said to you? The strategy for identifying that is the VRDP vessel deployment plan that is owned by Transport Scotland. We already know that there are two new vessels being built at Port Glasgow. There is a question or option of another ferry being built for the Islay service. The question of the VRDP and its addresses is, what is that future strategy around vessel delivery? I have been a record of saying that the average age of our fleet is 22 years. We have got eight vessels that are over 30 years. The clearly needs to be a review long-term future about how that resilience is maintained. Do you need one a year that would help you and also help the workers at Port Glasgow to build? We have made no statement about needing one per year. Your comment is simply a question of maths. If you want to maintain 30 vessels at the same age, then you need a frequent development programme. We have no demands. We will operate the service with the assets that we have available and make the best job that we can. You would like one a year. I think that you pushed that too long, tried to put words into somebody's mouth. Do you actually feed into the Government's review on ferry procurement? Do they say, look, this is what we need, this is where we need it, and how are you going to produce that? Or is it the other way around? Do they tell you what they are going to give? Procurement? Are you talking about the replacement strategy? If it is the replacement strategy, then there is a procurement of ferries, new ferries and replacements. In terms of what there looks like, we are part of a tripartite discussion with Transport Scotland and CML and ourselves and looking at what that strategy might be and what the specification of any future ferries might want to look like. If we are looking at the Islay vessel, for example, we will be clear about what our requirements are for that vessel and put that forward to Transport Scotland and CML to deliver that. Just a simple question. We heard about 11 new vessels that have been in recent years. Is that reduced or increased the average age of the fleet? If you look at a chart of the age of our fleet over time, it is going up the way. Clearly, it has had a positive impact. Of course, it has, but our average age is 23, and that is just a question of facts. Is there a difference between the large vessels and the small vessels? Not a material difference. Can I just ask for clarity for our final question, unless anyone else on the committee has a question? The two ferries that are being constructed, when are they going to be delivered and is that when you expect them to be delivered? As David and Rory said, they were expected to be delivered this summer. The latest indication that we have is that they will be delivered sometime in winter 2018-19. As soon as they are delivered, they will be able to put them into operation. I always get confused and the committee will understand my confusion. Is that winter of 18 or winter of 19? Is that the winter this year or the winter next year? Winter next year. Sorry, it is our winter timetable, which is 18-19. That is next winter. November is winter, is not it? That is November 19. I always get confused and I like to just be understand because we usually get into a discussion about seasons and then that confuses me. That winter period runs from October 18 through to March 19. The final question is when those two ferries come in, will you still be looking for an additional ferry? I think that, as we have said, the VRDP has identified the need for an additional ferry on Islay, so that is the next one that we will be looking to put in place. What I have already said is that those two ferries coming in gives us resilience, because it does not enable to do a cascade through the fleet. It potentially frees up one major vessel, either to be used as a spare vessel or to be deployed somewhere else. It gives us real improvements on our resilience. My question is simple. I am sure that most businesses, if they said that they have been looking for a bit of machinery for six years, it does not matter what it is and they could not find it. Having had no luck for six years, they might realise that they are looking for something that they will have to buy or commission rather than buy second hand. That is the position that I want to find out. You are saying that you are going to keep looking for something that is not there or that you are going to... We have already said, and we have committed to Transport Scotland, that we will commit along with CML to continue looking for vessels. However, as none has emerged in six years that are suitable, there is no high expectation that any will emerge over the next six years. However, we will continue with that process because there may be one emerging, in which case that may offer a shortcut to providing some additional resilience. However, the most likely and obvious way to being resilient in is to build more vessels into the future. I should have commissioned it four years ago, maybe, but anyway we will leave it at that. I think that that has been a very useful session for the committee. Robbie and David, thank you very much for coming along. I am now going to suspend the meeting for five minutes to allow a changeover of witnesses. Is that right? Sorry, I have got that wrong as the class pointed out to me. I am now going to suspend the meeting to allow the witnesses to change and then we are going to move into private session. The meeting is now therefore closed or fair. Thank you.