Sunday, October 07, 2012
The fare for a car in 2008 was £5.20. 40% increase in 4 years, ouch!
The thing is that the demand is inelastic - people living in remote Ardnamurchan have to get supplies from Fort William, the journey to Oban is much more expensive. All the builders, bus and delivery companies have to use it.
I'll take a bet that their financial people had already written off the cost of the old ferry, and the piers, in 2008.
Lets say that after depreciation year by year they were valued right down to £500,000 (I've got no idea) For that they would have an easy job of making a 7% return on their assets, only needing £35,000 of profits a year.
Now they been upgraded, at a big cost probably. Their new value could easily be £5 million. So they suddenly need £350,000 a year in profits to get 7%. That is an extra £1,000 a day needed. That's where your price increase comes from.
Its no good everyone bleating about it. Its the commercial fact of life.There is no greedy Russian Oligarch involved. Just everyday normal folks. Like your neighbours. How normal is that?
ps. On the other hand the price for the ferry crossing for a car to-day is just about the same as it would cost you in petrol to get to Fort William going the long way round and adding 45 minutes to the journey. Funny that, huh?
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Posted by John Winkler at Sunday, October 07, 2012