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  • October 2018 v1.1

    7-9 North St David Street, Edinburgh, EH2 1AW Tel 0131 524 9610, email [email protected], web www.dhc1.co.uk

    Final Report

    Review of Argyll and Bute Public Service Obligation Air Services

    mailto:[email protected], http://www.dhc1.co.uk

  • Review of Argyll and Bute Public Service Obligation Air Services

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    Document Control Issue record

    Version Date Approved by Distribution 1.0 16 October 2018 NF Argyll and Bute Council and

    HITRANS 1.1 29 October 2018 DH Argyll and Bute Council and

    HITRANS

  • Review of Argyll and Bute Public Service Obligation Air Services

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    Summary Flights to the islands of Colonsay, Coll and Tiree started in 2008 so are relatively new compared to other more established air services within Scotland. The current public service obligation (PSO) contract ends on 15 May 2019, so this review seeks to identify opportunities for future development of these services through a new contract. The review provides insight into current usage, performance and potential for the air service, and options for timetable, frequency, capacity and route changes, taking account of the needs of local communities. Average seat occupancy on the flights is about 40%. There is potential to sell more seats to help reduce the costs of the service per passenger. Increasing utilisation of the service should enable the Argyll PSO to progress from the current level of subsidy of about £220 per passenger towards subsidy levels about half of this level and more consistent with the nationally delivered PSO to other west coast islands. All communities and all stakeholder groups considered that the services needed to be marketed better. Awareness of the services from people who were not regular users continues to be low. Residents and visitors alike suggested three scheduling changes that would help the services to better meet their needs: the ability to get on and off each island every day either by ferry or by air; the ability to make return trips each day with at least 6 hours on the island to undertake business; and the ability to offer Friday afternoon and Sunday afternoon ferry or air travel options between Oban and each island. The air services are used predominantly for work, health, and leisure trips, alongside the associated school transport flights which enable children attending school in Oban to return home to the islands at weekends. The services provided for health trip purposes benefit the lowest income groups most. Most users would accept a small fare increase, but most users consider current fare levels to be about right. Users do not think that practical fare reductions would encourage them to make more trips. Most island residents rated the experience at Oban airport as very good, but business travellers and visitors gave lower scores, particularly for food and drink. There are many benefits delivered by the air services which are non- quantifiable, but £60k public sector staff cost savings from reduced travel and accommodation costs, plus £55k savings from being able to close the hostel in Oban for secondary school pupils from the islands, are most easily quantified. Benefits for business are likely to be as great as the benefits for public service delivery. Perhaps the benefits of the air services are best understood as an essential part of sustaining and growing island populations. Benefits could be further enhanced with more sales of unused seats through local hotels and agents to tourists, better targeting of available capacity at the

  • Review of Argyll and Bute Public Service Obligation Air Services

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    greatest social needs, and more optimal pricing options for seats with different booking criteria. Scheduled air services to remote communities across the world face all of the challenges experienced in Argyll and Bute. If the lessons about competition, contract flexibility and approaches to subsidy are learned, then the prospects for the Argyll PSO are for future growth.

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    Contents 1.0 Introduction ........................................................................................... 1

    Approach to the work.......................................................................................... 1

    2.0 Use of the Air Services .......................................................................... 2 3.0 Survey Results ...................................................................................... 6

    Community needs in Coll, Colonsay and Tiree ................................................ 6 Making improvements ........................................................................................ 6 Business .............................................................................................................. 7 The passenger experience at Oban Airport ..................................................... 7 Surveys of potential operators ........................................................................... 8

    4.0 The Costs and Benefits of Changes ...................................................... 9 Usage and performance ..................................................................................... 9 Environmental benefits ....................................................................................... 9 Benefits for delivering public services ............................................................. 10 Benefits for business ........................................................................................ 10 Cost and benefits of better marketing ............................................................. 10 The Benefits of Tiree to Glasgow flights versus Tiree to Oban .................... 10

    5.0 Best Practice in Tendering Air Services .............................................. 12 Competition Issues ........................................................................................... 12 Flexibility within contracts ................................................................................ 13 Subsidy levels ................................................................................................... 13

    6.0 Conclusions ......................................................................................... 14 7.0 Appendix A - User and Community Consultation ................................ 15

    Household and passenger survey................................................................... 15 Community Consultation Events ..................................................................... 19 Specific Issues for Coll ..................................................................................... 20 Colonsay Community Consultation ................................................................. 21 Specific issues for Tiree ................................................................................... 21 Specific issues for Oban .................................................................................. 22

    8.0 Appendix B -Business Survey ............................................................. 23 General Issues .................................................................................................. 23 Restaurants ....................................................................................................... 24 Accommodation Providers ............................................................................... 25 Construction ...................................................................................................... 25 Retail .................................................................................................................. 25

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    Transport & Tour Operators ............................................................................. 25 Other Services .................................................................................................. 26

    9.0 Appendix C - Consultation with Public Service Providers and Other Stakeholders .................................................................................................. 27

    NHS Highland ................................................................................................... 27 Argyll and Bute Council - Social Work and Education .................................. 28 Tiree Community Trust ..................................................................................... 28 Bid4Oban ........................................................................................................... 28 SEPA .................................................................................................................. 28 VisitScotland ...................................................................................................... 29 Police Scotland ................................................................................................. 29 Scottish Natural Heritage ................................................................................. 29 Scottish Fire and Rescue Service ................................................................... 29

    10.0 Appendix D – Potential Operators ....................................................... 30

  • Review of Argyll and Bute Public Service Obligation Air Services

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    1.0 Introduction 1.1 This project has sought to identify options for the f