As he approaches the end of his second year as CEO of Condor Ferries, Paul Luxon oversees essential sea connectivity linking the Channel Islands, the UK and France. Paul talks to Business Eye CI’s guest editor Gary Burgess about the challenges he faces and why he relishes his life at the helm.
I have always felt that companies supplying products or delivering essential services over many years or more than one generation become, in time, part of the fabric of the community they serve. We can all list examples of organisations locally who fit this category and I would like to think Condor is considered as one of these.
To illustrate this, it may come as a surprise, but Condor reached a major milestone in 2017 as we celebrated seven decades of providing lifeline freight services to the Channel Islands.
Today, freight is as important as ever and forms one of the three key strands of our business along with essential islander travel and seasonal visitor traffic – each no less important than the other. As a company we take our responsibilities as the main sea connectivity ferry operator very seriously and understand that freight, tourism and islander lifeline travel are vitally important to our small, distant islands.
I travel regularly on our fleet of four ships and around our network of five ports and am often asked how changes in travel and trends affect our business. My reply centres on the link between the emergence of the low-cost air model and changing UK tourism destination consumer choice.
About a dozen years ago, at its peak, visitor numbers were around 1.4 million across both Islands – one million into Jersey and 400,000 into Guernsey. Once the low-cost airline model developed, that market suddenly dropped by about a third and visitors fell to under one million in total. One-third of those were travelling by sea.
As a result, Condor was taking 150,000 fewer bookings and the loss of revenue was significant. It is worth relating this back to the calls for more ships – and it is this particular dynamic that no one has really had a conversation about. There are fewer tourists, how can we justify more ships?
Condor is a private business, we have no subsidy or underwrite and have not asked for them either. We are trying to offer a service across the three strands but when your small market shrinks by a significant amount, that has a real impact. And it is hard to grow because of where we operate, having a finite market size.
In May last year, Condor was ready to operate a trial inter-island day trip service between Guernsey and Jersey following discussions with the Economic Development Departments in both Islands. This involved an underwrite provision in which the three parties (Condor, States of Guernsey and States of Jersey) would equally cover any operating deficit from the trial should there be any.
Ultimately and sadly the trial did not proceed. We kept the identical proposal open and available for the 2018 season, from May to October through to January 2018 when we had to withdraw from the tender process as one of the two vessels we had retained on hold became unavailable and the time to set up for the season had run on too far for resource planning.
A common theme or topic of conversation that I used to read a great deal about was Condor Liberation and her suitability for Island operations. There is no doubt that 2015 was an awful year for the company as we invested £48 million in her. We marketed the new ship in a strong way because we were very proud to have made the investment but sadly, a whole series of things happened in 2015 around bringing her into service that had an impact on our passengers. We absolutely regret that, it was a bad year.
Many of those problems have since been mitigated and resolved, and as we moved into 2017 and now 2018, there have been a smaller number of issues in real terms. As a consequence, I hear considerably less about her now than before which is true credit to our engineering and operations teams.
Today we operate two high speed ferries (Liberation and Condor Rapide), a conventional car, passenger and freight carrying vessel, Commodore Clipper, and Commodore Goodwill, a freight only ship. Each year, Condor Ferries carries more than 1 million passengers, 200,000 passenger vehicles, 100,000 freight vehicles as well as exporting thousands of tonnes of local produce.
We have developed a very detailed five-year business plan which our board and shareholder have approved. It gives my executive leadership team clarity about what we should be doing and at the heart of that is reliability, punctuality, customer satisfaction and service.
A key strategy within our plan, along with fleet replacement plans, comes under the moniker of ‘Project SMART’ – Condor speak for digitalisation.
The driver is making it easier for customers to deal with us – we want it to be straightforward by embracing the digital change and addressing demands for customer service through digital tools. It is about meeting today’s expectations and at the same time setting the company up to meet tomorrow’s too. The investment is expected to cost in the order of £2.5 million over the first 24 months with a host of improvements both internally and externally that customers will recognise.
Condor also invests over £100,000 per annum across the five port jurisdiction communities served by our fleet – Guernsey, Jersey, St Malo, Portsmouth and Poole – in support of good causes, sponsorship or direct support and we will again make an increased contribution to island life in this way in 2018.
We are very focussed on making sure we play our part in supporting the economies and communities of Guernsey and Jersey. It is that balance that we are really focused on – making sure we are operating the business in a way our passengers and customers will feel comfortable with and able to rely on.
Finally, as a forward thinking company, we are now midway into our 71st year of operations and currently planning our centenary in 2047!
