Editorial:
Time to go separate ways

The cruise ferry has prepared the market for a more demanding type of cruises, where the driving force is a true onboard experience rather than the joy of bringing home a plastic bag with bottles.

After decades of evolution, the cruise ferry was born on the Åland Sea. The basic conditions were set by the high taxation of alcohol in Sweden and Finland, enabling tax-free sales with exceptionally good profits. The ferry evolved into a floating hotel, while at the same time maintaining its original role as a workhorse, carrying large numbers of trucks with high-value goods.
One of the most obvious benefits of the cruise ferry was that it even attracted large volumes of passengers during the off-season. During the 1980s, the cruise ferry phenomenon of the Åland Sea acted as a model in many areas of Europe, and ferry operators adapted the concept to their own routes.
But there was always a clear difference. The sea lanes across the Åland Sea were far away from the heavy transportation routes in the heart of Europe. In densely populated areas, the endless need for transportation provided the ferry operators with a firm foundation for their operations. On these routes, the cruise ferry concept attracted more passengers but was not crucial for the traffic itself. It was a sort of bonus, adding icing to the cake.
In many respects, the situation was the exact opposite on the Åland Sea. Short cruises were the main product, deciding the schedules and the main routes. Transportation of passengers and cargo seemed to be more like a complementary business. Without all those passengers making use of short cruises, most of the cruise ferries would have fallen into disuse.
Today, there is no longer any economic basis for a business that is so heavily dependent on tax-free trading in Europe, although there are perhaps one or two exceptions to this. The change came with the EU. The inter-EU tax-free trade ended in mid-1999. On the Åland Sea, the Åland tax exemption allows this trade to continue on ferries sailing to or via the Åland Islands. The trend towards harmonisation of alcohol taxation in the EU, however, will also cut the profits from tax-free trade in the Åland traffic. Reduced prices ashore will force the ferry companies to cut their own prices too.
Profitability is falling because the cruise ferries generate high operating costs due to the size of their crews. It is becoming more and more difficult to maintain the cruise ferry’s dual role as a pure transporter and a provider of recreation. Instead, the ferry of the future will be a cargo carrier with additional passenger capacity and much lower operating costs.
The ro-pax vessel will rule the post-tax-free ferry scene in Europe. Now it is also gaining ground on the Åland Sea. But what about the cruise part?
It is a reality that a large part of the passenger market has been lost due to the disappearance of tax-free sales. This has been seen in the Gulf of Bothnia and on the routes between Sweden and Germany. The cruise ferry is by no means dead, but the world around it is shrinking fast.
Having said this, it is also a reality that the Finns (especially) enjoy ferry cruising a great deal. Short cruises are also popular in the Stockholm region. There are obviously several markets in Scandinavia with the potential for “real” cruises – even without tax-free. Altogether, though, these are most likely to be considerably smaller than the current markets for ferry cruises.
Many shipping companies have already started to prepare themselves for more expensive, non-tax-free cruise concepts. These are built around vessels of the highest standards, with many different activities and excellent service.
A whole generation has grown up with ferry cruising on the Åland Sea. Now the real challenge for the shipping companies is to continue the success story of the 1980s and to bring it into a new age – an age in which the whole on-board experience is the driving force, not just the plastic carrier bag full of bottles.

//Pär-Henrik Sjöström, Editor

Back to SSG 22, 28 November