Executive Summary

The UK passenger shipping industry, described in this report, participates in open-sea passenger transport by ferry or cruise vessel. Some long-sea ferry routes and some short cruising itineraries offer a similar product and occasionally use the same vessels. However, the passenger shipping industry consists of two distinct markets -- ferries and cruises. There are few companies represented in both segments of the market, although the cruises and ferries division of the P&O Group is the UK market leader for ferries and cruises. Nevertheless, separate, semi-autonomous companies undertake the cruise and ferry activities of the P&O Group.

In 1992, the ferry industry carried nearly 49.4 million passengers on major routes into and out of major UK ports. This was 2.6% more than the previous year. The increase in UK-Continent traffic was the main reason behind the overall increase. The UK-Continent sector of the ferry market increased by 4.9% in 1992, to nearly 29.7 million passengers, compared with a 0.7% increase in UK-Eire traffic to nearly 3.2 million passengers. Traffic on major UK domestic routes fell by 0.8% to slightly less than 16.5 million passengers.

With the exception of UK domestic routes in 1992, all sectors of the ferry industry have grown every year since 1988. This was despite the recession and the Gulf War, which affected most of the travel industry over the period. Between 1988 and 1992, passengers on Continental routes increased by 30.0%; on Irish Republic routes by 27.3%; and on major domestic routes by 11.1%. Sealink Stena is the only company represented in all three sectors of the UK ferry market, yet P&O European Ferries is largest in terms of total passengers carried. On international routes, P&O European Ferries and Stena Sealink command 68.6% of the market in terms of passengers carried, followed by Brittany Ferries with approximately an 8% share.

In 1992, around 220,000 UK residents took a cruise on the open seas, making the UK the second largest cruising nation in the world, after the US. This was 18.7% passengers more than the previous year. The rise in the number of fly-cruises to the Caribbean and the Mediterranean was the main reason for the increase. There were 11,000 additional Caribbean cruisers, to total around 84,400, and 15,000 more Mediterranean fly-cruisers, to total 30,400 in the year. The UK cruise market grew by 50% between 1988 and 1992. Over the period, fly-cruising increased its share of the market from 56% to 65%.

Cruise market shares fluctuate due to the positioning of ships. The Ex-UK market was stable at approximately 50,000 passengers during the 1980s. However, the market increased significantly in 1991, to more than 65,000 passengers, due primarily to P&O's introduction of a second ship on the Ex-UK routes. On Ex-UK routes P&O Cruises has approximately 80% of the market.

The underlying trends in international travel suggest that demand growth in the cruise and ferry markets will continue, although the opening of the Channel Tunnel in 1994 will have an impact on the short-sea crossing market to France. Key Note estimates that, despite a period of instability and loss of share to the Eurotunnel in 1994 and 1995, the UK-Continent ferry market will increase by 17% between 1992 and 1997. Based on the capacity increases planned over the next few years, growth in the cruising market is likely to be greater than that of the ferry market. Key Note forecasts that the cruising market will double in size between 1992 and 1997 to 443,000 passengers.

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