Friday, August 15, 2008

An extra turn of the screw

Fullers have finally formulated the way they are going to increase patronage, encourage tourism to Waiheke Island and generally care for the economic well-being of the island: they're putting the fares up by three times the current inflation rate.
A monthly pass will now cost $344 (up from $300, or 15%). A simple fun day out for your family and kids will now cost a small fortune and it'll be cheaper and more convenient to throw them all in the car and drive to Raglan or Ruakaka instead.

The "justification" the company gives is the usual baloney of increased operating and fuel costs (needless to say fares never come down when oil prices fall).
So the economic cleansing of the island continues apace: higher ferry fares will make people look at relocating off-island closer to work, if they have to commute; make it more costly to "import" workers who need to reverse commute to Waiheke (accommodation on the island is hardly affordable for low paid service workers anyway) so provision of services will become more expensive on Waiheke; and it will encourage people on fixed incomes, such as pensioners, to cash up and move out, which is also encouraged by relentless property tax increases imposed by a city council bent on keeping its income stream safe rather than focusing on how much more they rake off the island than spend there in services.

The Fullers-friendly owners of two local newspapers (Marketplace and Waiheke Week) faithfully reprinted the Fullers press release with little comment. Perhaps the deadlines were cleverly observed by the Fullers PR people. But it didn't prevent Waiheke Week (you can always rely on Merv to take the hard-done-by-capitalist company corner against the tree-hugging, rabble-rousing islanders) from editorialising that Fullers has no responsibilities towards Waiheke's economic or social well-being, and new island developments such as Ridgeview and Isola Estate will bring in extra passengers of a kind that never need to look at their black American Express card account, let alone a ferry fare ticket.

You can't blame Fullers for loyally carrying out what any monopoly business would do if it was it its place: squeeze the customer pips til they squeak. Infratil shareholders demand their dividend for buying up the business, and there is no regulator standing in the way of charging the highest fares and delivering the lowest service possible.
So there's the rub: the Auckland Regional Council and its toothless transport regulator have no say in whatever gouging a company like Fullers can engage in, simply because Fuller refuses to accept a subsidy for the Waiheke run as it would come with financial and regulation strings attached. Now it has no minimum service requirements; it can cancel sailings when it wants; organise schedules as it pleases; charge fares it can get away with and employ boats of a dubious quality on its runs. In short, it wants us to pay a first class fare for a cattle class service.

Coincidentally, BBC Hardtalk interviewed Ryanair boss Michael O'Leary last night, saying his business model to attract more customers is to keep on slashing prices and make costs as transparent as possible for passengers. You can now fly "anywhere" in Europe for £10 on his airline and promised not to impose fuel charges on his customers.
Here in New Zealand we have also signs of market forces working in favour of customers in the airline and bus travel industries: Pacific Blue and The Naked Bus offer enticing fares to places all over New Zealand at prices that wouldn't be possible under monopoly conditions. So basically all we need is a "Naked Ferry" company to come in to put a rocket under the Jet Raider and stick it up Fullers where the sun don't shine.

What is now needed is an official inquiry by the Auckland Regional Council into why there is no effective competition possible on the Hauraki Gulf and the ways to remedy this market failure. One clue is the integrated ticketing arrangement between Fullers Ferries, the Waiheke Bus Company and Stagecoach Bus, which allows seamless transfers for commuters (only those with monthly passes) between transport modes. Any new company coming in can't offer this considerable advantage and this has to change by region-wide integrated ticketing between bus, train and ferries with a capped price on monthly usage.
So come on, ARC Chairman Mike Lee, where are your market credentials and your monopoly busting skills when we need them?

UPDATE 1: This morning (18 Aug) Fullers warned passengers on the morning commuter boats that a smaller vessel would be in service due to a Jet Raider "technical failure". It may lead to passengers being denied boarding the 8am sailing. So I took the 7.20am which was more packed than usual. It is clear that Fullers really isn't up to its task of transporting passengers comfortably, at a reasonable price and on time.

UDPATE 2: A version of this blog entry was sent to the NZ Herald as a letter to the editor (which they don't put online) and my fellow commuters shouted that it was splashed all over the page as a headline. Which made me blush, of course. But I hope it will shame Fullers into pulling their socks up and reconsider this price hike as a PR disaster.

UPDATE 3: I mailed this blog entry to all Auckland councillors on the Auckland Regional Council and Chairman Mike Lee got back to me:
"I have raised this issue with ARTA in terms of what we can do and will respond in more detail as soon as possible.
I completely share your concerns especially given the news that some very questionable arrangement has enabled Fullers to pocket the public's wharf tax component of the ticket. I have raised these concerns in the media to put the spotlight on Fullers."

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