The Helensburgh and Firth of Clyde Steamship Company*

A proposal for a not-for-profit company to operate an excursion ship service on the Firth of Clyde

This is a completely hypothetical but realistic business plan which could secure the future of a historical passenger excursion ship, even in an area where this is already being successfully undertaken. Most observers would no doubt suggest that this is economic madness and most likely collapse quickly, taking with it other operators in the market. This need not be so.

It would require a completely different approach to that taken by paddle steamer Waverley whose business model requires her to operate as a "full-time" ship, very much as she was before her withdrawal by her previous operators in the 1970s. Such a model is unusual in the context of steamship preservation and normally relates to ships which are retained within larger operational fleets for specific reasons. Even in such cases, preserved ships tend to operate as "summer butterflies", very much as many did, for example, on the Clyde under the ownership of the Caledonian Steam Packet Company Ltd. By operating full-time, an independently operated ship generally has a high cost base and has to chase revenue often involving much complexity as well as expense. Any shortfall in revenue can lead to substantial and potentially disastrous deficits.

A more common approach for operating historical ships is to cut operating costs to the minimum level possible, leaving the revenue target at a much lower level and the risk of high deficits much reduced. The business must be as simple as possible, eliminating as many risks as possible and minimising the cost of recovering from problems arising. This must be coupled with lower maintenance and repair costs. There are numerous examples throughout Europe and other parts of the world of historical steamships surviving and operating on this basis.

There is a case that this approach would work even in a sailing area where a full-time vessel is in operation. Experience on the Clyde has shown that the peak summer weekend market is healthy and Waverley is often uncomfortably full, but on weekends outside of July and August there is no provision at all. The model as demonstrated would not require the ship to compete for business in midweeks, when demand is much slacker.

The proposal is made with the overriding target of saving an existing paddle steamer for long-term future operation and the paddlesteamers.info webmaster would welcome interest in this business model from anyone whose aim is paddle steamer preservation, whether formally as a society or on a personal basis.
Experts can then develop the business plan further.

The model would, of course, be equally suitable for a screw-propelled motorship although the issue of charitable objects might prove  major hurdle which cannot be overcome, with consequent implications for revenue streams.

BASIC BUSINESS PROPOSITION
To preserve a paddle steamer by operating it by providing passenger excursions on a financially sustainable basis.

T
he service will be marketed primarily as a heritage attraction in the leisure and tourism industry, offering a strong element of public education in past lifestyles and technologies.

The ship will operate on the Clyde because it is an area with a continuing tradition of day sails and therefore a market to sustain and develop rather than create from scratch. It is an area of scenic beauty, sheltered waters, reasonable tourist numbers and proximity to a major city.

Any surpluses generated will be reinvested in the ship and, where possible, held as provisions for major structural renovations

THE CUSTOMER PROPOSITION

A simple, easy to understand timetable with consistent timings

A choice of two short cruises to showcase the best of the Firth of Clyde scenery with the option of making a longer day by combining cruises or taking time ashore


Time aboard a historic paddle steamer with a chance to see steam engines at work and to learn about old technologies and paddle steamers' role in social history

THE ROUTE

From Helensburgh via Dunoon and Blairmore into Loch Long and Loch Goil with an afternoon sailing from Helensburgh via Dunoon to Rothesay Bay and round the Cumbrae islands.

The route is entirely within protected and well-charted waters with a minimised risk of losing sailings or pier calls due to poor sea conditions and tidal restrictions.

It is chosen based on the initial choice of sailing base, achievable attractive destinations within the likely sailing time available, the need to limit the number of pier calls to cut expenses and to keep the crew and administrative workload to a minimum.


THE HOME BASE : HELENSBURGH in the Argyll & Bute Council area.

Operating from one home base simplifies logistics such as provisioning and crewing, eliminates costly positioning runs and will help generate a sense of ownership by the local community.

Helensburgh is chosen subject to availability of essential supplies (water, fuel) and subject to the pier area and its approaches being suitably dredged to ensure consistent access at all states of the tide.

Helensburgh has a resident population of almost 15,000, and is a popular town for day-trippers, swelled in summer by holidaymakers. The main attraction is the Hill House, a house designed by the famous Scottish architect Charles Rennie Mackintosh. The main business is likely to be customers from Glasgow and the west of Scotland arriving by car or train. The town is also close to one of Scotland's other popular tourist areas, Loch Lomond and the Trossachs National Park

The city of Glasgow has a resident population of 598,000 (in 2011) with a similar number living in the Greater Glasgow urban area but outside the city's administrative boundary. It is also a significant magnet for visitors and tourists from elsewhere in the UK and overseas with 2.2 million staying visits in 2011. Overseas visitors stayed an average of 6.1 nights.
Helensburgh is linked to Glasgow by a regular rail service with a journey time of approximately one hour and is easily reachable from numerous railway stations in the Strathclyde area. It is also reachable by road from the Glasgow conurbation within one hour. Glasgow is deemed too distant from the prime sailing areas to be considered as home base for this business and is also well provided for as the home base for paddle steamer Waverley and starting point for its weekend cruises and also for shorter river cruises by Clyde Cruises (operated by Clyde Maritime Services Ltd).

THE STAR ATTRACTIONS
Loch Long and Loch Goil :



Loch Long penetrates into distinctively highland scenery and is often desribed as "fjord-like" with its steep sides and narrow channel. Loch Goil joins Loch Long approximately half-way along its length. In glorious weather the wooded slopes display a magnificence of green, but in cloudy and misty weather offer a completely different perspective on highland scenery. The haunting grandeur can transport you into a mystical world of clans and battles - a world away from modern-day Clydeside. This photo is taken from the decks of PS Waverley

The Firth of Clyde :  Rothesay Bay, the Cumbraes and Fairlie Roads




The Firth of Clyde cruise passes along the coast of the Cowal peninsula, to the lighthouse at Toward Point before turning into Rothesay bay for a view across to the popular resort on the isle of Bute. Passengers will be able to get a good view deeper into highland scenery; towards the Kyles of Bute, which separate Bute from the Cowal peninula, and into the steep-sided Loch Striven 

The two Cumbrae islands, Great Cumbrae and Little Cumbrae stand in the middle of the Firth of Clyde. The cruise passes through the channel between the islands affording fine views, including across to Millport in its sheltered bay.
From the southern end of the Cumbraes there is a maginficent view across to the Isle of Arran which towers over the Firth and, on a fine day, Ailsa Craig will be clearly seen poking out of the waters at the point half way between Glasgow and Northern Ireland
a popular town for day-trippers with
Fairlie Roads is a popular channel for yachtsmen and the cruise passes close to the mainland village of Fairlie and the nearby town of Largs, the main resort on the north Ayrshire coastline. Despite the beautiful scenery of the coast, there are also the marks of industry : a nuclear power station at Hunterston Point and the nearby jetty built in the 1970s to accept bulk cargo vessels.

Dunoon

Dunoon is still a favourite day-out for many. Linked regularly to Gourock by a small passenger ferry and to the Inverclyde coast by a nearby car ferry service it is not anticipated that Dunoon will be a major destination for passengers although some will undoubtedly wish to take a short trip on the paddle steamer and have time ashore at the resort. Dunoon's resident population is a little over 8,000 but this is swelled in the summer by tourists and there is potential for coach-trip holidaymakers in particular to make a cruise a highlight of their stay.

Blairmore

The hamlet of Blairmore provides a pleasant alternative to the full Lochs cruise and has some pleasant short walk opportunities along Loch Long. The call is proposed in part to assist in the survival of the historic pier which is managed by a supporters' Trust.

The ship :

The ship must become a "destination" in itself due to its features, facilities and its historical interest. The name should reflect local traditions and possibly restore the name of a much loved ship, just like the current Waverley has done. Jeanie Deans would have the required resonance.

TIMETABLE, CRUISE OPTIONS and FARES
SATURDAYS and SUNDAYS ONLY -  May to September. Bank holiday and special services to be advertised separately


Coloured blocks : time aboard ship.  Dotted line : time ashore
Proposed concessionary fares : Children 11 and under - 50%. Under 2 - free.  Persons aged 65 and above - 5.00 off any fare


EXCURSION OPPORTUNITIES ON THE CLYDE AT PRESENT

There are a number of year-round ferry services on the Firth of Clyde and one paddle steamer offering day cruises during the peak summer season. There is scope for additional excursion cruise capacity on busy peak weekends and at weekends outside the main season. The company will not compete for business during midweeks. The market already understands the product and has shown to be supportive of operators seriously wishing to provide excursion opportunities. There is scope to grow the market by making the Firth of Clyde an internationally renowned destination for tourists who enjoy "boat trips".

Regular Ferry Services :
The point-to-point car and passenger ferry services operated by Cal-Mac Ferries Ltd, Western Ferries Ltd and Argyle Ferries Ltd are not in direct competition for the purely excursionist traffic courted by this business. The proposed cruise routes do not directly link any piers which are at present linked  by existing ferry operators. Helensburgh has no ferry service. Dunoon is linked to the mainland only at the south bank of the Clyde at Gourock by a regular passenger ferry service. A car ferry service also runs from Hunter's Quay (near Dunoon) to McInroy's Point (near Gourock).

Excursion cruises on the Firth of Clyde :  
Paddle Steamer Waverley offers summer Saturday and occasional Sunday cruises from Helensburgh. Her main summer season on the Clyde lasts only from late June until late August, offering daily services on a range of routes. Waverley is well established in the market, but is traditionally absent from the Clyde in May, most of June and September with no replacement to serve the market. Clyde Cruises' small passenger vessel "Cruiser" offers a cruise from Greenock to Blairmore and on towards Carrick Castle in Loch Goil on Wednesdays and alternate Sundays from April until the end of September. It lasts 4 hours (12:30 - 16:30 pm) and costs 20.00 from Greenock.

Waverley - Saturdays (2014) : From Glasgow, calling at Helensburgh at 12:15 pm, for Dunoon, Rothesay and Tighnabruaich and returning to Helensburgh at 18:40 pm.
There may be competition for passengers to Dunoon, but Waverley's schedule requires Helensburgh passengers to be away for six and a half hours

Waverley - Sundays   (2014) : From Glasgow, calling at Helensburgh
at 12:00 pm, for Dunoon and a Loch Long cruise, returning at 18:30 pm. on three Sundays only.
Although potentially in direct competition, time aboard Waverley is extended to six and a half hours due to her sailing via Largs.


In 2014 Waverley's only regular midweek call at Helensburgh was on Thursdays for a cruise from Greenock to Brodick and the isle of Arran (requiring over nine hours aboard for Helensburgh passengers). Her only regular visits to Loch Long and Loch Goil were on Tuesdays, originating from Ayr and calling at Brodick, Largs and Dunoon. Waverley calls at Dunoon on peak summer Tuesdays, Thursdays and Fridays. It is proposed that for a large proportion of the main target customer base (local and regional residents), weekends will be the preferred and, in many cases, only possible sailing opportunity.

A GAP IN THE MARKET
Product Differentiation : It is proposed that many potential passengers at Helensburgh would not wish to spend over six hours on a cruise. The new company would offer Helensburgh customers the option of a non-landing cruise of 3 hours 30 minutes or either 4 hours or a full day of 7 hours 30 minutes away, both with potential for the journey to be broken with time ashore at Dunoon.

For passengers at Dunoon, Waverley offers a regular Saturday afternoon run to Tighnabruaich (away 4 hours and 45 minutes) and a Loch Loch and Loch Goil cruise on three Sundays (away a little under 1 hour 30 minutes). The new proposal is for a  3 hour 30 minutes Lochs cruise, to include the Tail o'the Bank and Helensburgh and a late afternoon cruise to the Cumbraes (away 2 hours and 30 minutes) on both Saturdays and Sundays. The new cruises offered are both between the "long" and the "short" Waverley cruises in length and would give an attractive alternative.

It is believed that the option of shorter cruises will expand the market, especially for "opportunistic" passengers at Helensburgh and Dunoon. The possibility of seeing two paddle steamers together in close proximity will have its attractions for the historically-minded and especially for the significant band of paddle steamer enthusiasts and this might help attract more visitors to the area, whether intending passengers or otherwise.


A LOW-COST BUSINESS MODEL

The business will be as simple as possible with all costs kept to a minimum. Crew, staffing and, as far as possible, care and maintenance will be on a volunteer-only basis.

Technical management, Maintenance and Safety management : Paddle steamer Waverley, motor ship Balmoral and steamship Shieldhall amongst others have shown how skilled volunteer technicians can be mobilised to ensure that most technical requirements of the business are met. This can also significantly reduce the cost of annual maintenance and renovation work.

Crew : It is believed that there is a sufficient reservoir of retired or unemployed trained seafarers willing to crew the ship on an unpaid basis and others likely to be willing to undertake training for many on-board tasks. Recruitment is made easier by being based at one pier and operating weekends and bank holidays only, extending the potential workforce to people in employment. PS Waverley (with a passenger capacity of 860) currently requires a minimum crew of 19.

Customer advance bookings and general administration : This will be handled by assigned volunteers with the assistance of small-business software and internet communications. There will be no office establishment.

Marketing :
The company expects to break even with less than 25,000 passengers, amongst whom it is expected that some will make more than one cruise annually.  Therefore, the required "reach" is modest. There is an established market for excursion cruises in the area. The target passenger number are around half of that taking cruises annually on the Clyde on paddle steamer Waverley. Advertising spend is set at close to 5% of predicted turnover - a broadly similar proportion to the larger and more complicated Waverley business.
Hard copy materials would be highly concentrated in the area of operation (Helensburgh and Dunoon) to attract opportunistic custom. Selected other strategic locations such as the main Glasgow Tourist Office (George Square) and the Loch Lomond & Trossachs National Park Visitor centre would be targeted. 
Broader awareness would be achieved through the use of various internet platforms. As a high-profile attraction in the area of operation, the service is expected to feature on many independent and private websites. The ship would also likely get plenty of free exposure on steamship and coastal cruising enthusiast websites. In the UK, there are around 3,000 members of the Paddle Steamer Preservation Society alone and many more sympathetic to paddle steamers, including many from Waverley's customer base. Potential repeat customers would be kept informed of important news by mailings, primarily electronically.

Catering : Most passengers will be aboard for a reasonably short period only, so, it is not anticipated to provide anything other than light and inexpensive snacks and a basic range of drinks in a cosy "coffee bar" type environment. Whether to aim for a licence to sell alcoholic beverages will be investigated but is not regarded as high priority. One priority for the company would be to avoid drink-related rowdiness amongst passengers and the associated costs and complexities of stewarding such situations.

THE BUSINESS CASE

The financial model below shows a breakeven scenario based on fares and on-board takings alone. The company would also pursue income from merchandising and brand licensing, potential advertisers and sponsors and welcome donations from supporters to generate financial reserves. The company would not seek grants from local tourist funding bodies for revenue support unless there were temporary financial shortfalls which threatened the survival of an otherwise sustainable business.

The financial model  uses estimated costs based on figures from known sources including published data for paddle steamer Waverley (for full-time summer operation), motor vessel Balmoral (with a more limited season) and steamship Shieldhall (operated on an even less intensive schedule than proposed here) - all regarded as suitable benchmarks for cost comparison.

Initial Capital Costs : The model assumes that a suitable vessel can be obtained free of charge or for a token sum and is in, or close to, operable condition. Working capital equivalent to the purchase amount and the cost of any pre-season inspection and repair will be required. This will be sourced through donations. Soft loans from supporters and bank financing will be sought for some or all of the amount as required.

Annual overhaul costs : This element has been budgeted as significantly below the amount currently attributed to paddle steamer Waverley primarily on account of a much shorter sailing season and the planned restriction of her range to sheltered (Class V) waters. The amount has been pitched at a figure higher than reported for SS Shieldhall.

Passenger Numbers : The budget is set at a figure considerably below the number achieved on a weekend by PS Waverley, in recognition of the latter already being a well-established business and its embarking of customers at Glasgow. It is also well below her reported overall weekly average in the region of 1000 "boardings" per day across her season - around 700 discrete daily passenger fares. The financial forecast presented below is based on a conservatively-pitched average of 480 fares per day (sailing at weekends and bank holidays only)


FINANCIAL BREAKEVEN

A realistic scenario which achieves breakeven without donations or support from grant-aiding bodies is shown below. It is based on 47 sailing days, all completed, with an average of 480 paying passengers paying an average basic fare of 18.75 (with 40% Gift Aided to include a further 10% top up donation) and an average profit of 2 per passenger from on-board spending
Note : For the purposes of this scenario, pier dues are included under "Other Costs/Contingencies"


Annual Result After 25 years
3,150 88,966
Operational Season
Budgeted Revenue Days 47
Lost days Actual Revenue days 0 47
Budgeted Crewed Inactive Days 0
Budgeted Light Sailing Days 0
Average hours/day sailing light 0
Crew paid on Days 47
Average Daily hours in steam 8.0
Passengers
 Average Daily Passengers Total Annual Passengers 480 22,560
Numbers needed for breakeven 477
Numbers needed to cover variables 164
Numbers needed to extend season 164
Fares and on-board revenue
Average Basic Fare (inc VAT) 18.75
VAT Rate (%) VAT payable per fare 20 3.13
Fare receivable after VAT deducted 15.63
Average Gift Aid Fare (Fare +10%) 20.63
Percentage of fares Gift Aided 40
Average Donations per fare 0.75
Average HMRC Gift Aid Reclaim 2.06
Net fare return per passenger 18.44
On-board Sales :  profit per fare 2.00
Total profitable income / passenger 20.44
Amount needed to break even 20.30
Other Revenue
Public authority grants 0
Donations 0
Other 0
Other 0
Other 0
Other 0
Other 0
Cash at bank  0 0
Interest rate on cash at bank 1.0%
Total Other Revenue 0
Variable costs excluding VAT
Fuel Costs per hour Fuel Costs per day 420 3,360
Fuel Costs per season 157,920
Daily volunteer expenses Total volunteer expenses 0 0
Daily pier dues Annual pier dues 0 0
Fixed Costs excluding VAT 
Daily Crewing Cost 0 0
Insurance 60,000
Other costs / contingencies 50,000
Sales and marketing 20,000
Office and overheads 10,000
Annual Refit 160,000
Other 0
Other 0
Other 0
Total Other Fixed Costs 300,000
Capital and Financing
Start-up Finance  0
Finance Cost (%) 0.0%
 Interest / dividend payable 0
Capital Repayment Term Years Annual Repayment 25 0
Additional Working Capital 0
Cost (%) of working capital 5.0%
Interest payment on working capital 0
Business Result
Income (exc VAT) 461,070
Costs (exc VAT) 457,920
Profit  3,150
Capital Allowance Rate (%) Capital Allowance Ship 8 0
Capital Allowance other
Corporation tax is 23% Corporation Tax payable 0 0
Profit after Tax 3,150
Daily Cost / Revenue Daily Income  9,810
Daily Contribution 6,450
Fixed Costs  6,383
HMRC Adjustments For information only (included in result above)
Gift Aid Reclaimed  46,530
VAT Paid on fares 70,500
Input costs shown above are after VAT deducted
Donations Total Donations above advertised fare 16,920


The future : it is anticipated that the basic cost / revenue relationship would remain constant with cost rises covered by rising fares. 

THE PUBLIC BENEFIT OBJECTIVES

Charitable status comes with a strict requirement to provide public benefit. The company would aim to gain charitable status through its role in preserving the nation's heritage.

Social history : A cruise along traditional lines encourages the understanding of how millions of people and their families enjoyed a day out in the days before the motor car, overseas vacations, mass media and the development of more modern forms of entertainment.

Technical history : Ships showcase technologies which developed quickly following the industrial revolution yet were soon overtaken as time advances. Paddle steamers are now regarded as a historical curiousity because their method of propulsion has been superceded by new forms of engineering, particularly those which younger people are now familiar.

The company would aim to ensure that a volunteer representative would be available on all cruises to answer questions about the ship's engines, which, in a paddle steamer, would be open for the public to see in action. This would be backed-up by informative displays and a free basic fact sheet.  The company would also aim to open up part of the ship as a reading room with books available for the passengers to consult on such subjects as steamships and their history and engineering, shipbuilding and other local historical matters associated with the ships and excursionism.

It is accepted that during the relatively short cruises offered, only a limited amount of time would be spent by a limited number of people looking at such materials. Therefore, there will be books available for purchase and materials provided to encourage people to take the interest further, such as joining the Paddle Steamer Preservation Society or other relevant organisations. It might prove possible for the ship to be open for visitors on occasion outside sailing days and used to encourage study. This would also give the opportunity for additional modest revenues from a limited catering service.

The concentration on limited sailing routes makes it easier to provide customer commentaries about passing points of interest. Customers appreciate such a service and with a standard route, the commentary can be pre-recorded rather than relying on volunteers being available. As well as an educational role, a commentary adds general interest to a cruise

 
There is no better way to learn how steam was adapted to provide motion in the days before the discovery of the more efficient internal combustion engine than to witness a steam engine in operation at close quarters. 



* The company name as stated is for illustrative purposes. No company with this name exists at present - and there is no prospect of such being established unless by overwhelming popular demand and the guaranteed prospect of a suitable ship, the required staffing and infrastructure being available

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