New Vessels | Q&A

What is the new vessels programme?

The Isles of Scilly Steamship Group is investing £42 million in three new passenger and cargo vessels to maintain lifeline links for the Isles of Scilly. The new vessels include a passenger ship, cargo ship and inter-island freight catamaran.

When will the new vessels be introduced?

We are taking a phased approach to introducing the new vessels on the route, with all vessels expected to be in service by March 2026.

We will share further details once build contracts and programmes have been finalised with our chosen shipyard/s.

How are you funding the new vessels?

We have an agreement for a loan of £33.6m from Lombard NatWest. This represents 80% of the funding solution.

We have worked hard to build up healthy reserves in the Company in recent years which allows the Company flexibility in how it finances the balance of the cost of the project.

Why have you decided to go down the private funding route?

Private financing provides certainty and a clear timeline for replacing the current ageing fleet. It allows us to introduce new vessels onto the route two years earlier in comparison to the Levelling Up Funding, although there was never any certainty that the money would ever be granted.

It’s a significant commitment by the Company and ensures that our experience and knowledge of more than 100 years of operating this route remains in place.

Will the other infrastructure improvements, such as quays/harbours still be delivered under Levelling Up Funding?

Our intention is to support island partners, the Council of the Isles of Scilly and the Department for Transport to ensure the other aspects of the Levelling Up project, which included infrastructure work on St Mary’s and Tresco, can still be delivered.

Will service improvements be delivered without these other infrastructure upgrades?

Yes, the new vessels will deliver a significant improvement in service which will see a reduced journey time and improved comfort for passengers on Scillonian IV. Additional cargo capacity on both Scillonian IV and the new cargo vessels will improve freight services to the Isles of Scilly.

Why was the Levelling Up Funding process delayed?

There has been no tangible progress made by the Government in the 18 months following the initial conditional offer in October 2021, and there were significant adverse changes to the original terms.

In December 2022, the Company, along with the Duchy of Cornwall and Tresco, put forward a proposal to the Government to unlock the funding. In March 2023, this was further rejected without any other tangible solution being proposed by the Government. There is no certainty that the money will ever be granted.

Is this just about protecting the interests of the Company rather than islanders?

No. We believe it is absolutely critical for the Isles of Scilly that new vessels are brought into service as soon as possible. The resilience of the lifeline link is at risk if we do not act decisively now.

There has been frustration on and off the islands with the delays in vessel replacement via the Levelling Up Funding route and there is uncertainty as to whether the funding will ever come through. Therefore, we believe it is important to revert to our original plan of private financing. This view is shared by the Island community who are concerned about the resilience of the lifeline link.

Why walk away from an offer of public funding to support vessel replacement?

Since the announcement of the funding by the Government in October 2021 we have been highlighting the need to commence the project to protect the resilience of the lifeline link. We have presented solutions to the Government to unlock the funding which have been rejected as they do not comply with Government policy. After 18 months of waiting and no certainty that the funding will ever be granted and no clarity about the terms and conditions attached to the funding, we have decided to revert to our original plan of private financing.

Is there a risk that the Government will press on with a publicly funded solution?

Yes, there is a risk but that would not be a good use of public money given the privately financed solution that we now have in place for new vessels.

Will fare and freight prices increase?

There will have to be an element of price rises but affordability to customers is a key objective and we will aim to keep any increases as low as possible.

Will islander discounts remain?

Yes. The Travel Club will remain, providing significant discounts for islanders.

Has Isles of Scilly Steamship Group selected its chosen shipyard?

We are in discussions with our final selection of shipyards, and we will share further details once decisions have been finalised.

Who will design the new vessels?

The initial concept designs have been produced by naval architect BMT using the experience of the project team and information provided by consultation with the Isles of Scilly community. The initial phase of the ship building programme will be to work with the preferred shipyard to develop the designs to a detailed level which allows the construction phase to commence. This process will take several months and will involve further input from the project team and key crew members. We will continue to consult with our customers and Islands community and to provide regular updates.

How will the Company ensure that the vessels are built to specification and to budget?

The Company has implemented sound governance structures and reporting systems to ensure vessels are built to specification and to budget. In 2019 the Company established a Marine Asset Replacement Committee (MARC). The Committee has marine, vessel construction, legal and financial expertise and will review decisions from the vessel project team and make recommendations to the Board of Directors.

The vessel project team consists of experienced operational members, vessel masters and shore-based technical support managers. The vessel project team will work with appointed architects BMT and the selected shipyard throughout the project build. The Company has commenced a recruitment process to appoint an onsite project manager and site manager who will be in daily attendance during the design and build phases of the project.

Will the new vessels be more environmentally-friendly?

Yes. All three vessels will have fuel-efficient engines which will reduce emissions whilst providing an enhanced service and improved resilience for the Islands.

Our new propulsion systems will be Tier III standard which reduces emissions of harmful Nitrous Oxides and will be a significant improvement in comparison to our current fleet.

Propulsion technology is developing rapidly. Our plan will be to design and construct vessels so that they can be adapted over their lifetime to incorporate improvements in green technology.

What will happen with the old vessels?

The existing vessels will continue to undergo routine maintenance programmes to provide resilience while new vessels are being constructed.

Scillonian III, the Gry Maritha and Lyonesse Lady will be retired once new vessels are introduced into service. There are currently no agreements in place for the sale of these vessels, but this will be explored while the new vessels are being constructed.