1 The Impact of Ferry Services on an Island Economy

valuable contributions to this paper, particularly for details of RET and costing models. This paper examines ferry fares and quality of service to a remote island region and analyses how this affects the economy of the islands. Taking the Western Isles in Scotland as a case study, the paper identifies the links between fares, service, and economic development and attempts to quantify this impact. A new methodology is developed to estimate the impact of service frequency. Our findings show that a reduction in ferry fares and, in particular in increase in service frequency, will have substantial income and employment benefits to the local economy, running into millions of pounds annually. It is also revealed that there is potential to increase the quality of service to the Isles, and reduce fares in some cases, with no increase in public subsidy towards operating costs. This is achieved by taking a more radical perspective to the routes and services operated, and by more closely matching service provision to the demands of communities within the islands.