CABIN prices on the Northern Isles ferries for islanders travelling between Lerwick and Aberdeen are set to reduce by 20 per cent from January.

The news comes as the Scottish Government confirmed this morning (Friday) that Serco NorthLink Ferries has been selected as the preferred bidder for the service’s next contract.

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Serco, which currently operates the service, had been in the running against government-owned Calmac.

The 20 per cent cabin discount for islanders will be in play year-round on the Lerwick-Kirkwall-Aberdeen routes.

There will also be a three-year fares freeze for passengers, non-commercial vehicles and cabins on those routes.

Both of those changes were incidentally proposed by SNP candidate Tom Wills in the recent Shetland by-election, which was won by Liberal Democrat Beatrice Wishart.

Wishart said in response to Friday’s announcement that while it is welcome cabin fares will be reduced, “there is more to be done to make this service fit for purpose”.

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Highlands and Islands list MSP John Finnie, meanwhile, said he was “astonished that the Scottish Government has decided to maintain its relationship with such a disreputable company by selecting them as the preferred bidder for the lifeline Northern Isles ferry services”.

Full details of improvements will be provided when the contract is awarded, but other benefits include the upgrade of ten cabins to premium class, upgraded terminal facilities at Hatston in Orkney and improved customer communications and services.

There will be a 10 day standstill period before the contract is formally signed and awarded.

Serco said there will also be a “new demand analysis and forecasting model to inform and improve accuracy and confidence in passenger and freight requirements”, as well as a new smart ticketing system for foot passengers.

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The contract, issued by government agency Transport Scotland, will run for eight years and its worth is around £345 million.

Serco, however, said the total estimated revenue value to the company will be £450 million for the first six years, and £160 million for the following two years, which are optional for the government.

The awarding the contract has been delayed by a legal complaint by private Orkney operator Pentland Ferries to the European Commission over the subsidies due to be included. It was previously expected to be awarded in August.

The Scottish Government says the contract will begin on 31 October, but only two days ago a Transport Scotland official said he could not guarantee with 100 per cent certainty that the contract would come into force before the government’s October target.

Minister for energy, connectivity and the islands Paul Wheelhouse said:

“In addition to the new contract, the Scottish Government is also helping island residents with a package of fare reductions. Building on the 30 per cent discount for passenger and vehicle fares already enjoyed by islanders, cabin fares on routes from Orkney and Shetland to and from Aberdeen will be reduced by 20 per cent from January, and we will also introduce a three-year islander fares freeze for passengers, non-commercial vehicles and cabins on those routes.

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“We have placed our island communities at the heart of the new contract and as preferred bidder Serco are making some exciting new customer focused enhancements. These include an extra ten premium cabins on the Aberdeen-Kirkwall-Lerwick routes, a full refurbishment of the terminal lounge at Hatston, earlier boarding at Aberdeen harbour and extended opening hours of NorthLink’s customer services centre.

“We are acutely aware of the particular seasonal and time-sensitive challenges faced by key industries on Orkney and Shetland. The new contract includes the flexibility to allow timetabled freight and ferry services to be amended to better reflect changes in demand across the year and from sector to sector.

“It is important to remember that Scottish ministers will retain control of all of the key issues, such as fares and timetables through the public service contract, and I look forward to continuing to build on our strong working relationship with Serco NorthLink Ferries in the months and years ahead.”

Serco group chief executive Rupert Soames said the company was “delighted” to be selected as the preferred bidder.

“We are very proud of our track record over the past seven years, during which time we have improved almost every aspect of the lifeline service for the communities and businesses of the Northern Isles, while also reducing materially the annual subsidy and thereby reducing the burden on the Scottish taxpayer,” he said.

“We look forward to further improving the service in the coming years.”

Shetland MSP Wishart said “I am pleased that Serco has been chosen to continue operating the service with such a short time frame for the new contract to be in place.

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“While it is welcome that cabin prices are to be cut by 20 per cent and fares frozen, there is more to be done to make this service fit for purpose. Islanders will remember previous promises of cuts of more than 40 per cent for passengers and more than 30 per cent for cars. What’s more the focus should not be on upgrading premium cabins when many people struggle to get a bed as is.

“I will be scrutinising the details to make sure particularly that the service will meet the demands of the freight sector. At this point, it’s unclear how the ‘flexibility’ in this contract is differs from the current contract.”

Chairman of Shetland Islands Council’s environment and transport committee Ryan Thomson, who also chairs regional transport partnership ZetTrans, said: “I welcome this announcement and would like to congratulate Serco Northlink on being announced as the preferred bidder for the Northern Isles Ferry Services contract.

“This provides continuity for all those who use our lifeline ferry services to and from Shetland, as well as for the Northlink staff.

“While the three-year fare freeze and the additional 20 per cent reduction on cabin fares is good news, there are still significant challenges on freight and passenger capacity. I look forward to continuing to work with Transport Scotland to address these constraints, so that our community and our economy can benefit under this new contract.”

SNP by-election candidate Wills, who is now the convener of the SNP Shetland branch, said he was “”delighted to see that ministers have listened to my calls for an islander discount on cabins and a three year freeze on NorthLink fares”.

“Clearly, the Scottish Government has put the needs of islanders right at the heart of its decision making process and these changes will benefit families right across Shetland.

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“While this announcement is great news, there is still more to do, for example on freight capacity, which is such a critical issue for our seafood sector. Personally, I would also like to see budget bunks prioritised over premium cabins. With a UK general election looming, the SNP group in Shetland will continue campaigning for positive changes.”

Green MSP Finnie said: “My constituents in Orkney and Shetland deserve a ferry service that is run exclusively in the interest of island communities, but instead the Scottish Government’s proposal will see a service run exclusively in the interest of private shareholders.”

Orkney MSP Liam McArthur, meanwhile, welcomed the movement on the new contract, but the Lib Dem said he was concerned that there “seems to be no movement in increasing freight capacity serving the Northern Isles”.

“While greater flexibility in how existing capacity is used may be helpful in some circumstances, the clear message from key business sectors in both Orkney and Shetland over the past year is that additional freight capacity is desperately needed,” he said.