2006-06-05

Spirit of Tasmania III

The Spirit of Tasmania III is a car ferry that runs from Sydney to Devonport. The idea is that tourists headed for Tassie from NSW board the Ferry in Sydney and, after a 20 hour trip, arrive in Devonport.

Now it seems as though the company that runs the SOT3 is debt-ridden. It appears as though not enough tourists take the route.

It's a classic case of loss-making - the price of the service is too high for the market to cope, and too low for the company to make money. Lowering the price may increase demand, but not enough for the ferry to be economically viable.

But this is where alternative ways of thinking need to be applied. Just because the ferry is losing money doesn't mean that it loses money for Tasmania.

Tourists who use the ferry go to Tasmania and then spend lots of money travelling around the place. Tasmanian businesses then use that money to pay staff, who then use that money to live their lives.

What needs to be done is simple. So simple I'm going to turn it into a basic mathematical equation:

a = Net cost of ferry operations (cost - income)
b = Amount of money that benefits Tasmanian economy by Ferry tourists.

If a <> b, then shut it down.

2 comments:

CraigS said...

a would have to be less than the tax earnt on b, rather than just on b.

One Salient Oversight said...

No - not at all. And that's the point of my argument.