Forecast Operating Losses

Summary

A request was made for forecast financial losses, decision-making data regarding the Snaefell Mountain Railway closure, budget changes, and revenue figures for Isle of Man railways. The Department of Infrastructure disclosed that losses could not yet be calculated due to unknown passenger numbers, confirmed the Minister's decision to close the Snaefell line due to staffing costs, noted a budget reduction of £72,736, and stated no specific revenue predictions were made in the business case.

Key Facts

• Forecast financial losses for the 2020 season could not be established as passenger numbers were unknown at the time of response.
• The Minister decided not to operate the Snaefell Mountain Railway because marginal staffing costs were too high relative to available income.
• The revised budget for Steam and Manx Electric Railway operations reduced net costs by £72,736, primarily due to a shorter season.
• The 2020 railway season was reduced from March-November to July 23/25-September 13.
• The business case for opening the railways did not include specific revenue predictions, only break-even passenger estimates.

Data Disclosed

• £72,736
• 23rd July 2020
• 13th September
• 6th / 13th March
• 1st November
• 9 scheduled flights per week
• 1373537
• 2020-07-16
• 2020-08-06

Original Request

Please can you provide the following information relating to the Railways Division; 1) The forecast financial losses for the operation of the Steam Railway and Manx Electric Railway for the 2020 season. 2) Information and data that was used to reach the decision that the Snaefell Mountain Railway will not be in operation during the summer 2020 due to Due to financial challenges, and who was responsible for this decision 3) What changes have been made from the original budget for Isle of Man Railways 4) What revenue figures were used in the business case to support the opening of the Steam and Electric railways? Thank you in anticipation

Data Tables (1)

Full Response Text

Department of Infrastructure Sea Terminal Building, Douglas, Isle of Man, IM1 2RF

Contact: FOI Response Team Telephone: (01624) 686785 Email: dpo-doi@gov.im

Our ref: 1373537 6 August 2020

Dear ###

We write further to your request which was received on 16 July 2020 and which states:

"Please can you provide the following information relating to the Railways Division; 1) The forecast financial losses for the operation of the Steam Railway and Manx Electric Railway for the 2020 season. 2) Information and data that was used to reach the decision that the Snaefell Mountain Railway will not be in operation during the summer 2020 due to Due to financial challenges, and who was responsible for this decision 3) What changes have been made from the original budget for Isle of Man Railways 4) What revenue figures were used in the business case to support the opening of the Steam and Electric railways? Thank you in anticipation" 1. We are not yet in a position to establish the financial losses as the revised summer timetable does not commence until 23rd July 2020 and passenger numbers are unknown. As our season has been reduced to 23rd / 25th July to 13th September when previously it would have operated 6th / 13th March to 1st November our income will be substantially lower than originally budgeted. However, as locals cannot leave the island without self-isolating upon their return we have a captive market of families and locals looking for something to do. We also have visitors from Guernsey and in the peak weeks there are up to 9 scheduled flights per week. 2. Marginal staffing costs are higher for operating the SMR because more of the staff are seasonal and are paid specifically to work on this railway. The average fare on Snaefell is higher which compensates for this additional cost. It was the Minister’s decision not to operate the railways as he did not feel the income was available to cover this cost.

3. The net budgeted costs for Steam and MER Operations have reduced by £72,736 in the revised budget, predominantly from the reduction in staffing costs due to the shorter season and operating days. 4. The business case proposal was to offer a summer season to re-engage with the islands community, offering attractions for ‘staycationers’ since much of the islands self-catering accommodation is fully booked for the summer season, whilst also encouraging local spending in nearby cafes and attractions. The railways are a key part of Manx heritage; with Manx National Heritage sites re-opening and being within walking distance of our stations this provides a one-stop-shop for local tourists. We will also be increasing employment of those on casual contracts who otherwise would have no income as, due to the nature of their contracts, they have been unable to qualify for any benefits during the pandemic. We will also be able to show off our Island to the visitors from Guernsey. No revenue prediction was made in the business case, it only pointed out how few passengers were required to break even Please quote the reference number 1373537 in any future communications.

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Yours sincerely

FOI Response Team