As CEO of Condor Ferries, Paul Luxon oversees essential sea connectivity between the Channel Islands, the UK and France. He tells Businesslife about the challenges he faces and why he enjoys life at the helm
Tell us how you got to where you are now.
I was born in the UK, but returned to my father’s home island as a young child. I’ve spent most of my working life between the Channel Islands, except for 10 years in the UK.
Most recently, I was the MD of Cimandis, working at the company from 1994 to 2011. After that, I spent four years as a Minister in the States of Guernsey, before joining Condor in early 2016. I see myself as a Channel Islander.
Going from a corporate life into politics and then becoming CEO of Condor might seem an odd career path on the surface, but at Cimandis we were the largest importers of food and drink products into the islands. So, in terms of logistics and the shipping part of the business, that wasn’t alien to me at all. Certainly, in my past, I’ve tended to move between different ‘genres’ in a relatively straightforward way.
Living in the islands, I’ve had a close relationship with Condor most of my life – be that as a boy playing sport in Jersey and France and using the ferry service, or later on as a freight customer running one of the larger distribution businesses.
When I was approached at the end of 2015, I recognised that becoming CEO would be a challenge, but understanding the importance of a ferry service for the Channel Islands meant it was a challenge I was willing to take on.
In a nutshell, what does Condor do?
The simple answer is it’s a ferry service. But the more informed answer is that Condor provides the sea connectivity part of the important sea, air and digital connectivity ‘holy trinity’ that is crucial to the economic success of the islands. This is a really incredibly important segmentation.
Our business comprises freight, tourism and islander ‘lifeline’ sea travel. While those three things are all important, you could say that freight has to come first because 98 per cent of everything we use and consume in the islands is imported – and of that 98 per cent, 80 per cent is brought in by Condor. That said, we’re a Channel Island ferry company, so all aspects of our business are important.
We currently have four ships operating from five ports – Jersey, Guernsey, St Malo, Portsmouth and Poole. We served routes to Cherbourg and Weymouth, but aren’t on those any more. We also have access to a back-up freight ship on permanent charter.
Some might say that being CEO of Condor is the most difficult role in the Channel Islands – what’s your take on that?
I wouldn’t agree it’s the most difficult job, but I do understand the thinking. Condor, like any high-profile business, is always going to be in the spotlight – and obviously, if things go wrong, then we’ll be in a bad spotlight.
Running a ferry company is, without doubt, a difficult proposition. The very nature of the sea can be unforgiving, ships are very expensive and complex assets, and there can be mechanical and technical issues.
There’s a lot of external pressure too. Take globalisation, for instance – the world has shrunk, low-cost air travel has had an impact on the islands. Then there’s digitalisation, the speed with which we’re all applying ourselves to living our lives and the way businesses have to digitalise just to make themselves more efficient. And then consider social media – the ability for the general public, the consumer, to have a very loud voice or platform to be able to share their experiences of a company’s services or products in a very penetrative way.
All of this makes it a challenging role, but I enjoy a challenge. There are other far more difficult jobs. I wouldn’t want to be the Health Minister of either island – and I was the Health Minister of Guernsey – because the demands on those people every single day are just unbelievable.
So, there are many other roles that are very difficult. It’s just that Condor has had a particularly difficult couple of years.
You mention social media. Some of the comments about your company on certain platforms have been scathing. Does it feel at times that people are simply ‘out to get’ Condor?
Social media does allow customers to really vent their feelings, be they good or bad. And there’s part of me that completely agrees with what you say.
However, the freedom of speech, the right to reply, and the customer – the general public – having an ability to get their message across, I think that’s really important.
Many businesses or brands could be arrogant or domineering in the past because they had the power of a corporate brand or the might of marketing or advertising, and could almost dictate what the general public or the consumer did or didn’t do, or thought or didn’t think.
The great thing about social media and digital platforms is that all that’s changed – the power is with the consumer now, so that can’t be a bad thing.
That said, do I think some of the criticism on certain social media platforms is unreasonable or goes too far? Yes, when it’s just an outright mistruth or misrepresentation. We’ve seen things posted that are completely and utterly bonkers. I developed the phrase ‘as odd as a gregarious pineapple’ to deal with some of the absurdity.
When I see stuff that people are posting, when it becomes personal, or when the criticisms are completely wrong, I find that really disappointing, unfair and, at times, sadly frustrating. And we’ve had to make complaints.
There was one particular Facebook page that I engaged with from day one. I arranged to meet the administrators, and have done so regularly over the past 18 months. I offered to go onto that page to simply correct inaccuracies, but they declined my offer, which is their prerogative. At that point, I stopped monitoring it.
I used to monitor it because I felt it was important as it was a group of people who were passengers or customers of Condor. I found that there were some genuine criticisms that we rightly deserved. But equally, I found some of it offensive and, at times, plain wrong. If I’m not going to have the ability to correct or respond, how can I engage with it?
So, in answer to your question, for some people it’s become a bit of an obsession. I’m happy to reach out and engage and answer any questions, but sometimes people don’t want to hear the answers.
If I hear something that is tosh, I’ll say it’s tosh. If I see something that’s bonkers, then I’m going to say that’s what I think. Equally, if I see something that looks like we’ve made a mistake, I’ll hold my hand up, apologise, reach out and we’ll try and fix it or make amends. Why wouldn’t I want to do that for our regular passengers as part of our Comprehensive Service Agreement?
Condor had issues with Liberation just after she came into service in 2015. Did you feel there was a loss of faith there?
There’s no doubt that 2015 was an awful year for Condor. We invested £48 million in Liberation, and that’s a big investment. We marketed the new ship in a strong way, because the company was very proud to have made the investment.
The sad thing was that a whole series of things happened in 2015 around bringing Liberation into service, that had an impact on our passengers. We absolutely regret that, it was a bad year.
As we moved into 2016, many of those issues had been mitigated and were resolved, and as we moved into 2017, there have been a smaller number of issues in real terms.
In October 2017, we put Liberation into dry dock early, having discovered a few technical problems, and quickly implemented our contingency plans, which did go well and helped passengers get to their destinations with minimal disruption wherever possible. The reality is, we’d planned to put her into dry dock anyway, so we just did it a few weeks early.
This year, it’s the 10th anniversary of the Macquarie acquisition, and in September 2017 you completed the most recent debt refinancing. What does this all mean going forward?
Every five years, we would naturally have a corporate refinancing – that’s how the company is set up. In September, we completed a normal five-year rolling rotation. We just went through a refinancing process where we look again at future plans in terms of capital requirements. So that was a normal process and happened very smoothly and efficiently.
As part of that, there is the provision for the acquisition of a new vessel. In November 2016, we published our Comprehensive Service Review, which examined our entire ferry services and the ferry services of the Channel Islands.
In that, we talked about replacing Rapide on the southern route in the next few years – so in our refinancing, part of that was to make sure we had access to capital in terms of funding that replacement tonnage. So, we’ve provisioned ourselves appropriately going forward.
In terms of our shareholder’s ownership of the company – that was set up in the Macquarie European Infrastructure Fund II.
It was a 10-year term, and that comes up in 2018 as part of the normal process. While there are no plans right now, at some point our current investor will look to sell Condor as one of the assets in that fund. But at the moment, we’re busy just working on running the business and implementing our improvement plans.
Can you share anything specific with us on your plans for the fleet and any future routes?
In the Comprehensive Service Review, we clarified that we would commit to replacing Rapide on the southern route with an alternative high-speed craft. And we also committed to replacing Goodwill, our freight-only vessel, when she came to her natural replacement time. And we’ll look to do that as part of the normal process.
It’s important to note that the Review, which was independent, stated that a four-ship fleet is the right size for the Channel Islands. At the same time, we recognise that there’s been considerable noise around the islands regarding wanting more ships and different ships. But the combined Channel Islands population is equivalent to a small town, and that makes it very difficult to justify a bigger fleet.
That said, we’ve been in dialogue, separately and jointly, with the States of both islands over fleet size. And those conversations continue around the overall ferry services in the broadest sense.
That’s all I can say right now because the conversations are ongoing. People often point to the fact that we used to have five ships in the fleet – we took the Express and the Vitesse out of service in 2015 before Liberation came in. However, the reality was that the Vitesse was on a permanent morning charter to Britanny Ferries, so we only ever had her in the afternoon. So, we effectively only had four and a half ships at that time.
How have declining tourism figures in the islands affected your business?
About a dozen years ago, when tourism was at its peak, total tourist numbers were something like 1.4 million across both islands – one million into Jersey and 400,000 into Guernsey. Once the low-cost airline model developed, that market suddenly dropped by about a third, and visitor numbers fell to under one million in total. One-third of those were travelling by sea.
As a result, Condor was taking 150,000 fewer bookings, and the loss of revenue was significant. It’s worth relating this back to the calls for more ships – and it’s this particular dynamic that no one has really had a conversation about. There are fewer tourists, how can we justify more ships?
When people say Condor is being ‘mean’, it just isn’t true. Condor is a private business, we have no subsidy or underwrite, and we haven’t asked for them either. We’re a private company trying to offer a service across freight, tourism and islander travel, but when your small market shrinks by a significant amount, that has a real impact. And it’s very hard to grow because of where we operate, having a finite market size.
Does the proposed inter-island ferry represent a possible new avenue for Condor?
Right now, the States in both islands have asked for expressions of interest from people prepared to operate an inter-island trial ferry service this summer. That closed on 20 October last year. We’re waiting to see what the next steps will be from the States. I imagine that soon they’ll be deciding what steps to take next, so until then we don’t know.
We offered to run a trial inter-island daily service from May to September 2017 and were committed to it. We’d invested £30,000 to get it ready to go, but unfortunately that trial had to be stopped at the last minute because the Committee for Economic Development in Guernsey wasn’t able to continue supporting it because of internal funding issues. So, we’re waiting to see what will come of it this year.
Finally, what does the next 24 months look like for Condor?
I’ve been in post for 18 months. The first six months I spent very actively making sure that I understood all of the issues and problems, difficulties and challenges. And in the last year, I’ve been busy leading an improvement plan for Condor. We’ve drawn up a five-year plan for the business, and that will come to the end of its first year in March. So, we’re at the end of year one.
Years two and three have exciting plans for additional customer service benefits that we intend to introduce, refine and improve. And we begin the process of looking at the next fleet replacement heading towards 2022, which we will start planning for soon.
So, we’ve got a very detailed five-year plan, which our board and shareholder have approved. It gives my executive leadership team clarity about what we should be doing. At the heart of that is reliability, punctuality, customer satisfaction and customer service.
The plan isn’t about the degree of profitability or that kind of thing. It’s part of it, because we do have to reinvest, but it’s much more about how can we make sure we play our part in supporting the economies and communities in Guernsey and Jersey. How can we do that as best we can, bearing in mind the significant shrinkage in the market we’ve seen? How can we absolutely make sure that we’re able to generate the funds so that we’re able to reinvest?
So it’s that balance that we’re really focused on – making sure we’re operating the business in a way our passengers and customers will feel comfortable about and be able to rely on. And we realise we have more to do there.