P&O Ferries Reflagging to Cyprus

[Debennut]

Were you aware that the Dover Calais fleet is being reflagged to the Cyprus registry?
Pride of Britain (!) is now a Cyprus registered ship with the rest to follow.
I cannot envisage the French reflagging their ships.
Any reason as to why P&O have taken this action? Is it likely to be Brexit?
Whatever the reason, surely it has to be a very disappointing decision?

 

[sailorman]

Were you aware that the Dover Calais fleet is being reflagged to the Cyprus registry?
Pride of Britain (!) is now a Cyprus registered ship with the rest to follow.
I cannot envisage the French reflagging their ships.
Any reason as to why P&O have taken this action? Is it likely to be Brexit?
Whatever the reason, surely it has to be a very disappointing decision?

Cost cutting

 

[Bru]

It;s been discussed on a thread in the Brexit sub-forum

According to Minn, who works in the industry, it's probably due to finance and leasing arrangements requiring the fleet to be flagged in an EU member state

 

[Concerto]

Wikipedia search on P&O Ferries has turned up this statement.

In December 2018, P&O Ferries confirmed that its two Dover-Calais flagships, the 2011-built Spirit of Britain and the 2012-built Spirit of France would be reflagged from the Port of Dover to Limassol, Cyprus as a result of the United Kingdom's exit from the European Union] in 2019. The two vessels are due to be reflagged in January 2019. It follows the announcement that 9 vessels in the fleet would have their duty free shops outsourced, these included all 6 Dover-Calais vessels.

 

[lpdsn]

That may just be a handy excuse. Irish Ferries have been Cypriot flagged for a good few years now. Cost cutting.

 

[oilyrag]

Only reason a ship owner re-flags to an open register, such as Cyprus, is cost saving. P&O only moved their ferries onto the UK register when the UK Tonnage Tax regime was introduced in 2000. As Tonnage Tax is an EU-sanctioned form of state aid for ship owners it seems likely that P&O are hedging their Brexit bets by moving to another EU country's register.

 

[Kukri]

Only reason a ship owner re-flags to an open register, such as Cyprus, is cost saving. P&O only moved their ferries onto the UK register when the UK Tonnage Tax regime was introduced in 2000. As Tonnage Tax is an EU-sanctioned form of state aid for ship owners it seems likely that P&O are hedging their Brexit bets by moving to another EU country's register.

All true.

A bit more detail:

You can run ships on Register A in country B’s tonnage tax scheme as long as both are in the EU. Great system.

I run ships which are on the British register and which are in UK Tonnage Tax. Nusrat Ghani MP, the Shipping Minister, was careful to tell us that no changes to the system are planned before the end of 2020.

I was told by the Big Four firm who are our tax advisors that these P&O ships are probably on a lease (most likely from a French bank) which requires them to be in a register which is acceptable to an EU approved tonnage tax scheme, which the UK register won’t be in a few weeks time.

It doesn’t matter to my outfit because our ships are old bangers approaching the end of their lives and the banks who financed them (on leases which optionally exited into UK tonnage tax) were paid off long ago; it’s next stop rebars for our fleet, which is not being replaced, due to Brexit.

The British flag for merchant ships spent the last quarter of the last century dwindling away to nothing as the Conservative Government under Thatcher didn’t understand the nature of shipping and over taxed it. John Prescott created the Tonnage Tax scheme and brought a lot back, but when Maurice Storey retired as head of the MCA the ghastly civil service recruitment people put in a succession of Admirals, charity managers and other no hopers and the spirit ebbed out of the MCA. It’s all pretty much over, and Brexit is the last nail in the coffin.

 

[oilyrag]

Thanks for the filling in some more detail, very interesting. And yes, kudos to Two Jags who, as ex merchant navy, understood the industry, and tried to do something to save the UK merchant fleet and jobs.