How Baleària is leading the way for the Spanish ferry market

Philippe Holthof asks Baleària president Adolfo Utor about the state of the sector and the operator’s transition towards net-zero carbon emissions

How Baleària is leading the way for the Spanish ferry market
The Astilleros Armón-built Eleanor Roosevelt has met expectations and Baleària is contemplating a repeat order with improvements in the general layout of the passenger areas, the vehicle decks and the engine output

Founded in 1998, Dénia-headquartered Baleària rose from the ashes of Flebasa Lines. Initially concentrating on the mainland Spain to Balearics and Ibiza to Formentera trades, the brand rapidly grew its fleet and network which today covers all main Spanish corridors, including the Gibraltar Strait and Alborán Sea, and a route between Huelva and the Canary Islands, which is operated in partnership with Fred. Olsen Express.

In recent years, the company has also spread its wings internationally and besides its regular services from the peninsula to Morocco and the North African Spanish enclaves of Ceuta and Melilla, it also operates a weekly crossing between Valencia, Spain, and Mostaganem, Algeria, as well as a seasonal service between Sète, France, and Nador, Morocco. In addition, Baleària Caribbean runs a single-ship service between Port Everglades, Florida, and The Bahamas. 

Adolfo Utor, who has been the company’s president and majority shareholder since its inception, has been instrumental in Baleària’s expansion and success. He gained full control in October 2021 when Baleària’s partner, the Matutes family, sold its 42.5 per cent stake in the business.

“We joined forces with the Matutes family in 2005 when its Umafisa Pitra ferry operations were merged with ours,” says Utor. “For the past 17 years, we have had a fluid, enriching and fruitful relationship with the Matutes family. Their participation has contributed to the strengthening of a leading shipping company in Spain and the creation of an international benchmark in sustainability and digitisation.”

When the Matutes family sold its shares, Baleària initially considered incorporating a new industrial or financial partner. “However, I finally opted to concentrate the capital as I was supported by the unequivocal backing of my current financial backers,” says Utor. “We have responded appropriately to a new shareholding structure, and with the step taken, I reaffirm my total confidence in the Baleària project.”

Utor’s bold move came amidst the Covid-19 pandemic and intensifying competition in Baleària’s core Balearic marketplace. Hot on the heels of the takeover of Armas Trasmediterránea’s Balearic operations by Grimaldi Group in April 2021, Grandi Navi Veloci (GNV) entered the fray, initially with two Visentini-class ro-pax ferries. But the thriving MSC subsidiary has a big appetite and now operates four ro-pax ferries from the mainland ports of Barcelona and Valencia, respectively. 

Utor describes the transfer from Armas Trasmediterránea as a new equilibrium in the mature and competitive Balearic Islands market. “One operator has been replaced by another, bringing fresh air and renewed competition,” he says.

Yet, the sudden entry of GNV is clearly a thorn in his side. “The arrival of a third operator into a mature market which was already well-served with good vessels, competitive prices and high customer and administration satisfaction has disrupted the Balearic Islands market in an irrational way,” he explains. “The introduction of four vessels with similar, or inferior, characteristics to those provided by existing operators that are already operating on the same timetables, but do not improve the service and represent an increase of 50 per cent of capacity in a single year, is not understandable from any economic or environmental sustainability analysis.”

 

The changed market conditions have clearly kept Baleària on its toes, but the company’s agility will enable it to remain relevant, says Utor. “This new situation has prompted us to maximise our operations, reorganise, accelerate our digitalisation process, make competitive gains and get the best out of all our teams, in order to continue to clearly lead the passenger and cargo market in the Balearic Islands.” 

Despite GNV’s entry in the Balearic arena, Baleària has retained a market share in excess of 50 per cent in both the passenger and freight segments. “Our competitive advantage allows us to confidently anticipate that we will remain in this position for many years to come,” says Utor. “While our new competitors make great play of their financial muscle, we continue to be dedicated to responding to the needs of our customers, improving every day and working hard to be more efficient. Only time will tell whether or not there is room for so many players in the market but what is beyond doubt is that our competitiveness and our status as a local operator keep us solidly in the lead, in both our own interests and those of the Balearic Islands’ territory and economy.” 

Besides the mainland-Balearics routes, the inter-Balearic ferry market has also been marred by aggressive competition, with cash-rich Trasmapi set to increase its footprint following the acquisition of three high-speed ro-pax catamarans. Luckily for Baleària, FRS Iberia has meanwhile turned its back on the Balearics. Utor points out that Baleària’s strategy is entirely oriented towards satisfying passenger and cargo customers, as well as developing new vessels with improvements in efficiency, innovation, sustainability and digitisation.

“We are the only shipping company that provides daily inter-island services throughout the year to all the Balearic Islands,” says Utor. “We have been doing it for years; others have tried and failed. We will continue to add new, efficient, environmentally friendly, digitised and comfortable vessels for passengers and shippers. The latest examples of this are the recently introduced Eleanor Roosevelt, the world’s first fast ferry with dual-fuel engines, and our newly ordered electric double-ended ferry which will be powered by hydrogen technology.”

Scheduled to enter the busy Ibiza-Formentera route in time for the summer 2023 season, the double-ended ferry will accommodate 350 passengers and will be built by Astilleros Armón. According to Utor the 83-metre-long shuttle ferry will be the epitome of sustainable mobility, becoming the first electric ferry in the Mediterranean to operate with zero emissions when entering, leaving and staying in port. The battery-hybrid ferry will serve specifically as a test laboratory for the use of green hydrogen, illustrating Baleària’s commitment to take the lead when it comes to decarbonisation. It will boast a compressed hydrogen fuel cell – the largest one currently in existence – which will provide five per cent of the ship’s propulsion power.

“Using this newbuild as a small-scale test bed means that we can learn and apply our experience in the medium term, when a more mature and stable transport and storage system than the current compressed hydrogen is available,” says Utor, elaborating on Baleària’s green agenda.

Baleària is one of the very few operators in the Mediterranean that has a strong commitment to using LNG fuel as a stopgap solution. In addition to Eleanor Roosevelt and the 2019-built Visentini-class Hypatia de Alejandría and Marie Curie, Baleària retrofitted no fewer than six of its existing ro-pax ferries to LNG propulsion, quite an achievement and an industry first. Despite European Union subsidies, the retrofit cost borne by Baleària was still significant, setting the company apart. The LNG price hike has prompted Baleària to partially switch to cheaper marine gas oil, yet Utor confirms that the operator has not stopped using LNG at any time. “However, we have currently reduced the consumption of LNG in our dual-fuel engines, limiting it to manoeuvres and port stays,” he says. “We will obviously return to 100 per cent LNG consumption when the price becomes competitive again. Our vocation to respect the environment is incompatible with a loss of competitiveness that would risk our viability.” 

Although Utor agrees that LNG is a transition fuel, it will remain part of Baleària’s fuel mix in the medium term. “The strategic commitment to LNG as a transitional energy remains unchanged even though we are aware that it is not the best option right now [due to its high cost]. We’re also actively involved in different projects linked to the use of renewable energies with the aim of achieving zero-emission shipping by 2050. Apart from green hydrogen, this also includes biomethane. Renewable gas is a reality, and dual-fuel engines will be able to inject both renewable gas and up to 25 per cent of hydrogen, something currently scrutinised by Wärtsilä.”

When asked about further fleet renewal and whether Baleària would consider lengthening its Visentini-class vessels in a similar way to Stena Line’s recent project in Turkey, Utor kept his cards close to his chest. To reinforce its connections between the peninsula and the Balearic Islands, Baleària recently took Stena RoRo’s Visentini-class Kerry on a two-year time charter with United Marine Egypt’s Wasa Express remaining on charter for the rest of 2022, providing services to North Africa. When Eleanor Roosevelt was still under construction at Astilleros Armón, Utor told local press that he might consider a repeat order, providing that the high-speed ro-pax catamaran was a success. So, how successful has the craft been from a technical viewpoint and what has been the feedback from the ship’s everyday users so far? 

“Eleanor Roosevelt has maintained very high occupancy rates with a very satisfactory commercial result,” says Utor. “In terms of seaworthiness in adverse sea conditions, the ferry’s performance has been exceptional and in line with forecasts. Overall, we are very satisfied with the new fast ferry, and we are indeed seriously considering constructing a new version with improvements in the general layout of the passenger areas, the vehicle decks and the power of the engines. But I cannot confirm contracts at the present time.”

This article was first published in the Spring/Summer 2022 issue of Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed. 

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By Philippe Holthof
21 April 2022

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