The peaks and lows of the cross-Channel run: Frank Barrett explains how to profit from the price war on the ferries as they cut costs and improve services to meet the challenge of the tunnel

A nightmare haunts the Dover-based ferry companies. Imagine - it's not hard - that over the next nine months, Eurotunnel's problems multiply and its debts increase. Suppose the Channel tunnel contractor, TML, grows impatient with Eurotunnel's incessant disagreements over payments and the British and French governments allow it to take over and write off the debts. The tunnel would then start with a blank sheet.

Instead of having to compete with a tunnel operator desperate to repay its debts, the ferry companies would have a competitor ready and able to win a market share at any price.

In Calais, you can find many prominent citizens who describe such conjecture not as a dream or even a nightmare, but as a likely event. The same people report that the tunnel will not open in December this year; more likely it will be December 1994.

The Channel tunnel is inevitably a fascinating subject for the rumour- mongers, but the project has been the victim of so many problems - its opening has already been postponed twice - that the drama is likely to be some way from its final act.

P & O European Ferries and Stena Sealink believe they can compete out of Dover with a high-frequency shuttle service: the former sailing every 45 minutes, the latter every hour. These plans demand substantial investment. For example, from April, when the services are due to begin, P & O aims to add a fifth jumbo ferry, the Pride of Burgundy, at a cost of pounds 200m.

Such expenditure carries a high element of risk. The ferry companies will have a daily capacity between Dover and Calais for 190,000 passengers and 50,000 cars, more than twice as many as crossed on their record day, in August last year. With P & O's closure of the Dover-Boulogne ferry, business will increase on the Calais route, but will it be enough to fill all the ships day and night? Even without the nightmare of a tunnel able to reduce its prices enough to grab a majority share of the market overnight, the main ingredients for a ferocious price war are in place. At present, the price- cutting is largely restricted - for example, to the pounds 1 passenger fares available through tabloid newspaper coupons - but it could quickly get out of hand. It is not hard to see the irony in this. If only the ferry companies had tried a bit harder, a bit sooner, would a Channel tunnel have been considered necessary in the first place?

Now that the ferry companies have transformed their Dover services to meet the coming challenge, it is hard to remember how awful they all used to be. In the Seventies, for example, the firms did not compete at all. Out of Dover, the main players were British Rail (which owned Sealink) and Townsend Thoresen (subsequently taken over by P & O): they met regularly to fix fares and co-ordinate services, but, like all cartels, the result was an operation which suited the ferry companies rather than the passengers (their only benefit was that tickets were interchangeable).

At the start of the Eighties, however, the government broke up the cartel and the ferry companies discovered - as transatlantic airlines had learnt a decade earlier - that cutting fares and improving services would not necessarily lead to bankruptcy but might provide an unexpected pathway to success.

Throughout that decade, passenger traffic out of Dover boomed from a little over 9 million at the start to more than 15 million at the end, as the new jumbo ferries followed the trend set on the Baltic Sea where duty- free pleasure trips between Sweden and Finland had grown into a substantial leisure activity.

If the Eighties placed the ferry companies in uncharted waters of competition, the Nineties present worse terrors. Out of Dover, at least, the questions are: what life is there for the ferry companies after the tunnel; will we be saying in the year 2000, 'How on earth did we manage before the tunnel?'; or will we be reflecting on what a marvellous, low-cost alternative the ferry offers to the discriminating traveller?

In the meantime, as the wise ones in Calais say: nobody should bet the farm on the tunnel builders meeting their latest target date of December. And while the long term may be uncertain, the ferry companies can be sure that this year will be at least as good as last, a record one for cross-Channel travel.

Package holiday sales may have slumped again, but ferry travel has boomed. Through Dover, for example, the latest figures show that passenger traffic last year rose by 13 per cent while car traffic grew by 6 per cent. And this month, the rush to cash in on the new wine and beer allowances has raised business by 10 per cent.

It all seems like the start of a sweet dream, but even the sweetest dreams can sometimes turn into nightmares . . .

Where the action is:

Stena Sealink and P & O European Ferries have engaged in only a limited price war for the peak summer period, but worthwhile savings can be made.

Stena's middle-of-the- night return fare for a car and two passengers of pounds 124 has been countered in the second edition of P&O's 1993 brochure with a pounds 125 fare. For a car and five passengers, for example, the new fare of pounds 135 return on a 3am or 4am weekday crossing for a car and five passengers, for example, offers a generous pounds 175 saving compared with a middle-of- the-day peak weekend crossing of pounds 310 return.

Overall, however, there is little difference between the companies' fare structures. P & O's standard return tariff for a car and up to five passengers is (letters denote time of sailing): E band pounds 135; D pounds 215; C pounds 280; B pounds 310. Stena's tariff is practically identical: E pounds 134; D pounds 214; C pounds 280; B pounds 312. Stena's peak season rate of pounds 312, compared with pounds 288 last year, represents an increase of about 8 per cent; P & O's pounds 310 compares with pounds 284 last year, a rise of about 9 per cent.

Both P & O and Stena are planning to speed up the loading process with a computerised system, which they say will cut check-in times to 20 minutes before departure. And they add that hi-tech cameras and computer-readable labels attached to car windscreens will enable cars at Dover to drive straight on to a ferry without having to queue.

But it is passengers returning to Dover from abroad who are benefiting from the biggest improvement. The endless queues for passport and customs checks have largely disappeared. Introduction of the single European market means that the biggest obstacle to leaving Dover is now the roundabout at the entrance to the Eastern Docks.

Planning

When you are choosing a ferry crossing, pick the service that fits in best with your whole journey. The shortest, cheapest crossing may be a false economy. On a pence-per-mile basis, the longer crossings offer much better value for money. Overnight, they can save the cost of a night's accommodation, and the morning arrival allows a full day's drive towards your destination.

If you live in Cornwall and are travelling to western Brittany, it obviously makes little sense to travel all the way to Dover and cross to Calais. This is an extreme example, but do look at a large map of Europe when planning your trip, and pick a ferry route that will take you most directly to your destination.

Remember that the opening of the new section of the A26 near Reims means that you can now reach the A6 to the south without having to venture anywhere near the dreaded Paris peripherique.

The operators

North Sea Ferries 0482 77177.

P & O European Ferries 0304 203388.

Sealink Stena Line 0233 647047.

Olau Line 0795 666666.

Sally Line 0843-595522.

Hoverspeed 0304 240241.

Next week: longer crossings to France, Spain and Scandinavia.

(Photograph and charts omitted)