Spatial structure and resource allocation in the PSO coastal shipping network in the Aegean sea

Abstract

The structure and financing of Public Service Obligations (PSOs) in coastal shipping are of crucial significance for the territorial cohesion and socio-economic development of geographically scattered and remote regions, such as the island complexes in the Aegean Sea. The present article investigates issues pertaining to the operation of the PSO network in the North Aegean, Dodecanese and Cyclades. Special emphasis is given to quantifying and explaining intra- and inter-regional inequities with respect to: (a) level of subsidy, (b) trip frequency, and (c) vessel technology, by destination, route and inhabitant. The results of a set of empirical weighted spatial indexes of inequity and the regression analysis verify, respectively, the existence of significant inequalities and their sources, including population criteria, income and vessel technology. Institutional interventions and a rationalized and integrated planning process are suggested to enhance the efficient and fair allocation of resources among islands. Such a process should balance supply with demand, based on the pure cost of service, without distorting competition. Finally, the network restructuring is proposed through developing regional hubs in a few large islands to locally redistribute traffic flows, in order to reduce operational costs, due to scale economies, and improve the level of service.