Med-Lines: Greek Ferry Operator

Med-Lines is a medium-sized Greek ferry company operating routes between Athens and three major Aegean island destinations: Crete, Mykonos, and Rhodes. The CEO has asked BCG to identify opportunities to increase revenue. The case involves analysis of the Greek tourism market, ferry route economics, revenue streams (passenger tickets, vehicle transport, food & beverage), fleet profitability, and fleet expansion options. It is BCG's official online practice case, and tests quantitative reasoning, market analysis, and strategic judgment simultaneously.

Client: Med-Lines, a medium-sized ferry operator in the Aegean Sea. The company operates a fleet of ferries connecting Athens, Crete, Mykonos, and Rhodes — the four major Greek port destinations. Operational Structure: Med-Lines is obligated by Greek regulatory authorities to operate at minimum one round-trip per day year-round on all routes. During summer months (June, July, August), it operates at least two ferries per route, each with two round-trips. Ferries operate 11 months per year, entering maintenance for one month. Market Context: Greek tourism is growing, with ferry ticket volumes closely correlated with Greek GDP. Strong growth is expected in 2008, driven by Russian and Eastern European tourism. The three major island destinations serve distinct traveler profiles: Crete attracts younger budget travelers, Rhodes attracts wealthier older tourists, and Mykonos attracts a mixed profile with rising accommodation costs.

What revenue growth opportunities exist for Med-Lines across its passenger routes, fleet operations, ancillary revenue streams, and potential fleet expansion or acquisition?

Step 1 — Market sizing: Use Greek GDP growth projections and the historical GDP-to-ticket correlation to forecast 2008 ticket volumes. Establish total addressable market. Step 2 — Route economics: Map all passenger flows using routing rules (e.g., all Rhodes traffic transits Mykonos; only Athens connects to Crete). Calculate revenue per route. Step 3 — Revenue stream analysis: Quantify and compare the three revenue streams — tickets, vehicles, food & beverage — to identify the highest-margin levers for improvement. Step 4 — Fleet profitability: Compare the three ferry types on the Athens-Crete route by revenue per passenger and implied profitability. Identify the optimal fleet composition. Step 5 — Growth options: Evaluate fleet expansion (new builds vs. Italian Seaways acquisition) using seasonal revenue analysis, route complementarity, and shipbuilding market trends. Key Insight: The Type 3 ferry generates the highest revenue per passenger despite the lowest capacity, because its cost structure is leaner (fewer crew, lower fuel). The most immediate revenue opportunity is the food & beverage contract renegotiation — the current 20% revenue share is below market and is the easiest lever to pull without government approval.