Sydney ferries.

Hoping to save ... for the past three years, Sydney Ferries has cost the government more than $133 million a year. Photo: Michele Mossop

THE state government is hoping to save hundreds of millions of dollars over the next decade following its agreement to contract out the running of Sydney Ferries to two large infrastructure firms.

The firms, Transfield and Veolia Transdev, yesterday put the size of the contract that will hand them control of Sydney Ferries in the next few months at $800 million over seven years.

For the past three years, Sydney Ferries has cost the government more than $133 million a year. Even without inflation or rising fuel costs, remaining on this trend would have cost the government $930 million over seven years.

But the Transport Minister, Gladys Berejiklian, dismissed concerns the deal would cause service standards to drop. She said the contract, which had not been released, required the new ferry operator to increase patronage to get full payments.

''This provides a clear incentive to the operator to continue to find ways to improve the customer experience and attract more passengers,'' Ms Berejiklian said.

''The contract will run for seven years and requires the new operator to meet a number of performance benchmarks in key areas such as safety, reliability and customer service,'' she said.

The firms, through their consortium Harbour City Ferries, will assume control of Sydney's ferries as soon as late July.

The chief executive of Harbour City, Steffen Faurby, offered little insight yesterday into how the running of Sydney's ferries would change. Mr Faurby said he would spend much of the next year understanding the business and working with staff to improve service levels.

''You will see staff in new uniforms, and particularly focused on engaging with the passengers and the customers,'' he said.

Mr Faurby, who has more than 20 years maritime experience, has never run a passenger service before. But he said he understood what it would take to improve Sydney's ferries.

''It doesn't really matter very much if it is a towage, tug company, or a container shipping company, or for that matter a ferry company … what matters is that you have the competencies to run it in an efficient, safe and effective manner.''

The size of the contract, however, triggered alarm from the ferries spokesman for Action for Public Transport, Graeme Taylor, who said at least $1 billion would be needed to run decent services over the next seven years.

''You just can't do it,'' Mr Taylor said. ''These are big boats, they are expensive to run. I am concerned they are going to try and turn the whole thing into a water bus service, small uncomfortable little ferries.''

The contract requires the government to consult with Harbour City as it plans replacements for Sydney's ageing ferry fleet.

Mr Faurby said he would recommend more ''flexibility'' of ferry services, which might mean fewer vessels of different sizes.

''At the moment, we've got a composition of the fleet with many different sizes and very different service speeds and all the rest of it, that certainly puts a limit to the amount of flexibility that you have.''

Transfield, which runs part of Adelaide's bus system, was recently penalised more than $120,000 by the South Australian government for under-performance.

The South Australian Transport Minister, Chloe Fox, this week told Parliament Transfield had had the worst performance of all the state's contracted bus companies.