POLITICS

Report on BC Ferries seeks more government cash, fare caps tied to inflation

01/24/2012 12:38 EST | Updated 03/25/2012 05:12 EDT
VICTORIA - BC Ferries needs all hands on deck to ride out an economic storm whipped up by rising fares, fewer riders and mounting losses despite significant improvements, says a new report.

A government-ordered review of British Columbia's coastal ferry service makes 24 recommendations, including holding future fare hikes at the rate of inflation, increasing ridership while cutting service levels and getting more subsidy dollars from the provincial government.

BC Ferries Commissioner Gordon Macatee's report, released Tuesday, recommends a four per cent cut in service, amounting to about 400 trips a year, for an estimated $5.4 million in savings.

It concludes wide-ranging actions are needed by the company, government, stakeholders and ferry users because "the financial sustainability of BC Ferries is at considerable risk."

Macatee was appointed last year to conduct the review to better balance the interests of ferry users and the financial issues facing the operators.

Proposed fare increases averaging 16 per cent across the ferry system — up to 80 per cent on some northern routes — prompted the review, but the hikes were rolled back to about four per cent.

"The immediate challenge is to reverse the declines in ridership, to restore the company to financial viability, to make ferry travel more affordable and to improve overall accountability," Macatee told a news conference.

He said that after visiting 27 communities and hearing from about 2,000 people, he concluded "current ferry fares and the proposed increases have reached the tipping point of affordability."

It currently costs a family of four — not including fuel surcharges — with two children 12 years old or older $104.25 for a one-way fare from the Lower Mainland near Vancouver to Vancouver Island near Victoria.

Macatee said fares have ballooned 47 per cent over the last nine years.

He said his report asks the B.C. government to take the lead in creating a long-term vision for the future of the ferry service, which includes 35 vessels serving 25 routes.

But despite forecasting a revenue shortfall of $58 million a year for the next four years and increasing the losses to $143 million a year by 2024, Macatee said it was not entirely up to the B.C. government to make up the projected shortfalls with increased ferry subsidies.

"We feel there are seven important moving parts," he said. "Fares is one, ridership, service levels, the capital spending plan, reduced costs, new sources of revenue and subsidies. The solution lies in a combination of those factors."

Macatee said the report doesn't recommend a new subsidy amount for the government.

"I'm not going to try to pin the government down on a specific number," he said. "It's a very complicated issue."

The report recommends switching ferry fuel to liquefied natural gas from diesel, a potential annual saving of $28 million, and switching to a free reservation system and instead charging a fee at the ferry terminal to people who haven't reserved in advance.

Transportation Minister Blair Lekstrom didn't rule out increasing the government subsidy, currently at about $150 million a year, but he wasn't making any promises.

Lekstrom said he will review Macatee's report.

But he said the government has no appetite to build a bridge from the Lower Mainland to Vancouver Island, a project he estimated would cost $10 billion.

BC Ferries president Mike Corrigan said the company is prepared to work with Macatee, the government and others to keep ferry fares and operating costs down.

He said the company has been actively looking at using LNG fuel vessels, but the recommendation about reversing the reservation system would result in a $15-million revenue loss.

Corrigan said Macatee's report identifies a $58-million shortfall in operations that must be filled through improvements, reductions or subsidy increases.

Opposition New Democrat ferries critic Gary Coons said the NDP would make coastal ferries part of the provincial highway system, but he did not estimate the potential size of an NDP ferry subsidy.