05/09/2012 08:24 EDT | Updated 07/09/2012 05:12 EDT

BC Ferries Gets $80 Million To Ease Fare Pressure


The provincial government has tossed BC Ferries an $80-million life ring to hold the line on fares -- but further cuts and route changes are still planned for the service.

Transportation Minister Blair Lekstrom said the subsidy and amendments to the Coastal Ferry Act introduced in the legislature Wednesday are meant to ensure fares stay affordable, but fares will still increase and the voyage ahead for some communities will be uncomfortable.

"Without question there are going to be decisions that are going to be uncomfortable," Lekstrom said at a press conference after he introduced the amendments. "I will not sugar-coat the issue."

He said BC Ferries plans to cut $45 million over the next four years, and those cuts could include service reductions to larger and smaller routes. Lekstrom said the government will discuss service levels and fare increases at a series of community meetings.

But the provincial opposition's transportation critic says coastal communities have been slapped in the face by changes to the Coastal Ferries Act. New Democrat Gary Coons said the amendments offer few changes and will still result in fare increases above the rate of inflation for the next four years

"There are some initial steps but far short of the overhaul that the Commissioner asked for and that the ferry-dependent communities were hoping for. It seems to be a small plug for a leaking ship and I don't think it's big enough.

Cuts to late-night service

BC Ferries chief executive officer Mike Corrigan said the $79.5-million subsidy increase and the plans to implement up to $45 million in service efficiencies and reductions will help the company achieve its goal of keeping fare increases under control.

He said he expects the company to immediately begin looking at cutting late-night sailings across the system to save money.

The government's new $79.5-million subsidy will be doled out to BC Ferries over the next four years, starting with $46.5 million this year and moving between $10.5 million and $11.5 million over three years.

The province currently provides BC Ferries with $150 million annually, while Ottawa contributes about $26 million a year.

Corrigan said many late sailings carry few passengers and are constant money losers and some communities will face hard choices about service levels in the coming months.

"Part of it is the trade off between service-level reductions and what people are willing to pay, and you've got to get out and have that conversation," he said. "There may be some communities willing to pay a little bit more to keep the service they have."

Corrigan said BC Ferries is actively exploring Macatee's recommendation of switching ferry fuel to liquefied natural gas from diesel, a potential annual savings of $28 million.

He said the company is also examining switching to a free reservation system and instead charging a fee at the ferry terminal to people who haven't reserved in advance.

The amended ferry legislation comes after a system-wide report released in January by BC Ferry Commissioner Gord Macatee, who made 24 recommendations and concluded the financial sustainability of the service faces considerable risk.

Macatee's report called for changes to ferry operations, including reduced service to smaller islands and holding future fare increases to the rate of inflation.

Ferry fare increases are currently capped 4.15 per cent a year. Ridership on BC Ferries has been declining and company officials admit customers, who now pay about $200 for a family of four to travel from Victoria to the Lower Mainland and back, are travelling less due to the expensive fares.

Last September, BC Ferries was forecast to lose more than $20 million amid fears of the lowest passenger levels in 20 years.