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Ferry Fares Float Upwards

Company hikes prices despite traffic drop, weak economy.

By Andrew MacLeod, 1 Apr 2009, TheTyee.ca

BC Ferry

Passenger numbers at five-year low.

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Despite a weak economy and dropping traffic and passenger levels, B.C. Ferry Services Inc. proceeded with April 1 fare increases.

The increase hikes fares by 3.74 per cent on the major routes, and 7.25 per cent on the other routes. B.C. Ferries has steadily raised fares since the government restructured the company in 2003.

In 2008, according to a chart on the B.C. Ferry Commission's website, the company had its lowest traffic since 2003. The B.C. government is predicting the provincial economy will shrink by 0.9 per cent in fiscal 2009-2010.

Does it make sense to raise fares now?

"It does under certain logic," said Brock Smith, a business professor with an interest in tourism who teaches at the University of Victoria. "As a private company what they're trying to do is balance the revenues and their carrying capacity."

Some parts of B.C. Ferries' market will keep using the system as long as it is cheaper than flying, he said. "They seem to be focussing on a price inelastic market, which is probably the business traveller," he said. Many tourists won't be deterred by higher prices either, he said. "People still travel to Paris, and Paris is really expensive."

Some will stop

Others will stop travelling, he said. "What you risk is reducing ridership from the friends and family market." Someone who normally takes the ferry from Victoria to the mainland to visit an aging parent six times a year might just go twice, he said. In Victoria, he said, people visiting family and friends account for as much as 40 per cent of visits to the city.

Deciding how to set fares is largely a question of philosophy, he said, whether it is better to serve larger numbers of people at a lower price or to maximize revenues despite a drop in traffic.

The B.C. government decided in 2003 what the philosophy would be. The Coastal Ferry Act set out six principles for how the B.C. Ferry Commission should protect the public interest. "Priority is to be placed on the financial sustainability of the ferry operators," says the commission's summary of the act.

Operators are to adopt a "commercial approach" to service delivery, minimize expenses and move towards a "user pay system" so the government has to pay less. The restructuring was also supposed to lead to stable fares.

Maximize the earnings

Commissioner Martin Crilly said a great deal of thought went into setting the cap on fares. "B.C. Ferries is free to charge less than [the] cap," he told The Tyee in an e-mail. "However, I would expect them to charge right up to the cap, to maximize their earnings."

Traffic doesn't drop so fast it negates the fare increases, he said. "B.C. Ferries' business case for charging right up to cap is straightforward, as higher fares mean more, not less revenue in these circumstances."

Also, he noted, a drop in fares does not automatically mean traffic will jump. "When fares were reduced by 33 per cent in December and January, there was very little if any stimulative effect on traffic," he wrote. "I'd agree that the awful weather complicated the picture, though."

B.C. Ferries' announcement said, "Fare increases are necessary due to the rising cost of operating and capital expenditures."

The group Save Our Ferries released a plan in mid-March that advocated tying ferry fares to the consumer price index for Vancouver.

"In this economic time I honestly feel a fare increase just has a negative impact on the ridership," said Gregg Dow, Save Our Ferries chair. "I'm fearful ridership is going to drop again."

'Balancing act'

Tourism consultant Frank Bouree said flat passenger levels are a problem for the ferry company. "It's bad if you have to reinvest in the fleet," he said. The company has bought several new vessels in recent years and the money needs to come either from passengers or the government, he said.

"It's a balancing act, really."

Compared to anywhere else in the world, B.C. Ferries fares are a good value, he said, but there is lots of uncertainty. "Consumer confidence is at a 10-year low in Canada," he said. That may well affect the peak summer travel season, he said.

Already many owners of hotels and bed and breakfasts have chosen not to raise their prices, he said. "The challenge right now is to convince hoteliers and B&B operators not to discount."

Rising ferry fares may hurt the overall tourism industry, he said. "Clearly British Columbians in particular are very sensitive about ferry fares. It becomes a negative marketing issue."

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Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. You can reach him here.

14 Comments:

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  • alive

    3 years ago

    the easy way out for Gordo

    The refrain was that "Government cannot run a business", the old saying the neocons have been braying for decades.

    They have a problem now when the real capitalist enterprises also are unable to run a business!

    If General Motors cannot make production of vehicles a profitable venture, why should a ferry system that is an extension of the highway system, be able to run without a subsidy?

    Why should the users who happen to need the less frequented routes have to face increases at twice the rate?

    This is a good example of how Gordo plans to solve every problem: just privatize it and the headache belongs to another "authority" while he still remains in command!

    Sorry, but "Passing the buck" is not leadership!

  • Grumpy

    3 years ago

    Tonight...........

    ......at 8:52 PM, the BC Ferries readerboard located on Hwy. 17 and Superport way, had the 9 PM sailing being only 39% full.

  • DJT

    3 years ago

    Huh?

    "What you risk is reducing ridership from the friends and family market."

    And that's supposed to be okay as long as the declining revenue is made up by "a price inelastic market, which is probably the business traveller"? You can't afford to visit your aging parents as often, but it's okay because BC Ferry's can just further gouge the business traffic to make up the diff?

    Leave it to the Liberals and their cronies at BC Ferry to set those kinds of priorities.

  • FlugelHorn

    3 years ago

    Fare increase % is worse than they say

    Andrew, your article quotes the fare increase % that BC Ferries announced, as "7.25 per cent on the other routes".

    I checked some of the increases to the published fares on the BC Ferries website. Most of the minor route increases are actually closer to 10-11%.

    For example:
    Regular vehicle on Quadra-Cortes run:
    - Price in March 09: $ 19.45 off peak fare
    - April 1 2009 new price: $ 21.50
    - This is an 11% increase.

    So this is a lot more than the quoted 7.25% increase for minor routes.

    I think that there might be a "spin upon a technicality" at work here. That's because the BC Ferries news release doesn't say that "fares will increase 7.25%", instead it says that "price caps will increase 7.25%".

    Andrew: If you're able and willing, can you look into the issue of the difference between a fare-$ increase and a "price cap increase". Because I think the public is getting a spin by the ferry company using the 7.25% figure in the press release, and then being repeated in media reports.

    People are actually paying 11% more on some (or most?) minor routes.

    Let us know what you think about that.

  • Van Isle

    3 years ago

    Martin Crilly; isn't that

    Martin Crilly; isn't that the same fella who got written up in the Comox Valley Record, dated Wednesday, August 2nd, 2000. Something to do about being caught putting in pipe, by-passing his septic system, and draining his sewer system directly into the salt-chuck. Naw, can't be the same one; the 'ferry comish' is gotta be way above that, I'm sure.

  • crh

    3 years ago

    As one of those 'friends and family market' users

    I can tell you that our family definitely uses the ferry less and less with each increase. This affects every user in a negative way, and these clowns can justify it any way they want and never face reality.

    And no, I've never been to Paris.

  • Frank

    3 years ago

    Robbing Peter to pay Paul

    So the thinking is increasing fares so that people using the ferry system to visit other people will use it less but the income can be increased because business still has to use the ferries and will pay the higher rates.

    Will those that have to use the ferries for business not just write the increased fares off?

    So how does the government gain at all from an increase in ferry fares when those same fares are deducted at tax time as a business expense?

    Meanwhile the province as a whole is worse off as people can't afford to visit each other as often.

  • Rod Smelser

    3 years ago

    Martin Crilly; isn't that the Transport 2021 Crilly?

    Martin Crilly; isn't that the same Martin Crilly as the man who chaired the Transport 2021 exercise? The one who didn't want the Golden Ears Bridge built, didn't want a new Pitt River Bridge built, and definitely didn't want a new Port Mann Bridge built, ... ever!

    He told me at a public meeting that we had to discourage "bridge hopping". Sixteen years later I am still wondering what bridge hopping is.

    With those priorities, how did he manage to become Premier Gordon M. Campbell's Ferry commissioner? What does Kevin Falcon think?

  • Campbellwearsatutu

    3 years ago

    One round trip.........

    On Global news last night(11.00 pm) they did a little story on the ferry increases and..........
    They calculated the price for a family of 4 to make a round trip to Vancouver island,the total they came up with was.....

    308.00$---in their calculations were the price of the car/the price of reservations/4 adult fares(2 each way)/4 children(2 each way) Cheese burgers and fries each direction......
    There was no money allocated for fuel or expenses unrelated to their trip......

    Expect the ridership to decline more and more,and of course if you are towing a boat/trailer/or if your over height you can add another 100.00$ to 200.00$ to that total.........

    And for good measure,liquor prices went up yesterday and BC htdro went uo 8% yesterday too.......
    But all is good because Campbell gave some Carbon Tax money back and called it a tax cut.

  • Grumpy

    3 years ago

    And guess what................

    .............Campbell ordered Deutch Zitrones that have been described as the 'Ferrari' of ferries. They are gas guzzlers supreme and need more money to operate.

    Ha, ha, ha, Black Ball's Coho is now older than any of the BC Ferries in service and it still trundles to and fro from Port Angeles to Victoria.

    I'd rather pay less on an older, cheaper ferry, than more on the 'Ferrari' of ferries.

    The end result is that the ferries are just too expensive to take. Something like Campbell's TransLink!

  • Transport_nation

    3 years ago

    Campbell Liberals gone socialist

    Anybody catch the CKNW news item today?

    Coastal marine company Seaspan is complaining that BC Ferries has entered into their freight market. Seaspan operates freight service to Vancouver Island. Seaspan is complaining that Ferries is aggressively entering into the Vancouver Island drop trailer business and is attracting customers at rates far less than market.

    They cite the rather hefty subsidy.

    My question would be can Seaspan and other coastal service providers get subsidies? Or is BC Ferry Services prepared to go all the way and go completely private and compete in the market like good capitalists? The BCFMWU ought to think carefully about memorandums it may have entered into. Be careful what you wish for.

    This entry into a new market one already well served is a distortion of commerce. The workers at Seaspan and other coastal towing companies are by and large represented by existing marine unions. These are good jobs, jobs that support families. With the downturn in the forest products sector Seaspan is very reliant on its freight business to ensure its survival.

    Many of us in the transport industry are looking forward to seeing how this works out. Perhaps Ferries will be completely privatized. Is this what Transport Minister Falcon is angling for? Is this the direction of the BCFMWU? If so it appears to fly in the face of the Save our Ferries Campaign!

  • Chris H

    3 years ago

    Ferry Use

    I already reduced my trips to Vancouver Island when they introduced the fuel surcharge. In the past, we would visit Vancouver Island to go camping a couple of times during the summer minimum. After successive increase we might go once a year. Now? There are so many more choices as to where to go ... why bother with the ferry costs?

  • southdeltawalker

    3 years ago

    Well i guess we are not going..

    Four of us thought we would go over to Nanaimo tomorrow.

    We live really close to the ferry docks but the passenger fare each is $27.50 round trip plus tax, fuel surcharge, port fee and gawds knows what else.

    All for a 2 hour ferry ride each way.
    Oh-we would have to take a vehicle-cost $90.00 plus taxes etc., as no buses go to the Duke Point ferry dock!

    So that's over $200 to go by ferry for a visit.
    And B C Ferries is wondering why their business is dropping?

    Just wait until the new pricey "gas guzzling" ferries they have ordered go into service...another fare increase.
    Stowaways anyone?

  • rouge+chartreuse

    3 years ago

    David Hahn's purpose is to destroy BC Ferries

    ... it was never to make it successful.

    Many who live in the ferry-dependent communities are starting to realize this. The plan all along was to enfeeble BC Ferries, slough off the minor routes and make the prime bits an attractive but under-priced bauble for a private takeover. As well, as BC Ferries becomes enfeebled, the power of the Ferry Workers Union decreases. Breaking the union or at least putting a good leash on it is essential to this plan.

    The BC Libs can do without all the minor communities like the Gulf Islands and Sunshine Coast and their hippy-lefty populations, who will all have to move elsewhere when those communities become unsustainable due to reduced, or cancelled ferry service. The effect is being felt, local business is decreasing as the volume of visitors goes down. Then these places can carry on as exclusive playgrounds for the rich, who can get to their private enclaves using their own yachts and sailboats.

    Hahn is already using the lower passenger volume as an excuse for dropping service. This is also why the highest fare increases have been directed at the smaller routes.

    BC Ferries privatization must be reversed, as well as Campbell's other BC privatization plans. Fortunately for all of us Campbell's plans didn't work out as well as he had hoped in 2001. By now we were supposed to have completely private ferries, hydro and health care.

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