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BC Ferries' traffic and earnings drop

In the sixth months ended September 30, 524,511 fewer passengers rode B.C. Ferries than in the same period a year earlier.

Passenger traffic was down 5.3 percent in the second quarter from last year, according to the management discussion and analysis released late yesterday with British Columbia Ferry Services Inc.'s financial statements for the quarter. Vehicle traffic was down 6.1 percent for the quarter.

Fares are, however, higher than a year ago, so ticket revenues are up despite the drop in traffic. B.C. Ferries brought in $330.5 million in the first six months of the year, up $26.7 million from last year.

The company also spent more money, however, so net earnings for the six-month period were $62.1 million, down $13.3 million from 2007.

“Ferry traffic levels are affected by a number of factors, including transportation costs, the value of the Canadian dollar, weather, global security, levels of tourism, disposable personal income, the local economy, demographics and population growth,” the management discussion and analysis document said. “With the increase in transportation costs as a result of fuel prices, the tariff rate increase of April 1, 2008, fuel surcharges and the current economic uncertainties, we are uncertain as to the cumulative impact these events may have on our traffic.”

There are few clues in the documents about why the company's three new German built ferries are not yet in full service, though they do talk at length about fuel consumption being a major issue for the company. The documents say the new ferries have efficient engines.

The Tyee recently reported the vessels have had a mix of mechanical and fuel consumption problems that may be related to design flaws. Internal company documents obtained by The Tyee show the vessels use much more fuel than older vessels with similar capacities.

While several of the older vessels have either been sold or are for sale, the 44-year-old Queen of New Westminister is receiving $55 million dollars worth of upgrades before returning to service in 2009 on the Tsawwassen to Swartz Bay route. The company hopes to get 13 more years of service from the vessel.

The discussion also notes that on August 25 the company reached an agreement to sell its head office in downtown Victoria for $11 million. The company signed a 15-year lease with an option to renew for up to 20 years in a building yet to be constructed in Victoria.

Details can be found in full documents at SEDAR, or summarized in the company's news release.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.

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