B.C. Ferries, advisory committee differ in optimism on profitability outlook

Ferry Advisory Committee chairs are less optimistic than B.C. Ferries the future.

Ferry Advisory Committee Chairs say they are less optimistic than B.C. Ferries after the corporation announced in its 2012 fiscal results that it plans to return to profitability by 2014.

B.C. Ferries is reporting a net loss of $16.5 million for the year ending March 31, 2012, and is forecasting “a small loss for fiscal 2013”, driven mostly by significantly lower traffic levels than expected.

In its report, B.C. Ferries stated it expects to make a profit in two years assuming there is no further deterioration of customer traffic.

The corporation is at a 21-year low in passenger traffic and a 13-year low in vehicle traffic, a pattern the committee doesn’t see changing unless fares drop.

“The main point is we have yet to see any evidence of it,” said John Hodgkins, chairman of the Gabriola ferry advisory committee. “If you take the Gabriola ferry route, up until April, we’re still seeing a year on year decline of four per cent for both passengers and vehicles and it’s very difficult to read into that any signs of recovery.”

With three years left in Performance Term 3, fares are expected to increase well beyond inflation rates for at least that time frame.

In January, changes were made to the Coastal Ferry Act based on 18 recommendations by ferry commissioner Gord Macatee, which could result in service reductions on minor routes that have less than 30 per cent ridership.

Gabriola has a ridership rate in the mid-40 per cent range.

A consultation of coastal communities by the province and B.C. Ferries is expected to continue throughout the summer with some changes being implemented later this year.

Part of the changes to the act included the province topping up B.C. Ferries subsidy by $79.5 million over four years, on top of the annual $150 million annual subsidy in an effort to keep fares down.

The advisory committee said it doesn’t believe that money will be enough to make the ferry service affordable, which will result in further reductions in ridership.

“The [money] for the ferry service is a very good deal for the provincial government,” said Tony Law, FAC chairman for Hornby-Denman, adding that it only amounts to 21 per cent of BC Ferries revenue while the province picks up 46 per cent of B.C. Transit revenue. “In all, the ferry contribution is a very modest amount to pay for essential transportation.”

In B.C. Ferries’ fiscal report, CEO Mike Corrigan said the legislative changes will improve the service’s financial outlook long-term.

“The legislative changes and committed funding are important to the long-term financial sustainability of B.C. Ferries in order to provide British Columbians with a reliable and affordable service without compromising safety,” said Corrigan in the report. “

Revenues for the last fiscal year saw a decrease from $739.3 million to $738.2 million, while operating expenses increased from $672.2 million to $682.7 million. A $10.5 million increase in fiscal 2012 operating expenses include increases of $4 million in fuel expenses and $8.5 million in amortization costs.

B.C. Ferries is currently exploring the possibility of using liquified natural gas to fuel the fleet, which could save the company about $30 million.

In February, Transportation and Infrastructure Minister Blair Lekstrom said bridges and cable ferries were also on the table.