Increased revenue fails to translate to reduced ferry fares

NANAIMO – B.C. Ferries say it's planning for the future to build assets.

While B.C. Ferries has been profitable in its second quarter, fares won’t drop, according to the corporation’s CEO, who says the ferry system is saving money with an eye to the future.

According to Mike Corrigan, president and CEO of B.C. Ferries, the corporation is in the black for the first half of the fiscal year but in the red for the second half.

B.C. Ferries made net earnings of $76.4 million in May through June, according to financial results released Friday. For the six month period ending Sept. 30, the company earned $90.3 million. The company made a modest profit, but fare cuts aren’t coming, Corrigan said.

“If we were taking a purely short-term approach, we could reduce fares but the challenge would be we wouldn’t able to invest in the future, borrow the money we need to be able to rebuild the assets and we have a $3 billion capital plan over the next 12 years,” Corrigan said.

“If we’re taking a short-term approach, we could but we’re taking a long-term approach and saying we need to have retained earnings to be able to go to the capital markets and borrow the money we need to be able to keep the business sustainable over the long term,” he said.

Corrigan said the $76.4 million was earned during one of B.C. Ferries’ busiest quarters of the year and considerable money is spent in the second half of the year on ship re-fits and maintenance.

B.C. Ferries instituted ferry route adjustments earlier in the year, including ones to the Gabriola Island ferry, and according to Corrigan, it accounted for savings as well.

He said B.C. Ferries had six per cent fewer sailings than for the same period in 2013, which led to a benefit from an operating cost standpoint.

John Hodgkins, chairman of the ferry advisory committee for Gabriola Island, said a 3.9-per cent fare increase is coming for Gabriola residents in April and if performance continues to be profitable, he hopes the increase isn’t necessary.

“The better performance in the second quarter, it’s pleasing and hopefully it will reduce the pressure on fares come next April, [but] I’m not holding my breath,” said Hodgkins.

The three and six-month results for the same period in 2013 were $64.3 million and $68.6 million respectively.

B.C. Ferries’ fiscal year ends March 31.

For more information, please visit B.C. Ferries’ website at www.bcferries.com.