General · 30th August 2010
This is a copy of a letter sent to me, in my capacity as chair of the local Ferry Advisory Committee by the undersigned. I have changed a few things to make it more relevant to Quadra/ Cortes people. The emphasis is mine! Any questions please contact me by email or phone 285-3896.
Ferry Fares, Then, Now . . . and Tomorrow
In September 2003, a round trip for two people and a car on the Powell River Queen from Campbell River to Quadra, using prepaid tickets, would have cost $10.65.
Today, that same trip using the prepaid Experience card would cost $22.65.
An 87% increase in seven years.
If that rate of increase continues to apply, in 2017 the fare would be $45.64!
In the same time period, from Quadra to Cortes on the Tenaka the cost has gone from $15.52 to $29.00.
A 107% increase in seven years.
If that rate of increase continues to apply, in 2017 the fare would be $54.23!
Most people lay this increase at the feet of BC Ferries. However, it’s more complicated than that. There’s a process that, in its simplest form, looks like this:
1. Once every four years, BC Ferries forecasts their expenses to operate the system on a route by route basis, and forwards those forecasts to the BC Ferry Commission. It is assumed the same ferry service will be provided as in the previous four years.
2. The Commission assesses the forecast for reasonableness and eventually settles on a mutually agreeable forecast. Using BC Ferries traffic projections, the Commission then calculates what the fare increase would need to be for BC Ferries to recover their costs, achieve a designated return on equity and cover a $6 million dividend to the Province. It is assumed here that the Province will contribute the same basic subsidy (transportation or service fee) that it did in the previous year.
3. The Province then decides whether it will contribute the same, more or less than it did previously. The Province has contributed the same annual basic service fee, $92 million, since 2003. It has supplemented that for the Northern route group to help cover the capital costs (interest and amortization) for their two new large vessels and related terminal improvements.
4. Once the Province decides what it chooses to contribute, the fare increase ‘cap’ is set. This then determines what the fares will be for the next four years.
Since 2003, the tariff (our) share of the revenue has gone from 31.5% up to 39.4%, while the Province’s service fee has dropped from 50.0% to 42.6% of the total revenue. This is consistent with the Coastal Ferry Act which states that the designated ferry routes [all the non-major routes] are to move towards a greater reliance on a user pay system so as to reduce, over time, the service fee contributions by the government.
Not to say the above is good, bad or neutral. It’s just what is, and it’s not broadly known.
BC Ferries’ submission for the period from April 1, 2012 to March 31, 2016 will be delivered to the Commission by the end of this September. The preliminary fare increase cap will be provided by the Commission by March 31, 2011. There will then be a three-month window for public comment.
A footnote, again not generally known, is that seniors’ free rides, along with other ‘social’ discounts, are in fact paid for by the Province. BC Ferries breaks even on them. This revenue is referred to as ‘social program fees’ and effectively flows directly to the recipients, not to BC Ferries, as they are required to provide the free or discounted travel.
In that we’re dependent on the ferries and we’re generally concerned about fares, it’s important we have a sense of how the fare-setting process works. Hopefully this helps clarify the process.
Brian Hollingshead, Chair
Southern Gulf Islands Ferry Advisory Committee