BC Ferries released its financial report this week stating that the company’s operating profit increased for the first half of its fiscal year.
That news follows hard on a report that cuts to service have cost the mid-coast millions of dollars in tourism revenue, and another study which says millions of potential riders stayed home during the past decade because of high fares.
This does not bode well for places like the Upper Sunshine Coast, which relies heavily on tourists having affordable access.
Across the board, increases for ferry customers have made travelling on the system 7.5 per cent more expensive this year alone, with a 3.5 per cent fuel surcharge in January and a four per cent increase April 2014. Another four per cent increase looms on the horizon for April 2015.
In economics, it is called the law of diminishing returns, and practically speaking it means that as the cost for passengers increases incrementally, the number of people willing to use the service will decrease. At some point if prices continue to rise, no one will be able to afford to use the service. That effect is what the ferry corporation has been seeing over the past decade, yet prices continue to go up.
While world oil prices have dropped recently, a corresponding decrease in local wholesale diesel fuel prices has not happened, according to Mike Corrigan, president and CEO of BC Ferries who added it is monitoring the cost of diesel fuel and will remove the surcharge when it can. BC Ferries is currently carrying a $3-million fuel deferral account balance because of the increase last winter.
BC Ferries’ ridership data shows volumes are down across the board from a year ago, continuing an almost steady decline since the early 2000s when the Campbell government transferred the corporation to a quasi-private operational model.
During the past 10 years, 31 million decided not to ride a ferry because of high fares, stated a study presented to the Union of BC Municipalities in September.
Perhaps it is time for the government to take a second look at whether this model is actually working. Raising fares and cutting service in the short term has led to record profits; in the long term it will only hurt the pockets of ferry-dependent coastal communities and put a drag on BC’s economy.
