BC Ferries Needs More Than a Covid Bailout

It is the classic problem BC Ferries has always faced – first as a Crown Corporation and now as an unnecessarily complicated quasi-private company still dependent on government subsidy. Given the constraints on fares imposed both by the government and a regulator, the government subsidy is not sufficient to fully cover the losses on the service government requires BC Ferries to provide. The combination of fares, subsidy and service levels are not financially sustainable over the long term. 

The recently announced Covid-related bail-out will help address BC Ferries’ immediate financial woes due to the springtime and early summer collapse in traffic and revenues. But it won’t deal with the long-term unsustainable arrangements, particularly with the provincial government making clear it wants more service without any fare increases or any reversals of the seniors’ and other fare discounts forced on BC Ferries over the last few years.

 

You can be sure the current government, like every government before it, will not want to increase the contract subsidy to the levels needed to sustain the service levels and fares it wants to see. And ferry customers, particularly the vocal Island stakeholders who think BC Ferries should be seen as part of the highway system, will not support increases in fares or cuts in uneconomic service consistent with the level of subsidy government will provide.

 

However, if BC Ferries is going to be able to recruit and maintain the skilled labour force it needs, expand and modernize its terminal capacity, maintain and upgrade its fleet, something will have to change. And if more subsidy and/or higher fares are not on the table BC Ferries will need to be given the flexibility and encouragement to fundamentally change the way it does its business.

 

It will need to introduce changes to its rate structures, reservation policies and schedules in order to increase the utilization of ship capacity much like the airlines were forced to do. Higher capacity utilization in off-peak periods and seasons will reduce average costs and the need for higher fares or subsidy to sustain operations.

 

For the longer term, definitely post-Covid, BC Ferries will have to make much greater efforts to encourage passenger as opposed to vehicular travel, especially in peak periods and seasons when more ships are needed to accommodate more vehicular demand. Encouraging more passenger as opposed to vehicular traffic requires better integration of ferry service with convenient land transport options including island taxi, uber, car share, bike and e-bike share, and upgrades of safe island bike networks. It requires as well much lower passenger fares with the bulk of BC Ferries revenue requirements recovered from higher fares on vehicles.

 

BC Ferries must also look for and be able to act on opportunities to eliminate duplication of terminals and reconfigure costly routes. And it should work jointly with the government to identify opportunities to replace ferry service to some islands with lower cost bridge connections.

 

There are calls for BC Ferries to return to its former crown corporation status. There is some merit in that. The current quasi-private structure makes little sense and probably adds to the interest costs BC Ferries pays on its large and growing debt. But that in itself won’t solve the fundamental problem. Fundamental change is required for that.