BC Ferries CEO and president Mike Corrigan says the public campaign against high ferry fares is keeping tourists away and could become “a self-fulfilling prophecy” that hurts coastal economies along with the ferry system they rely on.
“At some point in time it becomes almost a pile-on effect,” Corrigan told Coast Reporter in an hour-long interview last week in which he also defended the current BC Ferries business model.
Corrigan said he knows of potential tourists who are avoiding the coastal ferry system due to the negative publicity.
“I know people on the mainland, up in the Interior of B.C., people from back east, Americans, who think our B.C. ferry system is too expensive, so they’re not considering coming out and visiting. They don’t even know what the fares are. They probably couldn’t tell you what our fare is within $20,” he said.
“But if you type BC Ferries into Google and the first four stories that appear are about ferry fares and service reductions, who’s going to want to come out here? When the reality is, especially in the world marketplace, we still provide good value.”
The round-trip fare for a standard vehicle and two adult or teen passengers on Route 3 from Horseshoe Bay to Langdale is $84.70 after a net 2.9 increase on April 1.
Corrigan said BC Ferries has been “trying to do everything we can to keep fares down,” eliminating $84 million in costs during the current four-year performance term, reducing administrative costs by 15 per cent, and moving aggressively to LNG-powered vessels. As a result of those and other measures, ferry commissioner Gord Macatee was able to set preliminary annual price caps at 1.9 per cent for four years starting in 2016 — four years earlier than planned.
“That may not be Nirvana for a lot of people — I know a lot of people say reduce the ferry fares or at least freeze them,” Corrigan said. “But we’ve got a $3-billion capital campaign and have to raise our own debt, finance our own capital programs.”
Commuting by ferry from his home in Victoria, Corrigan said he understands the challenges around fares and service levels.
“But I think we’ve got to somewhat reframe the discussion a little bit, because what I’m seeing, to the detriment potentially of the local economies and tourism, is this is starting to turn into a self-fulfilling prophecy that’s going to potentially affect people wanting to come to Victoria or the Sunshine Coast or anywhere else to work or to live or to visit,” he said.
“I’m not suggesting that communities and ferry advisory committees shouldn’t continue to talk to government and lobby government, but I think we have to have the balanced approach going forward so we don’t kill the marketplace.”
Corrigan gave real estate sales as an example.
“It makes it a heck of a lot more difficult, I would think, for somebody trying to sell a property on the Sunshine Coast if all that people see when they come over here are signs about high ferry fares,” he said. “They’ve actually ridden the ferry over, they know what the fare is … but if they keep seeing that over and over again, it does turn into a bit of a self-fulfilling prophecy.”
Corrigan also took issue with the call by the B.C. Ferry Coalition and others for BC Ferries to be returned into government, pointing out highlights from Macatee’s latest report and providing comment:
• BC Ferries exceeded its efficiency target for the current term by $30 million, “without compromising safety or customer service.”
• The company has enjoyed 12 years of labour peace “with reasonable, modest wage increases for our ferry workers,” while ancillary services including food and retail have shown continued growth, helping reduce pressure on fares and debunking the myth that “fancy services” cost the system.
• Dispelling another common misconception, BC Ferries has cut the number of executives by half in recent years and has reduced executive compensation by 50 per cent since 2008.
Corrigan said what he’s most proud of as CEO is building BC Ferries “into a world-class safety culture to the point where we’re a top-tier employer and we’re getting a $1.1-million reduction per year from Workplace BC. We’re getting a $600,000 rebate every year because we’re in the top tier and $500,000 in premium savings.”
By comparison, he said, when he looked at BC Ferries as a Crown corporation, “what I saw is a definite pattern of under-investment in capital assets. I saw BC Ferry Corporation standing in line behind universities, schools and hospitals for funding and they were losing that fight, and then I saw a lot of government interference … and bad decisions being made.”
When he joined the quasi-privatized company in 2003, he said, “the government wrote off $1.1 billion from the former company, so it was bankrupt. People talk about the FastCats. Yeah, they wrote off half a billion dollars for the FastCats. But there was still another $600 million written off because of other bad decisions that were made. And that was because of political interference — MLAs and others dictating ferry schedules and fee structures and where ships should be built and everything else.
“So putting BC Ferries back into government I don’t think solves the problem that lots of people want to solve, because it’s ultimately around funding. If you’re getting your best bang for your buck from BC Ferries in its current structure, then it really comes down to funding at the end of the day. Once we’ve done what we can and generate as much revenue as we can from ancillary services and everything else, it comes down to funding.”
The provincial government decides the number of round trips on all routes, but Corrigan said BC Ferries can put together a business case for added sailings on any route if increased traffic warrants it.
Fleet-wide, 2015 has seen traffic volumes rise 10 per cent in February and five per cent in March compared to last year.
“Two months doesn’t make a trend, but what it does start to say is there is some hope in the long term,” he said.