The president and CEO of BC Ferries said the company is doing everything it can to keep fares low, but acknowledges there is more work to do.
During a visit to Prince Rupert last week for staff meetings, Mike Corrigan outlined substantial savings BC Ferries achieved that helped spur on the recent decision to keep fare increases capped at 1.9 per cent over the next five years.
“We will be able to find $84 million in savings through Performance Term 3 … it’s one of the big reasons we are able to keep the fare increases down to inflation going into Performance Term 4,” he said, pointing to a 50 per cent reduction in executive compensation since 2009 and a $5 million per year reduction in administration costs since 2008.
“We know that for a lot of people that is not enough, that they would like to see the fares reduced or frozen. But from our perspective when we look at the $3 billion capital program we have on the books to replace the ships and the terminals and keep the safety and liability up, coupled with the fact that we’re running one of the most complex ferry systems in the world here in B.C., we think it’s a pretty strong win to be able to deliver inflationary fare increases over the next four years.”
As well as looking at the reductions in administration, Corrigan said the decision by BC Ferries Commissioner Gord Macatee shows the importance of the various services offered aboard the fleet.
“We have heard things like ‘Why does BC Ferries have a vacation centre?’ and ‘Why does BC Ferries have food and retail services?’. We have heard on social media and bloggers people asking why we don’t just shut all those down and pass the savings on to the customers,” he said.
“What the commissioner was able to prove is that the exact opposite would happen. Fares would go up. Our commercial services division is expected to grow to $8.7 million next year … BC Ferries vacations does about $4 million in revenue and contributes about $1 million to the bottom line to keep fares low. That is in addition to attracting people to the north. Food and retail is another area people have suggested we shut down, but in fact it will contribute about $50 million to keeping fares down.”
As for the years ahead, Corrigan said there will be no cuts to service during the next performance term. While the collective agreement with the union is expiring in October, the CEO said he doesn’t foresee any problems reaching a new deal.
“One of the things that has happened … is that we have to go to binding arbitration now. If we can’t agree upon terms we go to a panel of three and get a final solution. What is off the table now is the labour interruptions of the past, which is a good thing,” he said.
“We have had some preliminary discussions with the union, but the challenge we have is we are in the middle of elections for new union leadership that won’t be finalized until the end of June. Once that is done we will sit down with the new leaders and talk about the longer term.”
Corrigan’s visit comes as passenger traffic on the Inside Passage is up more than 10 per cent, but the number of people sailing to Haida Gwaii is down more than seven per cent compared to the previous year. While he said people adjusting to the schedule may help reverse the trend, the biggest issue could be one of perception.
“I personally think we need to change the discussion around northern ferry service. It’s OK for ferry advisory committees and community leaders and BC Ferries and government to get in a room and try to hammer out more service, but when we keep talking about it publicly and in the media and on the Internet it becomes a self-fulfilling prophecy, from my perspective,” he said, pointing to the impact of service changes on the route serving Bella Coola.
“There was such a negative blow-back from the communities and the villages that it really tainted the north in the eyes of the Eastern Europeans and the people who come over here. They think BC Ferries has shut down for service in the north when nothing could be further from the truth. We have our two biggest ships in the fleet up here providing service and it is a heck of a product. We need to start changing the discussion.”