Fare cuts work: bright spot in dismal year

25 JUNE 2009 –  The chairs of the 12 Ferry Advisory Committees (FACC) see some warning signs and one bright spot in the latest annual report from BC Ferries (BCF), all of which will affect the system that gives British Columbians public access to their coast.

“The ferry system faces many challenges, including the current global economic climate. Yet, declining ferry traffic could be the most damaging threat,” says Tony Law, chair of  the Hornby-Denman FAC. “BCF needs revenue for capital and operations. It has two main sources: traffic fares or government funding. Without the required revenue from traffic, or compensating public funding, more fares increases look inevitable.”

The major routes are now seeing the erosion in traffic that has affected the minor routes for the past three years. Traffic dropped 5% across the system in the past year. While there are several causes of the traffic declines, the FACC says there is strong evidence that the primary cause is repeated fare increases far beyond the rate of inflation.

“Traffic erosion is a sign of the strain that the cumulative fare hikes impose on all ferry users –  visitors, tourists, long-established residents and businesses,” says Brian Hollingshead, chair of the Southern Gulf Islands FAC. “Everyone’s finding it harder to swallow the higher fares. It’s not a good sign for the provincial government’s goal of moving the system toward user pay, let alone its goal of doubling tourism to BC.”

The FACC note that BCF has done a good job of managing the short-term effects of traffic erosion and other fiscal forces, through serious belt-tightening.

In the longer term, BCF needs more revenue, ferry users need lower fares, and the BC government has shown that appropriate government backing for ferries can do both.

The bright spot for coastal transportation is the result of last year’s temporary ferry stimulus. In November the government generously allocated $20M, which allowed a 33% fare reduction in December and January. The results show that traffic will respond to lowering of fares, which is only possible through adequate government support.

The FACC expects that in the absence of such on-going, adequate support for this basic infrastructure, traffic will continue to underperform and will fuel widespread harm to dozens of BC communities, including those on Vancouver Island, and to BCF’s sustainability.

The FACC calls on the provincial government to step up its investment in ferries in order to safeguard public access to British Columbia’s coast.

– 30 –

Contacts

BACKGROUND

The Ferry Advisory Committee Chairs, with the cooperation of BC Ferries, have been tracking ferry traffic for the past few years.

They see this past year’s steady decline of system traffic, affecting both major and minor routes, as a warning sign.

The trend is evident in the attached graphs illustrating quarterly traffic calculated on a rolling four-quarter average.  As traffic varies considerably across the seasons, meaningful comparison requires averages or totals which include all four seasons for each data point.

Graphs 1 a) and b) indicate that while traffic had been drifting slowly downward, it dropped precipitously through the current fiscal year, April 2008 to March 2009.  In fact, passenger traffic dropped over a million (1,061,000) passengers while the vehicle decline was over half a million (512,000) vehicles, excluding buses and commercial traffic, compared to the previous fiscal year.

Click on graphs for bigger image.

Graphs 1 a) and b)

However, the traffic spike in January while the fare discounts were in place was a singular bright spot. Graphs 2 a) and b) compare monthly traffic to the same months’ traffic in the previous year. The graphs demonstrate that traffic has been dropping consistently all year with a few anomalies.

Click on graphs for a bigger image.

Graphs 2 a) and b)

–    Significantly, there were traffic gains of 2% for passengers and 3% for vehicles in January 2009. January is traditionally a low volume month, with very little discretionary traffic (minimal tourist and part-time resident travel).  Even with severely limited discretionary travel, the fare incentive was sufficient to raise the year-over-year monthly traffic well above the results seen through the rest of the year. We believe these gains are in direct response to the fare discounts.

Note that fare discounts were in effect in December 2008 also, yet passenger and vehicle traffic fell by 10%. This was the month that saw unprecedented winter weather that paralyzed all forms of transportation, particularly in the Lower Mainland.

Three Easter weekend (typically a heavy traffic time) anomalies give indirect evidence of the year-long traffic decline.

–    There were traffic losses of 10% for passengers and 6% for vehicles in April 2008, a month with no Easter weekend compared to the previous April which did have an Easter.
–    There were traffic losses of 12% for passengers and 11% for vehicles in March 2009, a month with no Easter, compared to the previous March which did include one.
–    There were traffic gains of just 6% for passengers and 1% for vehicles in April 2009, a month with an Easter, compared to the previous April with no Easter.

Note that traffic losses in months that ‘lost’ an Easter far exceeded the gains in April 2009, which ‘gained’ an Easter. That suggests the buoyancy factor of long-weekend travel is being depressed by other factor(s), notably high fares.

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