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Odds stacked against private ferry operators in B.C.

Government subsidies to BC Ferries create uneven playing field

Free-market competition is not about to become a factor in increasing ferry traffic efficiency any time soon.

BC Ferries has flirted with the idea of turning some routes over to private operators; on other routes private operators compete against BC Ferries, even though the odds are stacked against their success.

One current proposal is for BC Ferries to privatize the Buckley Bay–Denman Island route even though opposition in the community remains so strong that a petition signed by half of the population of Denman and Hornby islands has been tabled in the B.C. legislature.

BC Ferries issued a request for proposals from qualified independent operators to design, build and operate a cable ferry on the Buckley Bay–Denman Island route.

“We expect submissions by the end of the summer,” BC Ferries executive director of public affairs, Deborah Marshall told Business in Vancouver July 10. “If we don’t find an alternative service provider, we would consider building and operating the cable ferry ourselves.”

Opponent Peter Kimmerly, who recently retired as the senior master on the Hornby ferry run, told BIV that he opposes privatizing the route mainly because fares would increase.

He also believes that the concept of operating a cable ferry instead of a conventional one is an “absolutely stupid project destined for failure” because the price of replacing the cables would exceed any anticipated fuel savings.

“BC Ferries is continuing with it because it allows them to circumvent some union requirements,” he said. “There’s a whole bunch of people retiring, and it allows BC Ferries to say they’re not posting the jobs because of the potential of a private cable ferry.”

Buckley Bay–Denman Island is the only route that BC Ferries is currently considering contracting out to a third party.

Meanwhile, independent operators on other routes must compete with BC Ferries.

English Bay Launch owner Mike Shannon, for example, operates a water taxi service between Granville Island and Bowen Island.

Shannon had hoped to get a $20,000 subsidy through TransLink but said he failed to get the required letters of support in time from Bowen Island municipal council.

He has therefore reduced his summer sailings from about five times daily to no weekday sailings and six round trips per day on Saturday and Sunday.

The business is bleeding money and exists only because he can subsidize it with his main business: the profitable Old School Marine, which ferries tugboat crews to the Fraser River’s north arm. He expects that he’ll soon get work ferrying workers between Vancouver and a liquid natural gas plant near Kitimat.

“I cancel more runs to Bowen than I used to, but I’m not going to run at a loss,” he said. “If it’s raining and looking bad, we just won’t run that day, so it gets frustrating for the customers. It’s frustrating for us. If I was subsidized, I wouldn’t care. But, I’m not.”

Shannon bought the failed Granville Island Water Taxi venture for $20,000 in late 2009. In early 2010, he took on the route and clientele of the inactive Coastal Link Ferries.

Coastal Link owner Ihab Shaker told BIV in 2010 that he thought Shannon’s business was destined to fail.

“[The Vancouver to Bowen Island route] is not at all viable,” Shaker said. “I decided not to spend good money after bad money.”

Shaker operated various ferry enterprises around the world before he arrived in B.C. in 2008.

“I assumed that operating ferries here would be like elsewhere in North America,” he said. “Boy, was I wrong.”

Shaker said the government subsidies, which BC Ferries rakes in annually, destroy the profit potential for private water taxi operators. •