BC Ferries can raise average fares by almost 10 per cent each year for four years starting next year, according to the commission overseeing the private corporation, whose single shareholder is the provincial government.
British Columbia Ferries Commissioner Eva Hage said Friday (March 31) average fares can rise by 9.2 per each year for the period starting April 1 2024 and ending March 31, 2028 to ensure the company’s financial stability in announcing the new price cap.
The price cap is the maximum allowable annual increase in average fares that BC Ferries can charge during a four-year-long term, also known as performance term.
BC Ferries faces labour shortages, rising fuel prices and a capital plan worth billions to replace vessels over the next 12 years, she said. These factors will create what Hage called “substantial pressure.”
“Given this, we believe that a price cap of 9.2 per cent is appropriate and necessary to allow BC Ferries to meet the demands of the upcoming performance term,” she said.
Hage’s statement said the proposed maximum increase marks a “sharp departure” from the previous caps of 2.3 per cent and 1.9 per cent.
Hage said the commission will announce the final cap figure on Sept. 30 after it has considered the effects of the $500 million in provincial funding announced late February to avoid major fare hikes.
“Certainly the $500 million will help alleviate a significant amount of the pressure facing our ferry system and allow us to lower the final price cap accordingly,” she said.
Reaction to Hage’s announcement was swift, starting with BC Ferries President and Chief Executive Officer Nicolas Jimenez.
“I want to assure our customers, employees and partners that ferry fares will not be going up 9.2 per cent per year for the next four years,” Jimenez said. “What the (commission) has signaled today is not a final outcome but rather one step in a much longer process that is ongoing and won’t culminate until September when a final price cap will be set by that independent office.”
Key to the final cap will be the $500 million injection. It’s expected to maintain average rate increases in the three percent range, he added.
Minister of Transportation and Infrastructure Rob Fleming had a similar take.
“I want to assure British Columbians, particularly those who rely on our coastal ferry service, that our goal of holding annual average fare increases to no more than three per cent remains,” he said Friday.
BC Ferries is a critical part of the provincial transportation system, he added.
“Our government is protecting affordability of fares and supporting greenhouse-gas emissions reductions, so that coastal communities and all British Columbians are well served and supported by BC Ferries and our coastal ferry service.”
Hage’s proposed cap of 9.2 per cent per year predicates on BC Ferries cutting $10 million in operating costs. The proposed increase is also contingent on BC Ferries cutting $330 million from its proposed capital of $5.2 billion – the largest in the corporation’s history.
In other words, British Columbians face the prospects of paying more for using BC Ferries, while likely getting less service.
Hage’s statement can also be read as a shot across the bow of management.
“Although we believe that a higher price cap is necessary to ensure BC Ferries’ financial stability, it will not come without higher expectations,” she said.
BC Ferries corporation “must demonstrate good fiscal management” and “find a solid footing in which expenses align with revenues,” she added.
“To that end, we are requiring BC Ferries to provide us with a plan that sets out the steps it will take, in consultation with the province, to ensure a financially sustainable, safe, reliable and affordable ferry system over the long term,” Hage said.
Jimenez said BC Ferries agrees with Hage that the company needs to look at its own operations to find efficiencies.
“Continuous improvement has always been part of our ethos,” he said. “I’m pleased to say that there are a number of initiatives already underway and several identified in the next four-year plan. Delivering the services our customers expect in a safe, reliable and affordable manner will remain a focus.”