BC Ferries fare hikes cost economy $2.3 billion over 10 years

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A new study by the Union of BC Municipalities (UBCM) and the Association of Vancouver Island and Coastal Communities (AVICC) has revealed that BC Ferries’ fare hikes over a 10-year-long span has resulted in a $2.3 billion loss in the province’s GDP over the same period.

Fares have risen far beyond the rates of inflation since the ferry corporation was privatized, with rates increased by 51.2 per cent for major routes, 74.8 per cent for minor routes, and 65.9 per cent for northern routes.

Over the same timespan that fares increased, ridership levels have steadily fallen from 21.37 million in 2003/2004 to 19.6 million in 2013/2014, although ridership peaked at 22.03 million in 2004/2005 before beginning its fall. Altogether, it represents a decline of about 1.77 million passengers or 8.3 per cent over the decade.

While ridership has fallen on the ferry fleet, an extension of the provincial highway system, user numbers continue to soar for other transportation nodes and routes within the same 10-year-long period: Vancouver International Airport (23%), Victoria International Airport (32%), Comox Valley Airport (68%), Highway 1 in Metro Vancouver (8.7%), Highway 1 in Revelstoke (14.3%), Highway 3 at Crowsnest Pass (32.4%), Highway 97N at Williams Lake (5%), and Highway 99 at Squamish (16%).

In addition, since 2003, B.C.’s provincial population has increased by 11.1 per cent.

“The release of this report provides an opportunity to re-think the policies that direct the funding of BC Ferries,” said UBCM president Rhona Martin. “This study demonstrates a clear link between fare increases and declining ridership, and the cost of those fare increases to the provincial economy.  As a first step towards reversing the trend in ridership, we are asking the province to restore fares and service to 2013 levels.”

Indirect and direct economic activity spurred by BC Ferries’ operations is responsible for $1.49 billion of BC’s annual GDP. In contrast, the GDP of forestry and logging is worth $1.6 billion and the GDP of agriculture is $1.2 billion.

The report provides estimations that if fares had increased at the rate of inflation, passenger volumes would have grown by 19 per cent – to 25.43 million passengers – and added $2.3 billion to provincial GDP.  It would have also provided $609 million in additional tax revenues for municipal, provincial and federal governments.

The industries most affected by rising fares are tourism, construction, real estate, finance, transportation, manufacturing and retail.

Unlike urban public transit systems, BC Ferries has a high farebox recovery rate of 92 per cent, meaning a high proportion of operating expenses are recovered through user fees such as fares. It relies less on provincial government subsidies.

In contrast, heavily taxpayer subsidized transportation systems like TransLink and Washington State Ferries have farebox recovery rates of 51 per cent and 66 per cent, respectively. The farebox recovery systems are even lower for Calgary Transit (50%), Sydney Ferries (34%) and BC Transit (33%).

In the study’s findings, the provincial ferries’ high farebox recovery is only surpassed by Massachusetts’ Steamship Authority at 94 per cent.

In 2012/2013, B.C. Ferries had an operational budget of $524.9 million, with $263 million going towards labour, and revenues of $571.4 million. Another fare increase of 3.9 per cent is planned for 2015.

 

Feature Image: BC Ferries

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Kenneth Chan Deputy Editor & Social Media Manager at Vancity Buzz. He covers stories pertaining to local architecture, urban issues, politics, business, retail, economic development, transportation, infrastructure, and anything else that makes a difference in the lives of Vancouverites. Kenneth is also a Co-Founder of New Year's Eve Vancouver. Connect with him at kenneth[at]vancitybuzz.com
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