March 7, 2009

Decline in BC Ferries Traffic Volumes

BC Ferries reports sharp year-on-year drops in its traffic volumes over the past three quarters. The Commission tracks an index of annual traffic quantity, with a value of 100.0 for calendar 2003.  At the end of calendar 2008 it stood at 101.3, which was 3% down from 104.2 a year earlier. Here is a graph of the index since 2003.

Within a performance term, BC Ferries shoulders the financial risk due to fluctuations in traffic. We are currently in the second term (PT2), i.e. the four years ending March 31 2012. This means that BC Ferries will not be compensated through higher fares for lower-than-expected traffic, unless BC Ferries can satisfy the Commission that the circumstances are extraordinary under section 42 of the Coastal Ferry Act.

Fare caps will be re-set in 2012.  The PT3 caps will reflect the then-forecast traffic through 2016.  Also, the Coastal Ferry Act will require the Commission to reflect any higher crewing costs in higher-than-otherwise fares at that time (see item above). There will be no retroactive compensation for PT2 built into PT3 fares.