BC Ferries, under fire for increasing fares, is reporting first-quarter profits that have more than tripled from the same period last year – thanks, in part, to those hiked fares.
On Friday, the ferry operator said net earnings from April to June were $13.9-million, compared with $4.3-million in the first quarter of the previous year.
In a statement, the company linked the earnings to increased fares, higher fuel surcharges, lower financing costs and higher government subsidies.
In the first quarter of the 2015 fiscal year, revenues were up by 6.6 per cent to $213.1-million, while operating expenses increased 2.1 per cent to $182.5-million for the company, which carried 19.7 million passengers in the fiscal year ending on March. 31, 2014.
During the three months ending June 30, 2014, BC Ferries did 43,000 sailings, down from 46,000 in the same period last year. Overall, the sailings carried five million passengers and two million vehicles, the company reported.
“It’s a good start to the financial year. This is the first quarter. We have three more quarters to go,” Mike Corrigan, president and CEO for BC Ferries, said in an interview.
He said the second quarter – which is in progress – will be important because it’s the busiest time of the year. “This does set us up nicely for the year,” he said, “and it’s important we do have a profit because we have to reinvest in the assets and we have a $3-billion capital plan over the next 12 years.”
Part of financing the capital plan involves using retained earnings to help borrow on the debt market, he said.
Increased fares – most recently on April 1, when they went up 4 per cent – and service cuts have defined the debate over BC Ferries, an independent company with a contract with the B.C. government, which provides funding for the company’s services. Last March, hundreds of protesters gathered on the lawn of the legislature to protest service cuts. Fares are to increase 4 per cent this year and 3.9 per cent in 2015.
Claire Trevena, the B.C. NDP ferries critic, said the company should consider fare reductions in light of the results.
“Building positive financial results on the backs of people who are relying on this as a highway system is really something that BC Ferries shouldn’t be proud of,” Ms. Trevena said. “We don’t make a profit from any other highway.”
She said that if Transportation Minister Todd Stone is looking at the issue, he should go beyond congratulating BC Ferries as a good commercial enterprise. “He should be looking at this and saying, ‘We’re making a profit but at what cost? Who is paying for this? It’s the people who live and work on the coast.’<TH>”
Mr. Corrigan rejected the argument for fare cuts, noting that BC Ferries has to be operated in a sustainable way, which means customers paying their fair share towards its bottom line. He said the fare-reduction argument could only be justified if one took a short-term approach to the operation of BC Ferries.
“But we have to build the financial capacity of this company to be able to reinvest in the terminals and assets,” he said.
In a statement, the B.C. Transportation Ministry called the results “encouraging,” but noted they are only a “snapshot” of two months of travel after adjustments to service levels.
“Better alignment of service levels to the demand will help us ensure a coastal ferry service that’s affordable, efficient and sustainable for future generations while protecting basic levels of service,” the statement said.