The Nova Star is a $165-million luxury ferry that boasts a casino and 70 slot machines, a five-star restaurant offering fine wines and $225 bottles of champagne, and 162 well-appointed cabins.
Since May, it has been making the 10-hour voyage across the Gulf of Maine between Yarmouth and Portland – resuming a Canada-U.S. ferry service that was abandoned five years ago and is now bringing not only American tourists, but a measure of hope to this struggling fishing community.
Behind the optimism of a town, however, are some troubling truths – it has not been all smooth sailing for the Nova Star. Cranky weather, disappointing bookings and unexpected costs have made the first months of the restored and rejuvenated service choppy at best.
Five years ago, Yarmouthians watched businesses fail and neighbours move west for work after the former NDP government pulled its $6-million annual subsidy. The government argued the ferry was not economically viable, and despite a pre-election change of heart, it paid the price at the polls.
The new ferry is not just a people- and car-hauler like the old one, and the town is sprucing up accordingly. Flowers line the streets and the once-vacant ferry terminal and parking lot, which was overgrown with weeds, has been renovated. Some businesses are noticing changes, too. Len Burkitt, who runs a store featuring Nova Scotia crafts, says his June sales increased 15 to 20 per cent from last year.
“It was overwhelming,” says Yarmouth Mayor Pam Mood, emotional even now describing sailing into Yarmouth harbour on the Nova Star’s maiden voyage in May. “After almost five years of fighting for your life, the ship is finally coming in. People were standing on the rocks with big pieces of cardboard … ‘Welcome back. We’re so glad you’re here.’”
The ferry company, Nova Star Cruises Ltd., has already burned through the entire $21-million subsidy from the Nova Scotia government, which was meant to last for seven years. Instead, it ran out after two months.
“To get to this startup position has been very expensive,” says Mark Amundsen, the company president. “To build the route equity back up and to get the passengers back has been difficult. I would have liked to have seen higher volumes in May and June.”
Mr. Amundsen said Thursday that his company is starting to talk to the Nova Scotia government about future subsidies but so far there is “no commitment.”
The 160-metre ship is expensive to run: It costs $20,000 a day for its lease, $40,000 a day for fuel, and there is a crew of 120. At times, the crew has outnumbered the passengers: In the first few weeks of operation, there were about 100 passengers per voyage and fewer than 30 cars.
Although bookings have picked up – from 3,000 passengers in May to 7,000 in June and more than 11,000 booked for July – the boat is not near capacity of 1,215 people and 336 vehicles. Fares have been discounted three times since May. The ship caters to all travellers, those who want the full cruise experience and those who are looking for economy.
The company is hoping for about 100,000 passengers, who will each spend about $50 onboard, this year. But with such a short peak season – July and August – it may be difficult to reach that goal.
Mother Nature has been no help either. The weather in May and June was miserable, and post-tropical storm Arthur hit on the July 4 weekend, when bookings, according to Mr. Amundsen, were strong. The Nova Star was forced to stay in port for one round trip, and all that business was lost.
Then there were the unanticipated costs: A $5-million operating line of credit promised by the government of Maine has yet to materialize, forcing the province to forward that amount to the company. There was also a $2-million bond that the U.S. government required the company to post – again, from the subsidy. The company is to pay back the province when it is able.
This is in addition to the $10.5-million that was allocated for the first-year startup costs. The remaining half of the subsidy, $10.5-million, was to be spent over seven years for marketing in the U.S.
Mr. Amundsen is preaching patience. He says that all the cabins sold out last weekend and he’s expecting 1,800 passengers over three days of this last July weekend. But the key to success, he says, is not only extra revenue streams from onboard services but attracting commercial trucks; 40 trucks a trip will nearly pay for the fuel.
The history of the ferry service is complicated – and political. Until it stopped sailing in 2010, a ferry was operating continuously for more than 50 years. But changing travel habits, the U.S. requirement that Americans carry a passport, and a worldwide recession contributed to the decline in business.
Between 2002 and 2009, there was a 73-per-cent reduction in passengers, according to the findings of an expert panel appointed by the NDP government in 2012 to investigate the feasibility of bringing back a ferry.
Despite the decline, the panel said a service was viable if the business model was “built around the passengers’ on-board experience rather than simply offering another transportation route from the U.S. northeast to Nova Scotia.” It suggested a “cruise ferry” model. If all the stars aligned, the service could break even in the seventh year, the panel said.
Acting on that, the NDP government, which had been heavily criticized for killing the ferry, reached a deal, including the $21-million subsidy, just a month before the 2013 provincial election. It didn’t help the NDP, which lost the election – but the ferry was back.
For Liberal Tourism Minister Michel Samson, whose government inherited the deal, it isn’t perfect but must be made to work. “We were under pressure time-wise,” he says. “We were determined to have that boat in the water for 2014.”
He considers it vital not just for Yarmouth but the entire province: “The message was loud and clear … Nova Scotians wanted that ferry service back,” he says. “And not only did they want it back, they went out of their way to punish the previous administration for taking it away.”