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BC Ferries proposes route cuts to stem losses

With passenger and vehicle traffic in a slump, BC Ferries plans to seek permission to cut up to 400 sailings from major routes.

And with traffic not expected to recover in the near future, the corporation is also looking at cuts in other areas, including capital projects.

The potential route changes would have to be approved by provincial Transportation Minister Blair Lekstrom.

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The pending cuts – floated as BC Ferries is already facing criticism over executive compensation and rising fares – highlight long-standing problems at the operation, said NDP MLA and ferry critic Gary Coons.

"For quite a few years, we have seen skyrocketing fares, ridership is down – and the loss that we were told in March was going to be $20-million is now nearly double that, at $35-million," Mr. Coons said.

"It's really been a failed experiment."

Mr. Coons was referring to a 2003 decision by the provincial Liberals to restructure BC Ferries – formerly a Crown corporation – into a quasi-independent entity. It still receives a government subsidy.

In May, after a public furor over fare increases, the province announced a review of the corporation, which is now underway. The province also brought in legislation to cap fares while the review is being conducted.

Net losses for the corporation's first quarter, ended June 30, 2011, were $5.5-million, compared with a profit of $0.9-million for the same period in 2010.

Revenues fell by 1.8 per cent to $186.7-million.

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In the first fiscal quarter of 2011, BC Ferries experienced a decline of 3.3 per cent in vehicle traffic and 2.9 per cent in passenger traffic compared with the same quarter last year – its largest first-quarter year-over-year decline in passenger traffic in recent years and a 20-year low. Vehicle traffic is also at an 11-year low.

BC Ferries CEO David Hahn said the proposed cuts represent a small fraction of the 10,000 sailings the company runs each year.

"We had originally planned for a net loss estimated to be in the range of $20-million for this fiscal year, largely driven by lower traffic levels and our commitment to fund ongoing refit and maintenance programs, training and safety programs and capital projects," Mr. Hahn said in a statement. "Recently we have seen a further erosion of traffic and we do not anticipate a turnaround in the foreseeable future. Therefore the year-end loss could be significantly higher. In view of this challenging situation, we have initiated a comprehensive review of all of BC Ferries' expenditures, which will result in cutbacks, particularly in the areas of capital expenditures and discretionary spending."

The deficit is now forecast to be closer to $35-million, with BC Ferries citing factors such as rising fuel costs and a drop in tourism for the bleak financial picture.

The cuts are expected to affect major routes in off-peak months.

BC Ferries and the provincial government have been criticized for Mr. Hahn's compensation, which includes salary and benefits that amount to more than $1-million a year. The corporation's board last month defended Mr. Hahn's package, saying he took over and successfully overhauled a struggling operation.

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With a file from The Canadian Press

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About the Author
National correspondent

Based in Vancouver, Wendy Stueck has covered technology and business and now reports on British Columbia issues including natural resources, aboriginal issues and urban affairs. More

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