Bay Ferries can’t afford new boat

Jonathan Riley

DIGBY COURIER

NovaNewsNow.com

Bay Ferries president Mark MacDonald says it would be “challenging” for his company to finance a new boat for the Digby-Saint John service.

“It is self-evident the business can’t pay for itself right now out of revenue.”

“It makes for a challenging business case if we’re trying to finance a new asset from the service generated revenue. As late as 2001 we thought it might be possible but given the conditions today, it would be challenging to do it on a strictly private basis.”

MacDonald was speaking at the Digby Area Tourism showcase last Saturday and answering questions about his company’s plans for the service.

He said ideally the ferry service should generate enough money to pay for:

− operation and maintenance costs,

− finance capital costs

− and turn a little profit.

“The challenge of the last couple years has just been getting past the first part – making enough to pay for operations and do the maintenance – we can’t even get to the point of looking at buying an asset privately.”

Bay Ferries announced last year, June 2006, that it could no longer afford to operate the ferry service across the Bay of Fundy due to rising fuel costs and declining ferry traffic.

The provincial governments of Nova Scotia and New Brunswick each chipped in $2 million over two years and the federal government anteed up $4 million to keep the ferry running while a long term solution is worked out.

A consultants report commissioned by ACOA presented four options for the service:

1. End the service

2. Revitalize the service by fixing up the Princess of Acadia

3. Buying a new or used boat compliant with new shipping regulations coming into force by 2012.

4. Buy two boats and split the service into cargo and passengers.

The present ferry, the Princess of Acadia, will not meet the new standards.

Dean Kenley, a business owner in Digby, asked MacDonald whether the service could run without a subsidy, if government cost- shared the purchase of a new boat.

“It’s possible,” replied MacDonald. “How much would a new boat reduce repair costs? How much would it reduce fuel costs? How much is the travel market going to come back?”

MacDonald pointed out that Bay Ferries was able to purchase the CAT high-speed catamaran for the Yarmouth to Maine service.

“We were able to make a sound business case and go the banks and borrow the money. Would that same equation work for the Princess of Acadia? It would be really challenging.”

MacDonald says he has been talking with Transport Canada and they are working hard on the file.

Denny Morrow is the spokesperson for a coalition of Nova Scotian industries that use the ferry.

“Our multi-industry committee wants to communicate to government that this ferry is essential infrastructure.

“It requires the same supports that highways and bridges receive.”

Morrow says it makes simple economic sense for the government to invest in the service.

“When you add up the $6 million in tax revenue generated by the ferry, and the $20 million economic impact of losing the service, you can see a 10-year amortization of a new vessel would be less than that. It should be feasible for government to do this.”

MacDonald says for now Bay Ferries is renovating the Princess of Acadia and working on plans to revitalize the service. But as for a new boat, they are waiting for government.

“Government will define what process they want to follow and we will react to it.”

jriley@digbycourier.ca