Economy needs lowest possible BC Ferries' fares

VICTORIA - What's the big deal about spending a bit more for ferries, anyway?
Quite a lot, actually. Just look at how past ferry rate increases have damaged the economies of the province, and Vancouver Island.
B.C. shipyards should have been giving a chance to bid on construction of three new ships for BC Ferries, a contract that could be worth $500 million. It's just wrong that a government-owned corporation barred the leading local shipyard from even submitting a bid.
But lots of critics have argued that it's worth paying more to buy locally, while remaining vague on where that extra money will come from.
It's not likely the government will write a cheque to cover the extra costs, which leaves ferry riders on the hook.
And that would be very bad news, for Vancouver Island, coastal communities and the province.
Ferry rates matter. BC Stats concluded earlier this year that three decades of big increases are costing Vancouver Island's tourism economy more than $25 million a year in hotel and room revenues alone. Figure on other spending, and you're looking at a $50-million annual loss to the economy because ferry fares went up faster than inflation.
And it's not just a regional issue. Because Vancouver Island is a destination for visitors from outside the province, it's likely that B.C. tourism as a whole has been hurt by the rising rates, the report found.
BC Stats established average fares from the Mainland to Vancouver Island over the last 30 years, factoring in traffic types and the impact of reservation fees. It found fares have steadily increased faster than inflation over the last three decades.
Since 1975 the Vancouver cost-of-living index has gone up by an average 4.5 per cent a year. Ferry rates have gone up by an average 6.5 per cent a year.
Back in 1975 a car and driver could get across to the Island for $5. If costs had matched inflation, then today's fare would be about $17. Instead the average fare for a car in 2003 was $30, a 77-per-cent real increase.
Still a bargain by world standards, some might say.
But that misses the point. The real cost of using the ferries has been steadily rising, and that has inevitable consequences.
For some people, mostly locals who have to use the ferries, rising costs are an irritant, but it doesn't alter their travel plans.
But the basic laws of economics hold that if the cost of a discretionary purchase - like a holiday - increases, then a certain number of people will cancel their plans.
And they have.
The number of passengers on BC Ferries went up 33 per cent from 1980 to 2003.
But B.C.'s population rose 55 per cent. The overall tourism industry exploded. BC Ferries hasn't kept up.
Back in 1989, Vancouver Island had a 20.2-per-cent share of room revenues in the province, a standard measure of tourism activity. But the Island has been steadily losing ground to the rest of B.C., and in 2003 its share had fallen to 18.4 per cent, according to BC Stats.
Sounds like a small drop. But it translates into $25 million in lost revenues, and a whack more in the money those people would have spent. (The study wasn't skewed by picking one rough year; the decline was steady through the period.)
"The trend in Vancouver Island’s share of room revenues has closely followed changes in ferry prices," BC Stats reported. "This suggests that BC Ferries has been, to a degree, pricing Vancouver Island out of the tourism market."
None of this justifies shutting local shipyards out of the building.
But it should be a caution for those who are willing to pay a premium for local ships - and want ferry users to foot the bill.
Higher prices for ferry travel do matter, and their effects reverberate through the economy.
Footnote: BC Ferries own studies confirm the report. In its prospectus filed as part of its borrowing plans the corporation said that for every 10 per cent fares went up on the main routes, about three per cent of travellers cancelled trips. The corporation's last annual report blamed large 1997 rate increases for falling passenger volumes.