From April 1, BC seniors who presently receive free ferry travel Monday to Thursday will be required to pay 50% of their usual fare. To be clear, this means 50% of the discounted passenger fare if you have an Experience Card, and 50% of the full adult fare if you don’t.
So where will that half fare go – to the government, or to BC Ferries?
Up until now, each time a senior travels free, the government pays BC Ferries the equivalent of the full adult fare for that journey. So, for each free senior making a round trip to or from Gabriola, BC Ferries receives $10.30 (the present adult fare) from the BC Social Program. Seniors travelling with a vehicle pay the full vehicle fare ($24.50) or $15.65 if paying with an Experience Card.
From April 1, the amount paid by Seniors ($3 if paid with an Experience Card or $5.15 without) will be offset against the payment that BC Ferries receives from the government’s Social Program fee. So, instead of receiving $10.30, the fee paid to BC Ferries will be $7.30 if an Experience Card was used, otherwise $5.15. So, the cost to government goes down and BC Ferries is no better off. Well, no – not quite.
Between now and 2016, the Province budgeted their likely expenditure on seniors’ ferry travel assuming no contribution from seniors. Now, with the fares that seniors will pay from April 1, any reduction in spend through Social Program fees will be added to the Service Fee that government pays BC Ferries to run our ferry routes – so, in the end, the amount that BC Ferries receives from government stays the same – and BC Ferries gets to keep the seniors’ fares too.
According to government, they expected to spend $16 million on supporting seniors’ ferry travel in 2013/14, rising to $17 million next year and $18 million in 2015/16. With seniors paying a percentage from April 1, government estimates the social program fee could drop by around $6 million, which will then be added to the service fee, making BC Ferries $6 million better off. But if the volume of seniors travel reduces (as it surely will), the number of vehicle fares paid will go down too – and that loss will come straight off BC Ferries’ bottom line.
In 2012/13, the social program fee paid for seniors to make 45,761 return trips between Gabriola and Nanaimo – up 10% on the year before – and likely up to about 50,000 in 2013/14. Assuming 80% of seniors have an Experience Card (as 82% of all passengers do) then BC Ferries can expect to collect around $170,000 in extra income from seniors’ fares on Route 19 next year. Seniors’ free trips currently represent about 12% of all passenger trips on this route – and those free trips likely account for at least 10% of the number of vehicles travelling. That’s around 37,000 round trip vehicle fares, worth about $650,000 to BC Ferries. So, if seniors travel declines by anything more than 25%, instead of making money out of the deal, BC Ferries starts to lose money.
The present contract between government and BC Ferries runs until March 2016. After that, it’s all back on the table again.
Notes: All fares quoted in this item are at March 2014 prices and exclude the 3.5% fuel surcharge which was added in January 2014. Data relating to the number of seniors’ fares funded through the social program is taken from information released by BC Ferries through a FOI request which can be found here.