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HomeNewsArchivesFerry Companies Still Losing Money Despite Gains, Representatives Tell PSC

Ferry Companies Still Losing Money Despite Gains, Representatives Tell PSC

May 14, 2007 — The bad news: The Territory's ferry companies are still losing money. The good news: They lost less than half as much in 2006 as they did in 2005, according to the companies' representatives.
Concerns about the ferries’ finances and scheduling, along with service complaints, dominated the Public Services Commission meeting Monday afternoon. Varlack Ventures and Transportation Services of St. John had concerns of their own involving possible infringements on franchise agreements and security issues at terminals.
Representing the ferry companies were Kenrick Augustus and legal counsel Claudette Ferron, who sat before the commission for almost two hours. They presented a financial report for the 2006 calendar year that was fairly bleak but improved over the previous year, reporting a loss in 2006 of $172,000, compared to 2005 losses of $402,000.
Several factors explain the improved performance, including tightening up on non-paying riders, a streamlined system, increased employee accountability, increased ridership and fare increases, Augustus said.
Ferron presented the financial summary, but the detailed report had not yet reached the PSC and was still in the mail.
“The franchise is in trouble and is need of an increase in revenue,” Augustus said.
An increase in fuel costs and operating off-peak runs with low passenger capacity were the primary reasons for the 2005 loss, he said. Even though ridership increased between five and 10 percent last year, the actual cost of running the ferry still exceeded revenues, he said
“Yes, the ferries between 6 and 8 a.m. are full, and the same between 3 and 5 p.m.," Augustus said. "But after 6 p.m., we have only five percent of capacity riding. The public perception is that we are always full, but that is not the case.”
Adding to operating costs were increased insurance costs, vessel depreciation, debt service and Homeland Security mandates, Ferron added.
While the companies were grateful for the $500,000 they received from the government last year, both said the companies need an annual subsidy to offset the discounted tickets given to students, government workers, and police. Every ferry company in the country receives subsidies, Augustus said.
As she did in the October 2006 PSC meeting, Ferron continued to advocate for a government subsidy and for the Virgin Islands Port Authority (VIPA) to lift wharfage and dockage fees.
Both Ferron and Augustus asserted that other business are infringing on the franchise by transporting passengers to St. John in numbers greater than 10 as prohibited by franchise rules and regulations. They further asserted that no agency was enforcing those rules.
Barges continue take many more passengers than allowed, and other private operators use loopholes that cost the ferries needed income, Augustus said. The ferry companies contend that it is the responsibility of VIPA or the Department of Planning and Natural Resources (DPNR) to enforce the rules.
“Any law without enforcement is useless,” Ferron said.
PSC board member Joseph Boschulte was not convinced by the financial summary, requesting more exact numbers to prove the ferry companies are still operating in the red. He suggested the need for an audit of the companies' financials.
The commission voted to request a formal meeting with VIPA to discuss the issues raised by Ferron and Augustus, noting that no response had been received from the letters already sent to VIPA.
PSC Chairperson Alecia Wells voiced public frustrations about inefficient line control at the terminals and poor handling of canceled ferry runs. Additionally, the representatives and the commissioners got into a protracted debate about which agency was responsible for security at the terminals. Homeland Security regulations put certain aspects of enforcement in federal hands.
In other business, V.I. SeaTrans principal Marjorie Smith was granted 15 days to review current franchise rules and regulations towards adopting them for Seatrans’ exclusive 15-year franchise agreement to provide ferry services between St. Thomas and St. Croix.
By law, those rules and regulations must be adopted within 30 days of the enactment of the bill granting the franchise. The bill was passed on May 10.
The commission voted to open a docket on the new rules and regulations with a 90-day deadline.
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