Subsidy policy on low volume ferry routes : British Columbia's coastal services

The British Columbia Ferry Corporation (BCFC) provides a coastal ferry service for passengerd and vehicles, operating 24 routes serving 42 communities including high volume financially viable routes between Greater Vancouver and Vancouver Island. The smaller routes requre a subsidy but these subsidies may not be available in the future. The paper (1) reviews economic and social rationales for ferry subsidies (2) compares ferry subsidy practices for washington and Alaska, and for some servies in Scotland, Norway and Australia; (3) analyzes cost and revenue comparisous for 19 short distance BCFC coastal routes (4) makes recommendations for change. Cost-recovery varies from about 20-83% of annual operating costs across the BCFC routes; including capital costs and overheads would approximately double the level of costs hence halve cost-recovery. The level of cost-recovery/subsidy is largely unrelated to market size, distance, or peak/off-peak traffic differentials. Greator indepennndence from government is needed to modify prices; greater peak/off-peak tariff differentials are a major needed change.