BC Ferries CEO speaks of 'growing pains' and sees fare hikes in the distance

A sense of optimism and ambition marked BC Ferries CEO Nicolas Jimenez’s update to members of the Greater Victoria Chamber of Commerce and other regional stakeholders on Tuesday morning. It also served as a report card and warning that expensive changes and subsequent fare increases are definitely on the horizon.

By 2028, a 30% fare increase will be necessary just to stay at its current levels of service, he said. The increase represents a necessary shift in BC Ferries’ priorities around fleet and infrastructure upgrades.

Jimenez explained that his first order of business, since he came on board as president and CEO in Jan. 2023, was to address disruptions caused by staffing shortages. Though finding qualified mariners remains a challenge—Jimenez said representatives travel regularly to countries such as the Philippines, Panama, and the UK to recruit—he said Ferries has made huge efforts in the last two years to hire and train more people and to pay them at a competitive rate. As a result, “this past summer, we had no cancellations on our major routes due to staffing issues,” Jimenez said.

Jimenez said with staffing issues mostly resolved, the company’s aging fleet and terminal infrastructure is now the company’s new priority and greatest challenge. With 27 terminals and a fleet of 16 aging vessels— the Queen of New Westminster is now 60 years old—building new ships and retrofitting terminals will be the focus of his efforts.

To meet the growing demand for service in rapidly growing coastal communities in the CRD and on the mainland, BC Ferries has planned for 15 island-class vessel replacements between now and 2030. Four all-electric, one-day vessels (meaning ships not equipped to provide rest for employees) are currently being built in Romania. And here’s the rub: building a new ship costs 40% more in 2024 than it did in 2020, according to Jimenez.

“They're building four new island-class vessels, as we speak. They will be the first all-electric vessels in our fleet. From an environmental perspective, the new ships mean less greenhouse gas (GHG) emissions. The electric vessels will take 10K GHG emission units out of the system. It's a small step forward, but an important step forward.” Jimenez said.

The new ships represent the biggest reinvestment in the fleet’s history to date. Increased capital costs also extend to the marine infrastructure the ships require. A significant percentage of BC Ferries’ marine-based structures are in what Jimenez described as a “marginal or poor state.”

“We've got 30+ terminals that require work in the next number of years—that's almost one in three terminals that need some significant investment,” he said. The electrification of the major terminals from which the new ships will run also promises to be a complex and costly process.

Overall, BC Ferries’ 12-year upgrade plan will push its capital costs up between 10 and 15% per year. That’s hundreds of millions of dollars that Jimenez says BC Ferries can’t shoulder alone. To make up for that huge funding gap, “its solution set is limited,” he said.

Currently, that solution set includes only government subsidies and fare increases.

Few revenue-generating options

“We need revenue to come into the system sustainably. We only bring in $800 million in fares, $200 million from the government and we need hundreds of millions more.”

The Coastal Ferry Act currently limits what BC Ferries can do to bring more revenue into its system. Where the levers of regulation and legislation are concerned, “we’ll need to pull every lever we can,” Jimenez said. When they talk with the new minister of transportation, they’ll have to have “all policy options on the table,” he said.

We have to think with the government out loud—because it can’t just be any source of revenue, it has to be a rational link to what needs to be paid,” Jimenez said.

For travellers in the CRD, it would appear fare hikes are inevitable.

13 advisory committees get the deep-six

BC Ferries also has decided to scrap its 13 advisory committees and plans to replace them with an as-yet not-planned engagement process.

In a conference call on Monday, BC Ferries officials informed members it was moving to dismantle the committees, some of which have represented their communities for 30+ years.

Jimenez told Capital Daily he didn’t want the committees to “go away” or “to feel they were unwanted.” He said they still have a role to play through different forms of engagement.

During Monday’s call, Ferries spokesperson Jeff Groot told committee members the goal was “to come up with a model that will lead to broader, representative feedback and include not just in-person meetings but more online options.”