Marine Atlantic has seen a massive decrease in ticket sales due to the coronavirus, which may lead to a formidable financial crunch that could lead to ticket increases or a substantial reduction in services.
A federal policy requires that the Crown corporation must recoup roughly 65 percent of its operating costs through ticket sales alone. And the interprovincial ferry service has never failed to meet this requirement.
According to CBC News, Marine Atlantic has seen 31 percent decrease in transport trucks aboard its ferries in April alone. Throughout the month of April, there were 882 fewer transport trucks compared to the same period in 2019. During the same period, the number of drop-trailers transported by 559, a 15 percent decrease, despite the fact Oceanex, Marine Atlantic’s competitor for commercial shipping, has reduced the number of trips to St. John’s.
The number of passengers, excluding truckers, has dropped by 72 percent compared to the same time last year. Marine Atlantic usually carries more than 100 non-commercial passengers every trip at this time of year, but ferried as few as 15 to 20 passengers per run last month. The 100-passengers limit was never reached due to social distancing orders.
Marine Atlantic spokesperson Darrell Mercer told Radio-Canada that the corporation has only three options if the drop in traffic continues to plummet long term.
Although Marine Atlantic had already fixed its pricing for 2020-2021 before the pandemic spread to Newfoundland, ticket prices may alter in an effort to shore up revenues.
Ferry services could also see a decrease. While the Port aux Basques-North Sydney route is guaranteed by the Constitution, the summertime Argentia-North Sydney run, connecting the Avalon Peninsula to Cape Breton, is run on a cost-recovery basis, Mercer added.
“In-depth discussions that would have to take place from a financial view have taken the backseat until we get through this initial phase of the pandemic.
Mercer said Marine Atlantic could seek funding from Ottawa, if the federal government relaxed its policy on cost recovery.
“No decisions have been made on any of those pieces right now. We're still too early in the process, but obviously those are the options that could be under consideration.”
“Nobody predicted that we were going to be into this type of a pandemic situation.… So there's still a lot of uncertainty and unknowns as to what that's going to mean for our budgetary projections,” he said, noting that the 2020-2021 fiscal year had just started.
A spokesperson for Transport Canada said, “At present, funds allocated [to Marine Atlantic] are sufficient to sustain its activities.”
“As an independent Crown corporation, Marine Atlantic is responsible for managing its activities, including fares and revenues,” said senior communications advisor Annie Joanette.
Since the outbreak of the pandemic, Mercer said, Marine Atlanntic and the federal government have focused on working through implementing new safety protocols for vessels.
“The in-depth discussions that would have to take place from a financial view have taken the backseat until we get through this initial phase of the pandemic,” he said.
Joanette said the department “has maintained constant contact with Marine Atlantic since the beginning of the Covid-19 pandemic and will maintain regular communication as the situation evolves.”
Jean-Marc Picard, executive director of the Atlantic Provinces Trucking Association, said that any increase to fare would guarantee consequences for consumers living in Newfoundland.
“It's people in Newfoundland who I have pity for in this situation. We [truckers] can't absorb those costs. It makes zero sense,” Picard said.
“We depend on the ferry service, which is already very expensive, and it'll be people in Newfoundland who end up paying exorbitant prices if they increase fares.”
Under normal circumstances, Marine Atlantic entertains a larger number of non-commercial passengers during the summertime. Since the province closed its border to tourists on Monday, it has resulted in the indefinite closure of the tourism sector to out-of-province travelers.
Fresh food transported by Marine Atlantic remains stable, according to Mercer. But the sheer volume of other freight is down. Ferries are operating far below capacity, he added.
In 2018-2019, Marine Atlantic’s operating and capital expense totalled around $242 million. The corporation received $133 million in funding from Ottawa and generated about $109 million in revenue from ticket sales and other ancillary sources, which was enough to cover 65 percent of operating costs, satisfying the federal policy.
The four Marine Atlantic vessels completed 1,634 trips, carrying more than 300,00 passengers, and 88,000 transport trucks.
Financial statements from the 2019-2020 year have not yet been made available.
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