Ferry Fact File. July Gabriola Ferry Advisory Committee

Ferry Fact File July 2018 Gabriola Ferry Advisory Committee

Contents Page Governance & Regulation 3 Ferry Fares and the Price Capping Process 5 The Fuel Deferral Account 8 Government funding for ferry services 10 Delivering a reliable and efficient ferry service 12 Financial Information 14 Who pays for Gabriola s ferry service? 16 : Operational Information 17 : Passenger fares by tariff type 18 : Vehicle fares by tariff type 19 : Passenger Traffic Analysis 20 : Vehicle Traffic Analysis 24 : Overloaded sailings 33 : On-time performance 34 : Customer satisfaction reports 35 Where to find more information 37 Gabriola Ferry Advisory Committee 38

British Columbia Ferry Services Inc. (BC Ferries) is one of the largest ferry operators in the world, providing year-round vehicle and passenger service on 24 routes to 47 terminals, with a fleet of 35 vessels. In April 2003, the Coastal Ferry Act transformed BC Ferries from a Crown corporation into an independent, commercial organization under the Company Act, with the BC Government as the sole shareholder. The Company is governed by an independent Board of Directors appointed by the B.C. Ferry Authority. The BC Ferry Authority is a non-share capital corporation whose purpose is to hold, administer and sell a voting share in BC Ferries, elect directors to the board of BC Ferries and to approve compensation plans for the directors and executives of BC Ferries. The nine-member board of the BC Ferry Authority comprises four directors representing the coastal regional districts, one representing the BC Ferry and Marine Workers Union and four other suitably qualified candidates. BC Ferries is the operating subsidiary of the BC Ferry Authority. In addition to the creation of BC Ferries as a wholly-owned subsidiary of the Authority, the Province established the initial capital structure of BC Ferries though the issuance of preferred shares. The Province owns the terminal lands and leases them on a long-term exclusive basis to BC Ferries. BC Ferries Governance and Regulation Donald P Hayes Chair of the Board of Directors, BC Ferries

Governance and Regulation Sheldon Stoilen BC Ferry Commissioner A 60-year Coastal Ferry Services Contract exists between the Province and BC Ferries. The contract specifies service levels and transportation fees (financial support) for 20 out of the 24 coastal ferry routes. The contract is framed around four-yearly performance terms and is subject to amendments for each new performance term coinciding with price cap reviews conducted by the BC Ferry Commissioner prior to the start of each performance term. Performance Term 4 (PT4) runs from April 1, 2016 to March 31, 2020. Within this framework, BC Ferries has direct access to capital markets and carries responsibility for raising the funds necessary to maintain and replace its assets; the company s borrowing is therefore not treated as a government debt. The BC Ferry Commission is a quasi-judicial regulatory agency operating under the Coastal Ferry Act. The commission regulates the ferry operator on its 24 saltwater routes. The Commission is independent of both the provincial government and of BC Ferries. The primary responsibility of the Ferry Commissioner is to regulate ferry fares. The commissioner sets a ceiling or price cap on the average level of fares which BC Ferries can charge. The goal in setting the price cap is to balance the interests of ferry users with the interests of taxpayers while protecting the financial sustainability of the ferry operator. Sheldon Stoilen was appointed BC Ferry Commissioner from March 1, 2018 replacing Gord Macatee.

Ferry fares are regulated by the Ferry Commissioner, who is responsible for setting a Price Cap on the average fares paid by ferry users. The process is conducted along the following lines: BC Ferries presents to the Ferry Commission their forecast of expenses, traffic and revenue for the upcoming performance term, assuming the same service level; The Commission reviews the BC Ferries submission, trims it where deemed appropriate, and assuming existing service levels and government service fees, arrives at a preliminary price cap; Government reviews the preliminary price cap, existing service levels and existing contribution, and determines what (if any) adjustments to the service fee and service levels are necessary to arrive at a final price cap; The Commission factors in any adjustments to the service level and service fee, along with any recommended BC Ferries efficiencies, and calculates a final price cap. The Price Cap represents the maximum permitted increase on the average fare paid across the whole ferry system. The average is calculated from a basket of vehicle and passenger fares, so fares on individual routes may, at times, increase above or below the level of the price cap. Ferry Fares and the Price Capping process

The BC Ferry Commission oversees two Regulatory Accounts held by BC Ferries. The purpose of these Accounts is to regulate how BC Ferries responds to external factors that may not have been foreseen at the start of a four-year Performance Term. Regulatory Accounts Compliance with the Price Cap The Commission directs BC Ferries on the raw data, formulas and assumptions that it must use and computes a maximum permitted level of average ferry fares for each year. The Annual Price Cap is determined at the start of each Performance term and is phased in over the four quarters of each year. The first Regulatory Account measures the fares income received by BC Ferries (expressed as a weighted average fare) against the Price Cap. Every quarter, BC Ferries must report to the Commission the average level of fares paid by its customers. (see next page) Should BC Ferries average fare exceed the level permitted under the price capping process for 3 consecutive quarters, the company is required to adjust the level of fares charged to bring the average back to the level determined by the price cap. In December 2013, the BC Ferries proposed that a regulatory policy be established that would enable it to transfer price cap regulatory account balances to or from the Fuel Deferral Account to balance a surplus in one account with a deficit in the other. The Commission rejected the proposal but granted BC Ferries the authority to transfer revenue earned in excess of the price cap to offset future deficits in the fuel deferral account, with the wider aim of stabilising fare levels.

Source : BC Ferry Commission Quarterly Reports for Period Ended March 31, 2018

Regulatory Accounts The Fuel Deferral account A second key element in the process of determining the Price Cap is a mechanism designed to deal with fluctuations in fuel prices over the performance term. At the start of 4-year term, a set price for marine diesel (and LNG) is built into the formula by which the price cap is determined. Provision is made for standard annual inflation in the set price but with the volatility of the fuel market, the actual price paid by BC Ferries can vary significantly from the set price. Such fluctuations can have unexpected impacts on the viability of BC Ferries, so the Commission requires that the actual cost of fuel purchased in each quarter is offset against the set price and any surplus or deficit is transferred to a regulatory account known as the Fuel Deferral Account which is zeroed at the start of a PT and must return to zero at least once during the PT. Fuel Rebates or Fuel Surcharges are applied to fares as a means of ensuring that ferry users contribute to balancing the account. However, since 2016, fuel rebates have been used not only to balance the fuel deferral account, but as a means of avoiding the perceived impact of fare increases. In April 2016, the fuel rebate was increased from 1% to 2.9%, entirely offsetting the 1.9% increase in fares in the year leading up to the provincial elections. The April 2017 increase (also 1.9%) was cancelled altogether but the 2.9% rebate continued, resulting in a revenue gap that widened each quarter and reached over $13 million. On April 1, 2018 the fuel deferral account was reset to zero but the 2.9% fuel rebate continued until June 2018, when it was removed by BC Ferries in the face of continuing high fuel prices and a failure to secure alternative funding from government.

Fuel Deferral Account balances 2014-2018 Source : BC Ferries / FAC Chairs Group

BC Ferries Government funding for ferry services Hon. Claire Trevena Minister of Transportation and Infrastructure Financial support for BC s coastal ferry services comprises two distinct elements: A Federal/Provincial Subsidy Agreement, currently $29.2 million per annum Ferry Transportation Fees payable by the Province of British Columbia ($155.4 million in 2016/17), of which $96.2 million underwrites the operation of the 18 minor routes, with the remainder allocated to maintaining the northern ferry routes. No support is payable for the four major routes serving the lower mainland (routes 1, 2, 3 and 30) In 2016/17, (Gabriola Nanaimo) received $3 million in transportation fees from the Province and $0.7 million through the Federal/Provincial Subsidy Agreement. Although the Federal/Provincial subsidy increases annually with inflation, payments from the Province were set in 2003 with no automatic indexation. By 2012, the gap between Provincial support and operating costs was becoming unsustainable, and the Province was forced to inject an additional $79.5 million funding for the remainder of PT3 and to initiate service reductions on the northern and minor routes to close the funding gap. Payments into PT4 have fluctuated with the progressive transfer of funding for concessionary travel by Seniors from the Social Program into general Transportation Fees and in February 2018 the government announced an additional $27 million support in 2018/19 ($33 million in 2019/20 and 2020/21) to stabilize ferry fares and restore free travel for BC Seniors on Mondays to Thursdays. The Province maintains the Social Program to provide free travel for Students, Disabled people and their escorts, and for travel for approved medical appointments. In 2016/17, Social Program Fees amounted to $16.9 million, of which received $0.6 million.

Provincial support for minor ferry routes 2004-2017 Source : BC Ferries Annual Reports to The BC Ferries Commission

BC Ferries Delivering a safe, reliable and efficient ferry service Mark Collins President & Chief Executive Officer, BC Ferries BC Ferries is responsible for delivering a safe, reliable and efficient service within the parameters of the Coastal Ferry Services Act. BC Ferries owns and operates a fleet of 35 vessels, ranging from the smallest (MV Nimpkish) with a capacity of 12 vehicles and 95 passengers and crew, up to the largest (MV Spirit of Vancouver Island) which carries 358 vehicles and 2,100 passengers and crew. The one passenger-only ferry in the system is operated by Kona Winds Charters on behalf of BC Ferries between Langdale, Keats and Gambier Islands. BC Ferries leases its terminals from the Province of British Columbia and takes responsibility for their day-to-day operation as well as any maintenance, terminal upgrades or improvements that are required. However, in locations (such as Gabriola) where ferry traffic lines up on the highway, the Ministry of Transportation is responsible for traffic management. BC Ferries operates and maintains its fleet in accordance with the requirements of Transport Canada who set safety standards for all marine operations. Each vessel in the BC Ferries fleet is regularly inspected to ensure compliance with Transport Canada regulations and Transport Canada determines the number of crew members required to safely operate each vessel, according to the number of passengers on board. MV Quinsam is licensed to carry up to 392 passengers with 8 crew, though she normally operates with 7 crew and a maximum of 293 passengers.

The table below compares the financial performance of with other BC Ferries routes, highlighting what proportion of the total operating costs for each route is covered by fares income (including fares paid by government through social program reimbursements). Source : BC Ferries Annual Reports tothe BC Ferries Commission Financial Performance across the network

Financial information Headline financial information is published for each route in BC Ferries Annual Report to the Ferries Commissioner. Detailed analysis of expenditure items is not published, owing to commercial sensitivity. Note that the $400k service reduction in 2014 reduced the operating deficit by almost $1million, well in excess of the $400k savings target. Source : BC Ferries Annual Reports to the BC Ferries Commission Financial Performance Round trips operated Tariff revenue from vehicle fares ($) Tariff Revenue from passenger fares ($) Total tariff revenue ($) Ancillary revenue ($) Social Program Fees ($) Total operating revenue ($) fiscal year 2013/14 fiscal year 2014/15 fiscal year 2015/16 fiscal year 2016/17 fiscal year 2017/18 route 19 route 19 route 19 route 19 route 19 per round trip 5,730 per round trip 4,963 per round trip 4,915 per round trip 4,922 4,929 2,895,948 2,012,557 4,908,505 505 351 857 2,886,918 2,263,367 5,150,285 582 456 1,038 3,133,430 2,381,668 5,515,098 638 485 1,122 3,249,930 2,479,321 5,729,251 660 504 1,164 77,000 957,000 5,942,505 13 167 1,037 89,000 836,000 6,075,285 18 168 1,224 89,000 873,000 6,477,098 18 178 1,318 83,000 588,000 6,400,251 17 119 1,300 Total operating Expenses ($) 7,399,000 1,291 Operating Deficit ($) -1,456,495-254 -531,715-107 -378,902-77 -743,749-151 Amortization ($) Financing expense ($) Total Capital cost ($) -2,437,000-1,071,000-3,508,000-425 -187-612 -2,204,000-937,000-3,141,000-444 -189-633 -2,157,000-809,000-2,966,000-439 -165-603 -2,143,000-712,000-2,855,000-435 -145-580 Gain (loss) on disposal of capital assets ($) Route deficit before service fees ($) Ferry Transportation Fees ($) Federal-Provincial subsidy agreement ($) Net route surplus / deficit ($) -3,000 6,607,000 1,331-89,000 6,856,000 1,395 0 7,144,000 per round trip 3,563,689 2,631,110 6,194,799 0 1,451 0 723 534 1,257 0 0 0 0 0 0 0 0-4,967,495-867 -3,761,715-758 -3,344,902-681 -3,598,749-731 2,740,000 668,000 478 117 2,852,000 668,000 575 135 2,778,000 677,000 565 138 3,003,000 687,000 610 140-1,559,495-272 -241,715-49 110,098 22 91,251 19 0 0 0 0 0 0

BC Ferries What is included in operating costs? Source : BC Ferries Annual Report 2017

BC Ferries Who pays for Gabriola s ferry service? Source : BC Ferries Annual Report to The BC Ferries Commission 2017 : Revenue sources 2016/17 7% 24% 30% 32% 6% 1% Passenger fares Vehicle fares Social Program Fees Ancillary Revenue Provincial Transportation Support Federal/Provincial Subsidy

Each year, BC Ferries presents its annual operating statistics as part of its Annual Report to the BC Ferries Commission. Key performance indicators include the numbers of vehicles and passengers carried, the % of vehicle deck space utilised, the number of overloads reported and the % of sailings that operated on time. Source : BC Ferries Annual Reports to the BC Ferries Commission Operational Information

BC Ferries passenger fares by tariff type Source : BC Ferries data supplied to FAC

BC Ferries Vehicle fares by tariff type Source : BC Ferries data supplied to FAC

Passengers per day quarterly averages 2014-2018 Passenger numbers are reported quarterly to the Ferries Commissioner though each quarter has a different number of operating days, so in order to monitor trends more accurately, the FAC publishes data based on the average number of passengers carried each operational day. The reduction in passenger traffic on since 2013 followed the service cuts and the introduction of a 50% charge for Seniors. By the end of 2017, passenger traffic had recovered to levels last seen in 2011, despite the loss of two round-trip sailings each day and that recovery shows all the signs of continuing through 2018. Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission

BC Ferries traffic statistics are expressed in terms of passengers per calendar month, making month-by-month comparisons difficult because of the varying number of days in each month. To address this, the FAC publishes average daily passenger data each month. Source : BC Ferries Monthly Traffic Statistics Passenger traffic by month since 2013

Passenger traffic on sailings from Gabriola Island Source : BC Ferries data supplied to the FAC Note : The 1350 departure from Gabriola on Saturdays and Sundays operated only during July and August

Passenger traffic on sailings from Nanaimo Harbour Note : The 1425 departure from Nanaimo on Saturdays and Sundays operated only during July and August Source : BC Ferries data supplied to the FAC

Quarterly vehicle capacity utilisation 2014-2018 The MV Quinsam can typically accommodate up to 70 Automobile Equivalents (AEQs) though at the end of 2016, BC Ferries recalculated the capacity of all its vessels adopting a longer measure of 6.1 metres per AEQ instead of the previous measure of 5.3m. Quinsam s published capacity is now stated as 63, though this chart tracks changes against the previous capacity of 70. In the summer of 2017, Vehicle Capacity Utilisation (the percentage of deck space occupied) had increase to 63% up by 6% compared to Summer 2016. Utilisation in the final quarter was almost 9% higher. Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission

Vehicle numbers are reported quarterly to the Ferries Commissioner though each quarter has a different number of operating days, so in order to monitor trends more accurately, the FAC publishes data based on the average number of vehicles carried each operational day. Note the reduction in vehicle traffic on in 2014 followed the service cuts, and the progressive recovery each subsequent quarter. By the end of 2017, vehicle traffic had recovered to pre-2011 levels, despite the loss of two round-trip sailings leading inevitably to more overloads. Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission Vehicles per day quarterly averages 2014-2018

Vehicle traffic by month since 2013 BC Ferries traffic statistics are expressed in terms of vehicles carried per calendar month, making month-by-month comparisons difficult because of the varying number of days in each month. To address this, the FAC publishes average daily vehicle traffic data each month. Source : BC Ferries Monthly Traffic Statistics

January - February from Gabriola Sun Mon-Fri Sat Sun 0615 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 0615 1505 1620 1735 1840 2025 2130 2230 1505 1620 1735 1840 2025 2130 2230 0850 1005 1120 1235 1505 1620 1735 1840 2025 2130 2230 Sun 0615 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 July - August from Gabriola 0850 1005 1120 1235 March - April from Gabriola Mon-Fri Sat Sun 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 0615 1505 1620 1735 1840 2025 2130 2230 1505 1620 1735 1840 2025 2130 2230 September - October from Gabriola 0850 1005 1120 1235 May - June from Gabriola Mon-Fri Sat 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 1505 1620 1735 1840 2025 2130 2230 November - December from Gabriola Mon-Fri Sat Sun Mon-Fri Sat Sun Mon-Fri Sat 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 0615 0615 0735 0850 1005 1120 1235 1505 1620 1735 1840 2025 2130 2230 1505 1620 1735 1840 2025 2130 2230 0615 0735 0850 1005 1120 1235 1350 1505 1620 1735 1840 2025 2130 2230 0850 1005 1120 1235 1505 1620 1735 1840 2025 2130 2230 0850 1005 1120 1235 1505 1620 1735 1840 2025 2130 2230 Vehicle capacity utilisation (2017) Source : BC Ferries data supplied to the FAC Typically less than half full Typically 50% to 75% full Typically almost full (over 75%) Typically full with overloads

Vehicle traffic on sailings from Gabriola Island Winter Source : BC Ferries data supplied to the FAC Notional vehicle capacity : 63 AEQs

Vehicle traffic on sailings from Gabriola Island Summer Source : BC Ferries data supplied to the FAC Notional vehicle capacity : 63 AEQs

January - February from Nanaimo Vehicle capacity utilisation (2016/17) Sun 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 Sun Source : BC Ferries data supplied to the FAC Typically less than half full Typically 50% to 75% full Typically almost full (over 75%) Typically full with overloads 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 Mon-Fri Sat 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 1545 1700 1810 1915 2100 2200 2300 July - August from Nanaimo Mon-Fri Sat 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 Sun March - April from Nanaimo Mon-Fri Sat 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 1545 1700 1810 1915 2100 2200 2300 September - October from Nanaimo Sun 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 Sun May - June from Nanaimo Mon-Fri Sat 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 November - December from Nanaimo Mon-Fri Sat Sun 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300 1545 1700 1810 1915 2100 2200 2300 Mon-Fri Sat 0655 0810 0925 1040 1155 1310 1425 1545 1700 1810 1915 2100 2200 2300 0655 0810 0925 1040 1155 1310 1545 1700 1810 1915 2100 2200 2300

Vehicle traffic on sailings from Nanaimo Harbour - Winter Source : BC Ferries data supplied to the FAC Notional vehicle capacity : 63 AEQs

Vehicle traffic on sailings from Nanaimo Harbour - Summer Source : BC Ferries data supplied to the FAC Notional vehicle capacity : 63 AEQs

BC Ferries reports quarterly on the percentage of sailings with vehicle overloads. Note the significant increase in overloads after the service cuts in April 2014 and the improvement achieved in 2015 following the recasting of the ferry schedule. However, as vehicle traffic has increased, the number of overloads on is increasing once more and between April and December 2017 have remained at levels only previously experienced in peak summer, with Summer 2017 peaking at 15.5% of all sailings overloaded the highest ever recorded. Overloads will typically occur on successive sailings during the morning from Gabriola and from mid-afternoon onwards leaving Nanaimo. Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission Quarterly vehicle overloads report 2014-2018

Quarterly on-time performance 2014-2018 As the volume of vehicle traffic increases on a route, it becomes more difficult to maintain on-time performance and as this chart shows, the percentage of on-time departures in the Summer 2017 quarter plummeted to just 76.9%, down from 86.4% in Summer 2016 and 90.6% in Summer 2015. (A ferry departing within 10 minutes of its scheduled time is considered to be on time ) On-time performance at this low level is unprecedented on, having dropped even below the standard achieved in 2014, the year of the service cuts, and it is evident that traffic has reached a critical volume that is now seriously impacting on-time performance year round. Source : BC Ferries Quarterly Operations Reports to the BC Ferries Commission

Customer satisfaction with the service provided to Gabriola Source : BC Ferries Commission Annual Customer Satisfaction Surveys conducted by the Mustel Group

Customer satisfaction with the ferry journey

Government of BC Coastal Ferry Act http://www.bclaws.ca/civix/document/id/lc/statreg/03014_01 Coastal Ferry Services Contract (consolidated version) https://www.bcferries.com/files/aboutbcf/cfsc Unofficial_Consolidation_Contract.pdf BC Ferries Corporate information https://www.bcferries.com/about/more_information.html BC Ferries Monthly Traffic Statistics https://www.bcferries.com/about/traffic.html BC Ferries Commission Annual Reports from BC Ferries http://www.bcferrycommission.ca/reports-press/annual-report/ BC Ferries Commission Quarterly Reports from BC Ferries http://www.bcferrycommission.ca/reports-press/quarterly-reports/ Gabriola Ferry Advisory Committee https://gabriolafac.com/ Where to find more information

Gabriola Ferry Advisory Committee July 2018 Steven Earle (Chair) Heather O Sullivan (Island Trustee) Jane McCall Woods Peggy Richardson Howard Houle (RDN Director) Jim Ramsay Paul O Sullivan David Prevost (SD68)