The Nova Scotia government is poised to give financial support to the operators of the Nova Star ferry for a second season, but it’s unclear what the 2015 sailing schedule will look like and how the service can be less costly to provincial taxpayers, according to some industry experts and political observers.
Government officials on Wednesday are expected to provide details about an agreement they have reached with the ferry operator, Nova Star Cruises, for the upcoming season. In the meantime, officials are turning down all requests for interviews on the subject.
The ferry service’s inaugural season last year between Portland and Yarmouth, Nova Scotia, cost the provincial government millions of dollars more than anticipated, and critics have been urging the government to cut its losses.
But the decision by Nova Scotia Economic Development Minister Michel Samson to make an announcement about the ferry service at a gathering in Yarmouth that includes local business and political leaders indicates Samson has good news to deliver – and that means the Nova Star is coming back, said Yarmouth Mayor Pam Mood.
“We are really looking forward to another season,” she said.
There is no way that politicians will travel 190 miles from Halifax to Yarmouth to deliver bad news, said Esther Dares, co-owner of the Harbor’s Edge Bed and Breakfast, which last year enjoyed its busiest year in 17 years because of the ferry.
“If it was a negative announcement, they would stay in Halifax, where we can’t reach them with rotten tomatoes because we can’t throw that far,” she said. “I’m sure if they are coming to Yarmouth they’ve got good news for us.”
The announcement had been scheduled for Tuesday but was moved to Wednesday because of bad weather.
NO DEARTH OF CRITICISM
The government has come under heavy criticism for spending too much money to subsidize the service. To date, it has provided Nova Star with $28.5 million (Canadian) in funding, including $21 million in forgivable loans that was supposed to be paid out over seven years. Maine has not provided any money.
About 59,000 passengers last year used the ferry service, far short of the 100,000 passengers that had been expected.
At the same time, the government will come under fire if it doesn’t give the Nova Star another year to prove itself, said Jeff Monroe, a former Portland port director who overseas the education and training programs for the International Association of Maritime Port Executives.
“The Nova Scotia government doesn’t have much of a choice at this point,” he said. “They have to give it another chance.”
There is little doubt that the contract with Nova Star Cruises will be renewed, said Chris d’Entremont, a veteran lawmaker who represents a district just north of Yarmouth and is a leader in the opposition party.
Although he supports the service because it brings American tourists to the region, the government needs to assure taxpayers that the province’s financial exposure is limited and that the ferry operator will be held accountable for failing to hit financial targets, he said.
“There has to be some strings attached to how this operation works,” he said.
Officials at Nova Star Cruises did not return phone calls seeking comment.
IMPROVING ECONOMY SHOULD HELP
There have been some changes in the global economy that could help the company increase passenger volume and also reduce costs. The operator last summer spent $50,000 a day on fuel, but fuel costs have since tumbled. In addition, the Canadian loonie and U.S. dollar were about equal in value last year. The dollar’s value has since climbed and it’s now worth more than $1.25 (Canadian).
The higher dollar has led to significantly higher passenger volumes on the year-round ferry that runs between Seattle and Victoria, British Columbia, because more Americans are traveling to Canada, said Darrell Bryan, president of Clipper Vacations, which operates the ferry.
He said Nova Star Cruises will still have to find ways to lower costs, such as reducing the size of its crew. The ship last year carried a crew of 130. Although it has capacity for 1,200 people, the ship often had fewer than 200 passengers during the non-peak season. In June, it carried an average of 112 passengers per trip.
If the operator runs out of cash during the sailing season and the Nova Scotia government refuses to provide additional money, anybody owed money can initiate a process to empower U.S. marshals to seize the vessel, Bryan said. In 2004, U.S. marshals seized a container ship, the Shamrock, in Portland Harbor in a dispute over payment of the ship’s mortgage.
“It’s pretty risky business,” Bryan said.
He said Nova Star Cruises needs to find more ways to make money off the ship, such as earning fees for booking passengers in hotels and on tour packages.
The ferry last year operated daily from May 15 to Oct. 13, ending its season three weeks early.
To save money, the ferry could operate for a shorter season, or it could also operate on alternative days in non-peak periods, Monroe said. The savings won’t be substantial because that strategy won’t lower fixed costs, such as the lease payments on the vessel and labor expenses, he said.
“You only save on the fuel costs of operating the vessel, but everyone is still hanging around, and they still get paid,” Monroe said.
He said the Nova Scotia government needs to rethink its entire approach to the ferry service. He said the service will succeed only if it’s a year-round service that is used by trucking companies hauling cargo between Nova Scotia and the United States. He said the vessel should be smaller and less luxurious than the Nova Star, while still offering some comfort to passengers.
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