BC Ferries is making less money despite record passenger numbers

For most businesses, more customers mean more profits. But that's not the case for BC Ferries, according to its new report.

The corporation just posted its latest quarterly results, which include record levels of vehicles on board and the highest passenger figures in two decades.

However, net earnings for the corporation plunged to $6 million for the first quarter of 2018 from last year's $17 million, according to the report.

Mark Collins, president and CEO of BC Ferries, spoke with Jason D'Souza, host of CBC's All Points West, to explain the loss in revenue.

Can you walk us through the discrepancy here?

In order to carry the traffic we had to increase the number of sailings. So, there's increased operating costs with that. At the same time, on April 1, there was a fare reduction implemented across the minor route network, so that eroded our revenue.

What kind of impact do those increased sailings have on the bottom line?

We provided about 700 more sailings than last year in the same period. That requires more employees. We take more overtime. We burn more fuel. When you look at providing more service, it's pretty inevitable your costs are going to go up.

Do you think that suggests that the current operating model requires more rethink, if an increased demand like that actually hurts the bottom line?

I know it seems counter-intuitive, but that's where we have to remember what happened with fares on April 1. That's revenue that the company did not collect. 

The NDP did campaign on a promise of fare reduction. Were you anticipating this as a result?

This change was anticipated in our budgets as a result of the agreement we negotiated with the government around the fares.

Are you satisfied with the results you are seeing, given that anticipation?

Net earnings help us pay for new ships, renovate our terminals and help us service our long-term debt. I would like to see the earnings on a quarterly basis be a little stronger. And we're looking hard at internal efficiencies.

Is the fare reduction that we've seen sustainable in your view?

People want even more sailings than we're providing today. So, we will need higher revenues to support even more sailings. Perhaps some diversification of our income ... away from the fare box and into ancillary services.

There has been criticism of the long waits at ferry terminals. What do you make of where BC Ferries is right now in terms of its ability to provide service?

The infrastructure that composes our system has never been used at this capacity before. [But] 70 per cent of the customers that are travelling on the big routes today are not waiting. These are the travellers travelling with reservations. [They] spend between 30 and 45 minutes in the terminal on average. It does provide challenges to the people who, because of their circumstances, can't plan in advance or are unable to make a reservation.

Listen to the full interview here:

This interview has been edited for length and clarity.

With files from All Points West