BC Ferries is reporting losses of more than $16 million last year, with vehicle traffic on its ships at a 13-year low and passenger traffic at its lowest in 21 years.

British Columbia Ferry Services Inc. reported a net loss of $16.5 million Friday for the fiscal year that ended March 31. Last year, BC Ferries reported net earnings of almost $4 million.

Mike Corrigan, BC Ferries' president and CEO, said it could have been worse. The company had actually forecast a $20-million loss at the start of the year, but company-wide cost-saving measures cut the final figure by $4 million, he said.

Corrigan said a return to a buoyant economy, continued belt-tightening, and the influx of the B.C. government's $80-million investment this spring are all part of the company's forecast of a balanced bottom line within two years — assuming traffic levels increase.

"We have to hope that the economy starts to turn around in the foreseeable future," Corrigan said.

"People just aren't travelling and getting in their vehicles like they used to, and if they aren't driving around in their vehicle, they are certainly not going to drive onto a B.C. ferry."

NDP ferries critic Gary Coombs said higher fares are the reason BC Ferries is losing so much money.

"It comes down to a key issue: affordability and the impact on ridership. Fares have skyrocketed and ridership's at record lows, so there's no surprise there and no surprise for those that use the ferries."

For much of the year, a family of four taking a return trip from Victoria to Vancouver was paying about $200 for the marine portion of the trip.

Following a review of the ferry system that concluded fares are almost at the tipping point for passengers and some routes are losing too much money, the government passed the Coastal Ferry Act this spring that included the five-year, $80 million investment to help keep fares in line.

Both Corrigan and Transportation Minister Blair Lekstrom warned that service cuts to many coastal communities and late-night sailings on the major routes from Vancouver Island to the Lower Mainland are likely to be cut going forward, as the system looks to save costs.

Corrigan said BC Ferries is also looking to cut $30 million from within its system and wants communities served by ferries to begin consultations on their service levels.

The year-end statement reported BC Ferries carried 20.2 million passengers this year and 7.8 million vehicles.

It said vehicle traffic dropped 3.5 per cent during the fiscal year while the number of passengers fell 2.8 per cent.

Revenues dipped by one million dollars to $738 million, but operating expenses jumped by $10 million to $682 million, mostly because of higher fuel and amortization costs.

One of the world's largest ferry operators, BC Ferries runs on 25 routes and 35 vessels throughout coast British Columbia.