BC Ferries releases second quarter results
British Columbia Ferry Services Inc. says it saw the highest passenger traffic levels in the second quarter that the company has experienced in over 20 years. Vehicle traffic levels were the highest BC Ferries has ever experienced in both the second quarter and year-to-date. During this quarter, passenger and vehicle traffic increased 5.2 per cent compared to the same quarter in the previous year, resulting in higher revenue and contributing favourably to net earnings. BC Ferries offered a range of deeply discounted fares for travel on off-peak sailings, as a way to improve affordability for travellers and to increase availability on the popular sailings.
“Our focus will continue to be on our customers and the communities we serve,” said Mark Collins, BC Ferries’ President and CEO. “We understand reliable, efficient and affordable service, combined with strong environmental stewardship, is important to our customers and coastal communities.”
In the three months ended Sept. 30, 2017, revenues increased by 3.5 per cent (3.3 per cent year-to-date) compared to the same period in the previous fiscal year, due to the increased traffic volumes, partially offset by a lower average vehicle tariff. The average tariff per vehicle decreased across the system mainly as a result of the many promotional discounted fares offered during this period. The average tariff per passenger did not increase over the previous year because there has been no passenger fare increase since April 1, 2016.
“BC Ferries thanks our many customers for travelling with us this summer,” said Collins. “Having you travel with us and having these positive results reduces future pressure on fares and enables continued investment in new vessels and terminal improvements.”
With record high traffic levels over the summer season, and conscious of the impact this can have on ferry customers, BC Ferries provided an extra 460 round-trips over and above its regular summer schedule, with some vessels providing shuttle service on the inter-island routes. Over the past six months, BC Ferries also introduced three new vessels into service.
“We continued to engage with coastal communities to ensure our services meet their needs,” said Collins. “In this quarter, we increased scheduled service on three routes – to Powell River, Gabriola Island and Denman Island – in consultation with these communities.”
BC Ferries’ net earnings in the three months ended Sept. 30, 2017 were $98.4 million, $3.2 million higher than in the three months ended Sept. 30, 2016. Year-to-date, net earnings were $115.7 million, $6.5 million lower than in the same period in the prior year due to additional service and new vessels. Due to the seasonality of ferry travel, net earnings in the first and second quarters are typically reduced by net losses in the last two quarters of the fiscal year when routine vessel maintenance is scheduled.
“During the busy peak season, BC Ferries generates higher net earnings that are offset by lower earnings when traffic decreases in the off-peak seasons,” said Collins. “Net earnings fund service improvements such as new vessels, upgrades of terminals and fare reductions like the ones offered this past summer to provide customers with more fare choice.”
“Record traffic points to the need to increase capacity and that means adding new vessels and upgrading infrastructure,” said Collins. “During this quarter, BC Ferries spent over $52 million for new vessels, terminal improvements and communications, which is part of our continuous rebuilding of the ferry network.”
Capital expenditures in the three and six months ended Sept. 30, 2017 totalled $52.3 million and $143.5 million respectively. Significant investments were made to complete the Salish Class vessel project, begin a mid-life upgrade on the Spirit of British Columbia, acquire the new northern vessel, Northern Sea Wolf, as well as improve customer facing technology.
Operating costs increased in the quarter by 3.4 per cent (6.0 per cent year-to-date) compared to the same period in the previous fiscal year. Increases in fuel consumption, labour and training related costs arose from increased service levels to communities, higher traffic volumes, additional sailings provided and the introduction of new ships.
