British Columbia Ferry Services Inc.

Quick Facts

  • Established: 1960, converted to a private corporation in 2003
  • Owner: Government of British Columbia
  • Previous Names: BC Ferries, BC Ferries Corporation
  • Industry: Transportation
  • Website: bcferries.com

Background

In 1960 there was a need that was not being addressed by the private sector: people wanted to move themselves and their cars in and around islands that were part of the province, in particular Vancouver Island. This bold Government initiative made it happen, and people rushed to get on board!

Today, many consider BC Ferries services an extension of the highway system, and few would dispute that ferries are an essential part of the province’s transportation system.

Theoretically BC Ferries was privatized in 2003. It’s just that the shares are still majority-owned by the Province of British Columbia.

There is a regulator, the B.C. Ferry Authority, which is supposed to “regulate” this “private” company.

Throughout its existence, the Ferry Corporation has been plagued by labour disputes, which too often have threatened the entire British Columbia economy because goods and people depend so heavily on this service. The average income of the lowest ranked employee on the Ferries far exceeds the average wage in the province, and employee benefits are extremely generous. Despite this, unions wield tremendous power over the entire economy of the province, and they have demonstrated time and again that they are quite prepared to use it.

The Privatize.CA Conclusion

First, the 2003 solution is not really privatization. At best, it is a half-hearted restructuring with the potential to adversely affect the B.C. economy for 60 years (the term of the agreement that this corporation has signed to offer ferry service in British Columbia).

The Ferries are still owned by the Government, and they are still a monopoly. The only thing worse than a public monopoly is a private monopoly. If this company, in its current form is eventually sold, this could be very problematic for the economy.

An effective privatization would split the company into separate port operating companies (functioning something like an Airport Authority), and ferry operating companies. Here is an example:

  • Six separate port operating companies, organized by market share and geography, would be ideal: (1) Tsawwassen Port Corporation, (2) Horseshoe Bay Port Corporation, (3) Swartz Bay Port Corporation, (4) Departure Bay Port Corporation, (5) Duke Point Port Corporation, and (6) Gulf Islands Port Corporation. If these corporations wanted to raise money to build mini-malls, restaurants, etc., they would be free to do whatever any other private corporation would do.
  • The ferries themselves are split into “ferry operating companies”, along current routes: (1) Tsawwassen-Swartz Bay, (2) Tsawwassen-Duke Point, (3) Horseshoe Bay-Departure Bay, and (4) Gulf Islands. These companies would be limited in their scope by the market regulator for a period of time, but would eventually emerge as any other corporation, raising funds as needed, adding an array of services to meet consumer demand on board, including restaurants, games, casinos, entertainment, etc.
  • The port companies would make their income through amenities located in their port areas, and by charging docking fees and ticket booth rental fees directly to operating companies, on a contractual basis.
  • Employee contracts would be staggered to ensure that a strike at one port, or with one ferry operating company would not shut down the whole transportation system. Consumers must be ensured an alternative transportation option. For example, if Tsawwassen is on strike, and Horeshoe Bay is open, then consumers are inconvenienced but not completely stuck.
  • Port corporations would be free to sign contracts allowing “new” companies that operate passenger and/or commercial vehicle transportation and/or passenger vehicle transportation services to use their ports and ticket booths.
  • All companies would be sold within three years to private shareholders, and common anti-trust guidelines which regulate the free market would be put in place to ensure that one company did not gain too much market share in either port or ship operation companies. Well regulated transportation companies are appealing investments to pension plans and insurance companies because their revenue is generally more predictable than many other investments. Some companies might also sell well in an Initial Public Offering (IPO) to a broad array of shareholders. The two Gulf Islands holding companies might prefer selling off smaller Gulf Islands ports to municipal governments or local companies.
  • A market regulator would be established to ensure the transition was smooth, and there were no serious service interruptions as a result of the transition. During the first three years, the market regulator would license new “port operators”, and “ferry operators”, paying specific attention that new ferry operators are not unfairly hindered in their access to ports, due to incumbent bias. By year three, incumbent ferry operators should be permitted access to compete with the incumbents at other ports. After five years, the need for a market regulator should be reviewed.