Beset by fuel costs, SSA eyes schedule changes

Published: July 17, 2008

Steamship Authority members are considering proposals from management to reduce the number of scheduled trips, particularly on the Martha's Vineyard route during the 2009 winter season, but also in spring. The goal is to trim fuel consumption. Fuel costs have escalated dramatically and promise to continue rising. Indeed, management projected that "if fuel prices remain where they are today - our vessel fuel expenses [for 2008] are expected to exceed our budget figures by around $2,700,000." The members met in Hyannis Tuesday.

Among the proposals, in the Vineyard-Woods Hole winter schedule, the 6 am trip from Woods Hole and the 7 am trip from Vineyard Haven would be eliminated on Sundays; the 8:30 pm trip from Woods Hole and the 9:30 pm trip from Vineyard Haven would be cut Mondays through Thursdays; and the 8:30 pm trip from Vineyard Haven and the 9:45 pm trip from Woods Hole would be eliminated Fridays through Sundays.

Management proposed similar reductions in Hyannis-Nantucket service.

According to the management proposal, the last trip of the day to Vineyard Haven would leave Woods Hole at 7:30 pm on Mondays through Thursdays, and at 8:30 pm on Fridays through Sundays. The proposal would allow for later trips to be added if needed.

Oak Bluffs port council member Bob Huss suggested that management consider delaying the last scheduled departures each day, to provide more traveling flexibility for Vineyard residents. Marc Hanover, the Vineyard member, asked for more information before deciding whether to support the proposed changes. He wanted to know how many passengers had been carried on these trips in the past.

In the spring schedule, boatline management proposed operating the 6:15 am freight trip from Woods Hole and the 7:15 am freight trip from Vineyard Haven on Sundays only. They also asked to run the 4:00 pm freight trip from Woods Hole and the 5:15 pm freight trip from Vineyard Haven on Saturdays only. Additional as-needed trips would be considered.

A comparative management analysis of rates and ridership in 2007 and 2006, to see how revenues related to operating costs, disclosed that on Vineyard routes, the cost of vessel operations and indirect non-vessel costs increased by $3,921,000, or 10.7 percent, from 2006 to 2007. The replacement of Islander with Island Home contributed to the Authority's being able to operate 385 fewer trips on the Vineyard routes in 2007 than in 2006, although the new ferry increased vehicle capacity by 32,635 "car equivalent spaces." Despite the greater capacity, "there were 1,441 fewer spaces occupied in 2007 than in 2006, resulting in an occupancy rate of 79.8 percent."

Among the conclusions drawn by Bob Davis, the boatline manager who described the results of his study to the members, "on average, automobiles covered only 92.1 percent of their allocated cost of service in 2007, with standard fare automobiles covering 129.7 percent and excursion fare automobiles covering 38.2 percent." Trucks covered 115.3 percent of their costs, Mr. Davis explained. The result is that non-excursion autos and freight carried a substantial part of the cost for Islander vehicle travel on boatline ferries on the Vineyard routes.

On the Nantucket route the support of standard fare autos and freight for excursion fares is similar, although the excursion fare discount is not as high as it is on the Vineyard routes.

In other business, the members accepted a management recommendation to modify the preferred reservation policy on the Vineyard routes to make more vehicle reservations available for sale to the general public. The Authority now sets aside 140 preferred spaces from Martha's Vineyard to Woods Hole and 110 preferred spaces from Woods Hole to Martha's Vineyard during the summer schedule. Most of those preferred spaces become available to eligible customers seven days before the day of sailing (although some spaces only become available to eligible customers at 8 am the day before sailing), and many never get booked.

In June, the boatline managers reported, an average of 35 Martha's Vineyard-Woods Hole preferred spaces went unused each day, and an average of 23 Woods Hole-Martha's Vineyard preferred spaces went unused. The new policy will allow for the release of all 7-day preferred spaces to the general public that are not booked four days in advance of the day of sailing, and the release of all one-day preferred spaces to the general public that are not booked by noon the day before sailing.

Some of the increase in fuel costs have been offset by the May rate hikes, and $325,000 in additional savings have been identified by SSA management. But net operating income for this year looks to be about $2 million less than the $4.2 million that was projected.

"If the outlook does worsen," boatline general manager Wayne Lamson wrote in his account of the Tuesday meeting, "we have identified several additional measures we would have to consider to further reduce expenses, such as redirecting the last two daily trips of the Martha's Vineyard from Oak Bluffs to Vineyard Haven, closing the Oak Bluffs terminal earlier in the year than scheduled, reducing the daily operating schedule of the Governor and/or the Iyanough during the fall season, and/or ending the Iyanough's operating season earlier than scheduled. But none of those possible actions are being taken at this time. Instead, we are going to continue to monitor our financial situation and keep a close eye on how it is being affected by both our high fuel costs and the economy.

"The good news," Mr. Lamson continued in his memo, which was directed to SSA employees as well as others, "is that the actions all of us have already taken will help our prospects of not having to take additional cost-cutting measures later this year. For example, by slowing down the vessels and consolidating trips, we have consumed 61,100 fewer gallons of fuel through May of this year than we did during the same period last year. The board particularly commended all of our employees who have been involved in that notable achievement. In addition, we already have met our cash transfer obligations to the sinking fund for the payment of bond interest due on September 1, 2008, and for the payment of bond principal and interest due on March 1, 2009, and still expect to make additional cash transfers to the replacement fund, the reserve fund, and the bond redemption account. This has been partly made possible by our receipt of grant monies this year for the Fairhaven pier improvement project and the Oak Bluffs terminal reconstruction project.

"Importantly, all of you should know of the strong support you are receiving from the board against ill-advised cost cutting. The board firmly believes that we are now providing the public with quality service in all areas of our operations on good and clean boats and at reasonable times, and that any expenses we do reduce must not adversely affect the quality of the service that we have achieved over the past few years. Therefore, we will redouble our efforts to get the message out to the public that we are the best service to the Islands - with the lowest fares as well - and we will try to increase our ridership so that our increased revenues will offset our increase in fuel costs."