Editorial : Head tide
Published: July 24, 2008
Happily, measured by traffic volumes, the Steamship Authority is beating last year's numbers. As of July 7, passengers traveling between the Vineyard and Woods Hole were up 4.3 percent, autos up 3.1 percent, and freight (that is, trucks) up 1.4 percent. For Nantucket travelers, the news is unhappy in each of these categories. Of course, the Steamship Authority has not set any volume records for either island for several years. Also good news, the total revenues for each of these income classes are also up year over year, though not enough to offset the huge leap in fuel costs.
Consequently, as we reported last week, the Steamship Authority's members are looking for new ways to save money, including a reduction in scheduled trips in the winter of this year and the spring of next. It's prudent of the boatline to do so, of course. Trimming the operation, as management has proposed to the members, is designed to offset the expensive fuel because, as management explained, "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." Some of the increase in fuel costs has been offset by the May rate hikes, and $325,000 in additional savings eliminated by SSA managers. But net operating income for 2008 is expected to be about $2 million less than the $4.2 million that was projected.
Management also analyzed the way the boatline's rate structure works - that is, how revenues relate to the operating costs allocated to each customer class. The report found 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. Incidentally, the replacement of Islander with Island Home allowed the line to operate 385 fewer trips on the Vineyard routes in 2007 than in 2006.
More important to Vineyarders contemplating the direction fares will take in the future, management found that automobile fares covered only 92.1 percent of their allocated cost of service in 2007. Standard fare automobiles, mostly paid by non-Vineyarders, covered 129.7 percent, thus subsidizing traveling Islanders. Excursion fare autos, the ones mostly Islanders drive, covered just 38.2 percent of their costs. Even trucks, that is, freight, subsidized traveling Vineyarders, covering more than their cost of travel by 15.3 percent. In other words, visitors pay the most, so Islanders can pay the least. And, Islanders pay more in goods and services so they can pay less when they take the family car off Island. 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.
Also last week, boatline members agreed to 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.
Taken together, this news must be regarded as distressing, especially for Islanders. There can be no doubt that, as costs grow - not just fuel costs but all costs - and traffic volumes rise only slightly, budget pressure will drive further reductions in service and hikes in rates. The low - actually, unreasonably low - excursion fares we enjoy today must rise, the service levels must be brought in line with sustainable costs of service, and the relatively inexpensive and generous ferry experience Islanders have enjoyed over the past 15 years must become more expensive and less generous.
Rate hikes, service reductions, a fare structure that subsidizes some travelers at the expense of others - these are all stop-gap measures employed by the Steamship Authority to stem the head tide it faces. The Steamship Authority's organizational structure, its fleet configuration, and its costs all require comprehensive rethinking. As we've argued repeatedly, a complete re-examination of how the boatline might reconfigure itself for the 21st century is in order.
