The Steamship Authority is eyeing fare hikes next year as the cost of fuel skyrockets and ridership is flat.
At the advisory port council meeting Tuesday, Steamship treasurer and comptroller Mark Rozum said without a price increase the boat line is projected to take in about $573,000 in net income in 2027, a far cry from the usual $10 million or so it has seen in the last few years.
One of the largest single line item increases in 2027 is fuel, which is estimated to go up by $4.9 million – 43 per cent jump over this year.
“The big item on the budget is impact of fuel prices,” Mr. Rozum said.
To offset the income gap, Steamship staff is considering higher prices for vehicle and passenger fares, as well as parking. Under a preliminary proposal, the cost of a non-Islander car in the high season could go up by $17 one way and excursion fares by $8.50 roundtrip.
Mr. Rozum said the Steamship would need the extra money to invest in the company.
“We look at it as not spending money, it’s investing the money,” Mr. Rozum said. “A lot of these items, the more we can do on the preventative side, the better off we are operationally and our riders get the benefit of that.”
The Steamship Authority locks in a price on fuel with its supplier, a practice known as hedging, which helped the ferry line save this year as prices jumped exponentially. But that will rise when the new hedge is established for 2027.
“Not only is the strike price significantly more, but the last hedge that we just purchased was almost double what we paid last year because of the price uncertainty and volatility,” Mr. Rozum said.
Some ferry lines and other transportation services have turned to surcharges when the price of oil spikes, according to Mr. Rozum. The Steamship’s preliminary rate hikes would be on the lower end of what others are doing, he added.
“You’re seeing this impact in transportation across the board,” he said. “I looked up other ferry operators. Currently, as of today, their fuel surcharges are between 5.5 per cent to 12.5 per cent on their ticket prices.” For members of the port council, which gives financial and other recommendations to the Steamship board, that wasn’t a route that seemed feasible for the Steamship Authority.
“Surcharges are bad,” said Gordon Carr, the New Bedford member and chair of the port council. “They are unanticipated, they’re sort of dramatic, all that kind of stuff, versus the way you manage both how we buy our fuel, but also these adjustments.”
Other rising costs included staffing, which is projected to rise aproximately $4.7 million (an 8.2 per cent increase) largely born from union negotiated contracts, according to Steamship officials.
Mr. Rozum emphasized that the numbers relayed to the port council were preliminary, and subject to change. The Steamship is fine-tuning the budget and is planning to have public meetings to get feedback from the port towns.
The financial team will then bring a proposed budget to the port council and the Steamship board of governors, the latter of which will have final say.
The potential new fares would change with the season, as do the current rates.
For an excursion car, it would cost an extra $6 roundtrip in the shoulder season. Non-Islander cars would range from $4 one way in the deepest part of winter to $7 in the shoulder season. High summer on weekdays could bring a $9 hike and weekends could go up by $17.
Passenger fares would rise by 50 cents for adults and 25 cents for children and seniors. Parking fees would go up $1 per day and permits would rise by $200 for the Woods Hole lot and $50 for Palmer avenue.
The Nantucket route would also have rate hikes, with their high season non-excursion vehicles potentially going up by as much as $29 one way.
If fuel prices do go down in the coming year, that could stave off any changes in fares come 2028.
Under the preliminary fare increases, the Steamship projected it could take in just under $10 million.
“We ended up coming up with about a $9.8 million bottom line,” Mr. Rozum said. “[We] really wanted to do over $10 [million] on cash flow purposes, but right now we’re at $9.8 [million]. The original budget was $573,000.”
The Steamship has raised rates for the past few years, and Nantucket port council member Nathaniel Lowell said the ferry line will need to address a common public complaint: boats leaving port with space on the vehicle deck, despite strong demand.
“I’m going to speak for the public right now. We have to figure out how to fill the boats,” he said. “We have to get the bleacher seats full.”
Mr. Lowell raised the prospect of demand pricing, where less traveled trips cost less than prized summer slots. He saw that as a potential to more evenly distribute traffic and maximize the Steamship’s availability.
The Steamship new reservation system, which has been in the works for several years, could give the ferry line the ability to consider such changes.
“If that’s what the port council and board wants, we can look at changes to some of these opportunities,” Mr. Rozum said.