Boat Line Sees Fuel Cost Spike

Steamship Authority Governors Consider Slowing Down Ferries
On Vineyard-Woods Hole Run In Effort to Save Money

By JAMES KINSELLA

Facing the possibility of up to $1 million in
unplanned fuel costs, Steamship Authority management is taking a hard
look at slowing down its ferries to and from Martha\\\\\\\\\\\\\\\'s Vineyard as a
way to cut costs.

SSA General manager Wayne Lamson said yesterday that reducing
speeds would be \\\\\\\\\\\\\\\"at the top of our list\\\\\\\\\\\\\\\" for reining in operating
costs at the boat line.

The Steamship Authority has forecasted operating expenses
this year of $63.5 million.

Also unexpected, though more welcome, was news that Gov. Mitt
Romney\\\\\\\\\\\\\\\'s 20-year transportation plan will earmark $25 million for the
replacement of the Steamship ferry Islander, to be known as the
Island Home. The boat line had already planned to pay for the new
ferry, now under construction in Alabama, by itself.

Members suggested that the money, should any of it come
through, could be applied to defray the cost of renovating the Oak
Bluffs ferry terminal, or building a replacement for the boat line\\\\\\\\\\\\\\\'s
fast ferry, the Flying Cloud, which has been plagued by mechanical
problems.

Despite word of a potential funding windfall, the issue of
skyrocketing fuel prices hovered over much of yesterday\\\\\\\\\\\\\\\'s monthly
meeting held at the New Bedford Public Library.

As of mid-week, fuel oil was selling for around $50 per
barrel, 35 percent higher than a year ago. At present, Mr. Lamson
said, the Steamship Authority is paying a little over $1.60 a gallon
for fuel oil, a vital commodity for the boat line

The SSA anticipated using 2.7 million gallons of fuel oil
this year at a cost of $3.4 million. But the higher prices, should
they remain at their current level, would add $1 million to that
budget.

Through the first two months of the year, Mr. Lamson said,
fuel costs were running $63,000 higher than anticipated. He said that
the extra expense could climb to the $1 million mark.

Given that he doesn\\\\\\\\\\\\\\\'t anticipate higher operating revenues,
\\\\\\\\\\\\\\\"We will need to start addressing the shortfall by reducing operating
expenses whenever possible.\\\\\\\\\\\\\\\"

Falmouth member Robert Marshall suggested that the boat line
explore running its ferries more slowly. Adding 10 minutes to a trip
was a reasonable response, he said.

Mr. Lamson said some vessels, such as the Martha\\\\\\\\\\\\\\\'s Vineyard,
actually cover the trip between the Vineyard and Woods Hole five to
10 minutes faster than the scheduled 45 minutes and recommended that
the boat line could run these vessels slightly more slowly and stay
within the existing schedule.

Mr. Lamson said the boat line needs to put together a speed
and consumption graph for its vessels to see how much fuel could be
saved by turning down the engine throttle. \\\\\\\\\\\\\\\"It probably should have
been done before now,\\\\\\\\\\\\\\\" he said.

Vineyard Haven resident Arthur Flathers, who frequently
attends Steamship meetings, said the boat line also should examine
cutting its basic schedule, and run extra sections as needed to carry
any surplus traffic.

Following the meeting, Vineyard Steamship governor Marc
Hanover, who is also chairman of the board, said the boat line should
be prepared to compensate for higher fuel costs by examining changes
in its schedule, and cutting costs in other areas to compensate for
the higher fuel costs. \\\\\\\\\\\\\\\"We need to look at all options,\\\\\\\\\\\\\\\" Mr. Hanover
said.

\\\\\\\\\\\\\\\"The biggest expense has been payroll,\\\\\\\\\\\\\\\" he said. \\\\\\\\\\\\\\\"That\\\\\\\\\\\\\\\'s
always been an issue.\\\\\\\\\\\\\\\"

He said that that cost of running the boat line ultimately is
borne by its customers. \\\\\\\\\\\\\\\"It\\\\\\\\\\\\\\\'s important that people understand that,\\\\\\\\\\\\\\\"
he said.

The belated appearance of $25 million in possible government
funding for the Island Home ferry was brought up for discussion at
yesterday\\\\\\\\\\\\\\\'s meeting by New Bedford member David Oliveira, who asked
whether the boat line could redirect the money.

The Martha\\\\\\\\\\\\\\\'s Vineyard Commission had asked the state to
include the vessel funding in the transportation program. The amount
reflects earlier Authority estimates that the ferry would cost
between $22 and $25 million. The contract price is $30.5 million,
with the overall cost estimated around $33 million.

Mr. Marshall asked whether the boat line could have used the money,
as initially proposed, to help fund the ferry Island Home. \\\\\\\\\\\\\\\"Does this
become a lost opportunity for us?\\\\\\\\\\\\\\\" he asked.

\\\\\\\\\\\\\\\"Eventually, it may be,\\\\\\\\\\\\\\\" Mr. Lamson replied.

But he said waiting for the money would have cost the
Authority in signing a construction contract and building the new
vessel. Further, Mr. Lamson said, \\\\\\\\\\\\\\\"It was never on the table. It was
never offered to us.\\\\\\\\\\\\\\\"

Boat line general counsel Steven Sayers said the SSA has made
use of the transportation funding in the past, such as for the
Hyannis terminal reconstruction project and the construction of the
Flying Cloud fast ferry. But Mr. Sayers cautioned that, given
national competition for the funding, the boat line at best receives
partial funding through the program for its applications. For
example, the program provided $2 million of the $8 million needed to
build the Flying Cloud.

Nantucket member Flint Ranney suggested that the boat line
draft a long-range capital plan and ask regional transportation
planning agencies, such as the MVC, to routinely file for funding
several years in advance for particular capital items, so that the
money is on hand when the projects go out to bid. Mr. Lamson said
that the boat line would do so in the future.

In other action at the meeting, SSA governors unanimously
approved a new license agreement for the seasonal Vineyard-Nantucket
ferry service operated by Hy-Line, a private ferry company based in
Hyannis. Hy-Line plans to base a vessel on each island with the
intention of providing a more convenient schedule. The service begins
June 25.

The board also discussed a proposal by Mr. Ranney to explore
arranging an affinity credit card for the Steamship. Mr. Ranney said
such a card could generate $3 to $5 million a year in revenue for the
program, in addition to making Falmouth and Hyannis realize that boat
line customers generate more than traffic.

Under such programs, a credit card company provides a small
percentage of spending that people charge to the card to a designated
recipient, such as a charity, a fraternal organization, or, in this
case, the Steamship Authority.

The boat line previously had considered setting up an
affinity card program with its employees, but credit card
representatives found the population too small. The new idea is to
offer the card to all SSA customers. Last year, the boat line
recorded 2.7 million passenger trips, although it\\\\\\\\\\\\\\\'s not known how
many individual passengers made those trips.

Mr. Ranney suggested people may be willing to use the card as
an altruistic way of helping the Steamship Authority. Mr. Oliveira
said the boat line also might want to offer discounts to affinity
card holders to encourage participation.

The Steamship board also deferred discussion on a proposed
modification or elimination of the passenger canopy on Water street
in Vineyard Haven until the June boat line meeting, which will held
on the Vineyard.

Mr. Hanover said the matter should be discussed at the next
boat line meeting on the Vineyard, which is set for June.

He said he doesn\\\\\\\\\\\\\\\'t particularly care whether the canopy goes,
as boat line management has proposed, or stays. But he said some
people who have contacted him about the issue say the canopy
effectively screens people on the terminal grounds from views of a
parking lot across the street. He also said the boat line might want
to use the canopy platform in a plan to queue cars off the street and
reduce traffic congestion on and near Water street.