High-speed ferry service to the Vineyard will be cut significantly next season, under changes approved this week by the Steamship Authority to the Hy-Line schedule.

Hy-Line, which operates the Lady Martha service between Hyannis and Oak Bluffs, will cut back by two round trips per day in the shoulder seasons, and one per day in the high season.

The changes come against a background of difficult times for Island ferry operations, as was made clear during the SSA’s last board of governors meeting for the year, in which they considered the licensing agreements of two private operators to the Vineyard.

Apart from Hy-Line, the governors also renewed an agreement with the owners of the Pied Piper service, which operates seasonally between Falmouth and Edgartown, and which also has been forced to cut service.

Pied Piper runs a so-called premier service, aimed mainly at Edgartown residents, overnight visitors and business travelers who want a direct connection and are prepared to pay accordingly.

Figures contained in management’s recommendation to the board showed ridership had slumped this year. The number of passengers carried, which had averaged around 27,000 for many years, dropped to fewer than 17,000.

“[Pied Piper’s] traffic dropped off dramatically this past year — by 37.5 per cent — after it reduced the number of trips it operated per week by almost 20 per cent and increased its fares even more due to the unprecedented increase in the cost of fuel oil,” said the management brief.

But the license fees received by the SSA dropped even more sharply; they fell from more than $20,000 to about $5,550, because the fees paid under the previous licensing agreement worked on a sliding scale.

A new fee scale was part of the renewal, although it will return the SSA no more unless Pied Piper passenger numbers increase dramatically.

The governors also approved minor changes to the operator’s schedule and allowed them to increase the Pied Piper’s licensed capacity from 90 to 100 people on most trips.

But even that small concession was given a little grudgingly. Falmouth governor Robert S. Marshall said that while Pied Piper’s services were little competition to the SSA, “in these difficult times, I’m very reluctant to give away even one passenger ticket.”

But the Pied Piper renewal was in the end comparatively straightforward. Not so with Hy-Line, which also has proposed a change in its fee structure, which SSA general manager Wayne Lamson said would result in a significant decrease in what the SSA gets.

Members of the SSA’s advisory body, the port council, were split in their views on the changes, leading management to recommend just a one-year renewal of the license agreement, pending compromise talks.

And that new agreement will include a new provision, that in the absence of agreement on a compromise, “Hy-Line shall have the option of either continuing to operate under this agreement or terminating this agreement at any time.”

Hard bargaining to come. But these are hard times, as the SSA’s own figures show. For the month of October, operating income was $75,745, or some $91,000 below budget projections. For the year to date, it was about $6.5 million, about $2.3 million lower than the budget forecast.

But there was better news at the meeting as well. Mr. Lamson said the SSA could expect a $400,000 windfall from the decision of a ferry operator in Washington state to use the design of the Island Home.

And governors endorsed a plan by management to minimize the future impact of fuel price spikes, such as the one this year, which forced fare increases. Management was approved to establish accounts with Merrill Lynch and/or Prudential Bache commodities to invest in oil futures, as part of a hedging program to protect against future increases from the current low costs, via a cap price.

Locking in fuel prices for the next year or more at the current low costs is expected to prevent fare hikes next year.

The governors approved the renewal of a reduced-fare deal with the regional high school. The arrangement sets a fixed price for the transport of students and others engaged in school activities, equal to about a 50 per cent discount. For the 12 months beginning next July 1, the fixed price is $60,000.

The governors also agreed to a plan reducing the number of Islander preferred spaces on ferries, following an analysis which showed less than 60 per cent of the spaces were used.