Steamship Authority governors have opted to take a hit of up to $160,000 to boat line revenues this year so high-speed services to Nantucket can be maintained in the face of falling patronage.
At their monthly meeting Wednesday in Woods Hole, boat line governors voted to exempt their main competitor, Hy-Line Cruises, from paying license fees to the SSA during the winter months on its high-speed ferry Grey Lady. Absent the change, Nantucket residents and visitors would be left with no option between January and April but to endure a two and a quarter-hour conventional boat trip, or to fly to the mainland.
While the change would appear to shift cost of service from Nantucket to the Vineyard, SSA management mounts an argument, on the basis of recent declines in fuel costs, that it does not, at least for 2009.
The essence of the problem, though, is the fact that hard economic times are affecting Nantucket more than the Vineyard.
Figures for the year to November 2008 show the number of passengers carried on the Nantucket route by the SSA were down 5.9 per cent overall and 10 per cent on its high-speed ferry, compared with 2007.
For the Vineyard, numbers were up 1.6 per cent.
It’s a similar story for cars (up 0.7 per cent for the Vineyard, down 3.2 per cent for Nantucket), and trucks (almost flat on the Vineyard, down 7.4 per cent for Nantucket).
Total passenger numbers for Hy-Line have not declined as sharply overall — they were down from some 390,000 in 2006 to 365,000 last year — but Hy-Line owners say the service in the winter months is not profitable.
Hy-Line runs the only high-speed ferry service during those months; the SSA stopped its high-speed service at the beginning of January and will not resume it until April.
Governors were told the SSA had examined the possibility of taking over the winter run from Hy-Line, but that would result in an even larger reduction in revenue, of some $200,000.
So the licence fee scale for Hy-Line was adjusted instead.
But, said the management summary of the issue, “even under management’s proposed formula, the authority will receive anywhere from $100,000 to $160,000 less in license fees in 2009 from Hy-Line in 2009 in connection with its Nantucket route.”
The summary noted there was a concern that the Vineyard might be seen to be “inappropriately subsidizing” Nantucket’s service.
“Fortuitously, since the authority’s 2009 operating budget was approved, there has been a significant reduction in the price of vessel fuel oil. As a result, because the Nantucket route uses much more fuel than the Martha’s Vineyard route, there is expected to be a far greater reduction in the cost of service to Nantucket . . . more than compensating for the proposed reduction in Hy-Line’s license fees . . .”
But that lucky balancing of factors may not last beyond this year, boat line general manger Wayne Lamson said later.
“If the Nantucket traffic continues going down and if the Vineyard traffic is going up, we have to take that into consideration. Either we have to cut back on [Nantucket’s] service levels or we have to increase the rates,” he said, adding:
“The member for Nantucket understands that we have this little window here in the near future, but beyond that, there’s an understanding that if we don’t get more ridership on the vessels, there will be consequences they have to face.”
Mr. Lamson suggested that in these constrained times, people looking to take a vacation on the Islands were less prepared to meet the greater monetary and time cost of travel to the more distant island.
Wednesday’s meeting also heard boat line management had locked in the current low fuel prices through futures contracts for the next 18 months, which would protect the SSA from any future price shock like the one which battered its budget and forced fare hikes last year.