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Government needs to show upside of keeping Yarmouth ferry: Consultant

WATCH ABOVE: The operators of the Nova Star Ferry is showing even worse performance numbers this year over last year, but the province maintains it is committed to having a Yarmouth to Portland ferry in 2016. Globals Marieke Walsh reports.

HALIFAX – The provincial government needs to show Nova Scotians why the Yarmouth to Portland, Maine ferry service is viable, said an economic consultant who has studied the issue.

“From the minister’s perspective, from the government of Nova Scotia’s perspective, it has to ask really hard questions,” said Michael Gardner, president of Gardner Pinfold Consulting. “Where is the source of optimism that this is going to turn around?”

On Tuesday, Nova Star Cruises released a dismal update on the passenger numbers for the first three months of the 2015 sailing season. At the beginning of the season, Nova Star Cruises said its goal was to increase ridership by 35 per cent over last year, instead ridership has sunk by six per cent. In a press release, the company called the numbers “disappointing.”

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READ MORE: Nova Star numbers worse than last year

Despite the low numbers, Transportation Minister Geoff MacLellan said he remains optimistic that there is a market for the ferry service.

“I’m absolutely convinced that there is a market that this service is viable and that we’ll do our best to ensure that we find that model that best fits,” he said.

However, while MacLellan said the Liberal government is committed to a ferry service, it may decide to use a different operator in the 2016 season. He said the government is still expecting to pay for at least part of the service.

“Will the government have to be involved and play a role with some sort of subsidy? All of the indications are ‘yes’ at least for a certain period of time,” said MacLellan.

“But at the end of the day there is a tourism market between the Northern United States and Canada.”

The strengthening American economy and low Canadian loonie should have helped the Nova Star, instead it hurt it it, said Gardner. His firm published a report in 2011 that said a ferry could be viable, but Gardner said the conditions that were needed to make it work aren’t all there.

For example, he said while tourism numbers have improved slightly in 2015, the numbers are still much lower than they were a decade ago. He said it’s possible Americans no longer have their sights set on Nova Scotia.

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“I tend to think given the trend particularly on air and road that this province as a destination is just less of an interest.”

However, he said another possible explanation for the low numbers is that the American economy hasn’t yet fully recovered.

Since the ferry service launched in 2014, the Nova Star has received $38.1 million in public money. Initially, the province had only committed $21 million to the ferry for its first seven years, instead that money was used up in the first two months of the sailing season.

The report that Gardner’s firm published was commissioned by the Yarmouth Area Industrial Commission. At the the time, the firm predicted passenger numbers would hit 120,000 in the first year of business. At the peak in 2002, the two ferry services running between Yarmouth and Maine had a combined ridership of roughly 330,000 people.

It could take up to $20 million in advertising over a number of years in order to get the service operating at its full potential, said Gardner.

“In the absence of a lot of advertising by the ferry company and a lot of promotional advertising by the government of Nova Scotia, it’s going to take time to see this …turn around.”

The government said marketing is a big part of any viable ferry business model.

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“Bringing passengers here is a question of marketing, it’s a question of the promotions, it’s a question of price and obviously of the service itself. And making sure that you reach that demographic that would be prone to taking the service,” said MacLellan.

MacLellan has previously said he has had talks with three other companies that are interested in operating the Yarmouth to Maine ferry. He said he will make a decision on the 2016 operator when the 2015 season is over.

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