Dec. 1, 2001 — Without Economic Development Authority benefits, fares on the V.I. Fast Ferry will likely increase next season.
While the V.I. Port Authority waived per-passenger port fees of $5.70 for the ferry's first year of service, fees will ramp up to $1.50 the second year and $3 the third year. In addition to those increases, Kevin Matthews, director of operations for Boston Harbor Cruises, the ferry's parent company, said the territory's 4 percent gross receipts tax hadn't been figured into the company's profit projections.
"We were unaware of this [EDA] program as well as the 4 percent gross receipts tax, as my accountant pointed out," Matthews said. "To make [the service] work, we have to keep it affordable."
Standard fares for a resident are $60 round trip and $35 one way. For children 3 to 12, the rates are $30 round trip and $27 one way. Children under 3 years old ride free. For non-residents, the full fare is $75 round trip and $42 one way; for non-residents 3 to 12, it's $65 round trip and $37 one way.
"Next year our rates will be going up because of the Port Authority taxes and gross receipts taxes," Matthews said. "With benefits, we wouldn't be raising it.
"We won't be profitable for a few years, so we're trying to minimize our loses," he said.
V.I. Fast Ferry's 600-passenger Salacia initiated its six-month winter season service between St. Thomas and St. Croix on Nov. 23. Matthews said the Salacia has been carrying an average of 50 passengers per trip so far, which he has said the company can't afford to do for long. But he expects business to pick up as the season progresses.
With an eye toward expanded service in the region — including Puerto Rico and the British Virgin Islands — Boston Harbor Cruises has ordered two more high-speed ferries similar to the Salacia. Those won't be ready for service for another two years, however.
"Our ultimate goal is to be down here year round," Matthews said.
To cut expenses further, the company wants to hire local crew and ticket staff. Currently, the Salacia's crew is from Boston. They are being housed on St. Croix at the company's expense for the six months of operation. That subsidy will not be provided next year, Mathews said. "We would like to eliminate non-island help to eliminate that expense."
The company wants to train locals as crew members by having them work on board the $10 million high-speed ferry while it is in the territory, and then travel to Boston during the summer for additional on-the-job training.
But under questioning from EDA board member Mary Ann Pickard, Matthews said housing won't be provided in Boston to any local who agrees to go there for the six summer months.
"It's a great idea," she said. "But they can't survive on that salary."
Boston Harbor Cruises, the largest company of its kind in the U.S., recives marine mass transit subsidies from the state of Rhode Island and from the federal government for its operations in Massachusetts. Matthews said the company is working with the Port Authority to find similar funding for its operations in the territory.
The EDA board took V.I. Fast Ferry's application for benefits under consideration. If the members approve the package, it must also be approved by the governor.
Benefits available under the EDA program include:
— A 100 percent exemption from property tax and gross receipts tax.
— A 90 percent exemption from local corporate income tax payments.
— A 90 percent exemption from income taxes paid by resident stockholders on dividends received from the enterprise.
— A 1 percent customs duty rate for raw materials and component parts. The standard rate is 6 percent.
— A 100 percent excise tax exemption for building materials, machinery, equipment, and supplies utilized in the construction, alteration, reconstruction, or extension of the physical plan or facilities of a beneficiary.
