Nov. 9, 2007 — The franchised ferry service between St. John and St. Thomas is at a crossroads brought on by a steep increase in ridership that necessitates a government subsidy, St. Thomas attorney Claudette Ferron said Friday.
Ferron, who represents the two ferry companies that share the franchise, Transportation Services and Varlack Ventures, said the companies will probably start running only during rush hours in about a week.
Shortly thereafter service will be halted entirely unless the local government comes up with funding, she said. The companies have long used their own funds to operate the company when, by law, that job belongs to the government, she said.
"We'll run until the money runs out and then there's no service," Ferron said.
The companies can no longer borrow money or have family members mortgage their houses to keep the ferry service going, she said.
"They don't have any more money to donate to the people of the Virgin Islands," Ferron said. "They lose money every run."
Unlike the V.I. Water and Power Authority, the companies can't add a surcharge when fuel prices go up. On the mainland and in most locations around the world, ferry service is subsidized by local and federal governments, Ferron said. Governments either operate the ferry service outright or hire a contractor to run it, she said.
"Nobody wants to step up to the plate for marine public transportation" she said, referring to the route between St. Thomas and St. John.
For decades the family owned Transportation Services and Varlack Ventures funded the entire cost of the operations. Previously that system worked because fewer people used the ferry system and the companies were able to augment their incomes by running tours for tourists, Ferron said.
That has changed, she said, and operating the franchised runs consumes almost all of the ferry companies' efforts. The companies transport 1.5 to two million passengers a year between St. John and St. Thomas.
The ferry companies do not have the right to curtail or stop service on their franchised runs between St. Thomas and St. John, Public Services Commission Director Keithley Joseph said Friday. The companies received $500,000 each in local funds earlier in the year, but Ferron said that money went to pay back bills.
"It was a drop in the bucket," she said.
At issue is the PSC's contention that the ferry companies haven't delivered on promises to fully open their books. Ferron disagreed. She said the companies submit quarterly certified reports.
"We opened up our books," she said. "We account for every penny."
PSC Board Chairman Joseph Boschulte said Friday that "our records clearly state that we don't have the financial records." The PSC has asked for a rate investigation on the matter, he said.
The franchise agreement between the local government and the ferry companies serves as a contract for operating the ferry companies. She faxed a Dec. 31, 1987, amendment to the franchise law that calls for the government to fund ferry operations.
The PSC's attorney, Tanisha Bailey-Roka, fired back to Ferron that a franchise is a privilege, not a right, and does not come with the expectation that the government will provide a subsidy. The government has the right to start forfeiture proceedings if the ferry companies fail to perform or abandon the franchised ferry runs, she said.
Despite a rate increase approved by the PSC, the ferry companies are plagued by sporadic canceled services, delays and complaints about poor customer service, Bailey-Roka wrote.
"On many occasions, the companies have failed to notify the commission or even the public in a timely manner as to these lapses in service," she wrote.
In addition to the $500,000 already received by each company, the government will ask the Legislature to provide operating subsidies to the ferry companies, Public Works Commissioner Darryl Smalls said in a news release issued Friday.
"I want to assure the residents of the Virgin Islands, especially the commuters between the islands of St. Thomas and St. John, that the government of the U.S. Virgin Islands is prepared and available to collaborate with the franchise operators and render any assistance it can for the betterment of the people of the U.S. Virgin Islands," Smalls said.
The government requested $4 million from the U.S. Department of Transportation's Federal Highway Administration for new boats but the request was denied, he said.
St. John Administrator Leona Smith said she is worried about the impact curtailment of ferry service or an outright stoppage would have on the island's residents and visitors.
"This is the tourist season," she said.
The government needs to come up with a backup plan in case the ferry companies' threats come to pass, Smith said.
However, Ferron wondered where those backup boats would come from since the ferry companies own most boats of that size.
For the franchised ferry runs to operate like similar operations on the mainland, the V.I. Port Authority would have to stop charging dockage fees and fees to use the ticket booths at Red Hook and Cruz Bay ferry docks, she said. The ferry companies pay $1,200 each to use booths at the new Red Hook marine terminal.
Boschulte said he believes that a system could develop that allowed for government subsidization of the ferry service, but said the ferry service has to provide financial documentation to prove the need. He said he hopes something can be resolved in the short term so the ferry service doesn't stop and, in the long term, to solve the problem once and for all.
The Public Works Department will meet with Varlack Ventures, Transportation Services and V.I. Sea Trans, which holds a St. Thomas to St. Croix franchised ferry run, at 1 p.m. Wednesday to discuss subsidy issues.
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