|
The Commission regulates ferry fare levels on 25 routes operated by BC Ferries. These routes are divided into seven groups. The largest group has 16 routes in it, while the smallest groups have only one route. Generally, the routes in a given group have common characteristics. For instance, the “major route group” comprises the three busiest routes which connect the BC Lower Mainland with Vancouver Island.
Every three months BC Ferries must report to the Commission the actual average level of fares paid by its customers, reporting a single figure for each of the 7 route groups. The figure is a weighted average for all the routes in the group, combining all the different traffic types (passengers, autos, trucks, buses etc...), the different times of the week (weekend vs. midweek), the different peak/shoulder/off peak fares charged in that quarter, and other variables. This is a complex calculation and the Commission directs BC Ferries on the raw data, formulas and assumptions that it must use.
Note that BC Ferries has freedom to restructure the fares within a route group (e.g. offering special discounts, charging premiums, making package offers). It is the weighted average of all these fares (for a given route group) that matters for the purposes of regulation.
Second, the Commission computes a maximum permitted level of average ferry fares for each route group. This ceiling is called the price cap for each group.
Click on the button Actual Fares vs. Caps on the left to find graphs showing the relationship between actual fares and price caps for each of the seven groups.
How is the price cap for each group determined? The Coastal Ferry Act set the initial cap at the level of the fares when the Act was passed, and it allows the price cap to rise annually by 2.8% (for the major route group) and 4.4% (for the other six route groups) through the year 2007. In October 2006 the Commission began reviewing a submission of data by BC Ferries (under section 40 of the Coastal Ferry Act) to establish the price caps for 2008 onwards.
The Commission can make adjustments in the price cap under certain circumstances (e.g. if fuel prices take an extraordinary jump and BC Ferries applies to the Commissioner for relief). To date, BC Ferries has made several such applications, starting with an application for a fuel surcharge in June 2005. Click extraordinary increases for more on this.
Infraction and Enforcement
The average level of the ferry fares, and of the price cap, are expressed as indexes which had a value of 100 when the Coastal Ferry Act became effective (April 2003). BC Ferries must not allow the index of actual ferry fares for a route group to rise above the index of its price cap for more than one consecutive quarter. If it does, the Commissioner can order BC Ferries to reduce its fares. If it fails to do so, the Commissioner can reduce the price cap as a penalty to BC Ferries.
|
