Post by Low Light Mike on Apr 7, 2006 17:44:32 GMT -8
an article, that I found at beautifulbc.net/press.asp?id=18
It's a bit old, but interesting nonetheless......
------------------------------------------------------
European firms target B.C. ferry market
European ferry operators are looking to set up shop in B.C. as the company that ran a popular Nanaimo-downtown Vancouver service proceeds through bankruptcy, say industry insiders.
The new players are looking to grab a share of the provincial subsidies BC Ferries receives for seniors, medical patients and school-aged Gulf Island residents, while taking advantage of legislation that allows private operators to enter the market.
Bill McKay, former operations manager for the HarbourLynx Nanaimo-Vancouver service, who is now assisting its bankruptcy trustee, says two London, England-based companies have shown interest in taking over the run since the ferry stopped sailing Feb. 2 because of mechanical problems in its starboard engine.
Meanwhile, a source with an overseas-based shipping consulting firm, which also invests in ferry companies, says his firm may help set up a new Nanaimo-downtown Vancouver run and is involved with two investor syndicates that are looking to operate the Vancouver-Victoria, Squamish-Vancouver and Victoria-Seattle routes.
The ferries would be built by Dutch-based Damen Shipyards Group.
According to McKay, a lender placed HarbourLynx's operator, Nanaimo Harbour Link Corp. (NHLC), in receivership Feb. 17 after its shareholders balked at paying $750,000 to repair a faulty crankshaft.
The Nanaimo-based firm is $5.5 million in debt, which includes a $500,000 provincial sales tax charge that is the subject of a dispute between the company and the province.
NHLC had until Feb. 27 to resolve its receivership situation, but it's common for deadlines to be extended in bankruptcy proceedings, pending the result of negotiations.
"Not being on the inside (anymore), I'm not confident Nanaimo Harbour Link is going to advance through receivership," says McKay, who has been retained by the lender to assist with a possible sale of assets. "If I was (still on the inside), I would be more than happy to help wherever I can, but I think there are too many challenges for the company to keep going forward."
McKay says he would advise prospective Nanaimo-downtown Vancouver operators not to proceed unless they can operate smaller vessels for more trips per day, and get better deals with the province and terminal landlords - TransLink and the Port of Vancouver on the Lower Mainland side, and the Port of Nanaimo on Vancouver Island side.
The lone HarbourLynx ferry has two engines but, unlike vessels with more motors, it can't continue to operate - beyond being able to return to port - after one engine fails. Nanaimo Harbour Link could have filed an insurance claim, but would have been required to pay for repairs first.
McKay blames his former firm's failure largely on the provincial government's refusal to give HarbourLynx the same benefits for seniors and medical patients as it grants BC Ferries. On mid-week trips, seniors travel on BC Ferries free of charge and the province reimburses the former Crown corporation for 100 per cent of their fares.
Last year, the province rejected HarbourLynx's pitch for a piece of the senior-passenger pie. Transportation Minister Kevin Falcon said in a letter to NHLC that it would be "inconsistent" for the corporation to receive a subsidy when the government is trying to phase out subsidies. McKay retorted by calling on the government to subsidize his firm until all subsidies are stopped.
Meanwhile, Vancouver Island-based medical patients approved by the health ministry are also allowed to travel for free to the mainland for treatment. The province pays the actual fares and ticket-processing fees to BC Ferries.
"If they're a private company, why does the province give (BC Ferries) assistance?" asks McKay.
He says NHLC has sought a meeting with Premier Gordon Campbell on the issue, but has been rebuffed.
"The premier seems to be well insulated on this issue," says McKay. "We can't get past (Falcon) and the MLAs. They claim to be a business-oriented government. We can't understand why we can't meet with the premier."
In 2003, Campbell's Liberal government changed BC Ferries to a private firm from a Crown corporation, but the province is the company's sole shareholder. Under the terms of the new Coastal Ferry Act, BC Ferries must purchase all its vessels from its own coffers rather than government aid, and private rivals were allowed to enter the market.
McKay says HarbourLynx also struggled because of "extremely rich" leases with TransLink - which operates the Sea Bus dock where HarbourLynx berthed - the Port of Vancouver and the Port of Nanaimo, although the terminal landlords did provide relief on lease payments before this year.
Harbour Link would have had to pay $1 per passenger in lease payments each way, and another 30 cents per passenger to the Vancouver Port Authority, says McKay.
The company's total lease charges could have risen to $412,000 this year from $120,000 last year, while only six parking stalls would have been available in Vancouver. But he contends the landlords over-estimated the number of potential passengers when setting rates.
The $500,000 sales tax dispute stems from a dispute over the ship's size. Sales documents indicate the ship was under 500 gross tonnes, which would prohibit a waiver of the sales tax, but Transport Canada's measurement shows it weighs more.
The overseas-based source says his group is looking at providing capital to an operator willing to set up a Nanaimo-downtown Vancouver run. His firm evaluates ferry operations, brokers loans between banks and ferry-company investors, and also takes equity stakes in some ventures in lieu of brokerage fees.
But he questions whether the Nanaimo-Vancouver tourist and business-travel market is large enough.
NHLC shareholders would be better off folding the current company, so there would be no debt, and starting up a new venture with a vessel more suited to the West Coast environment, he adds. The Nanaimo terminal would also have to move to a new location that has more parking, near the Nanaimo-Gabriola Island ferry dock.
The source says his firm had hoped HarbourLynx would be able to stay in business in order to help mount a case for companies other than BC Ferries to receive the senior, medical and student subsidies.
He estimates the seniors subsidy accounts for $35 million - $25 million in actual fares and $10 million in ticket-processing charges - out of the more than $100 million in subsidies that BC Ferries receives annually from the province.
Meanwhile, the newcomers hope to get part of the $5-$7 million that BC Ferries receives for medical passengers and school-aged students who reside on one island and attend classes on another.
Meanwhile, a Canadian-Swedish group calling itself Cascade is looking to operate a passenger-only route between downtown Vancouver and Sidney, and a Seattle-Sidney run, among other routes.
The downtown Vancouver-Sidney run could use the Washington State Ferries terminal, now used for a route between the Anacortes, Wash., terminal and Sidney.
According to an overseas source, Washington State Ferries will not renew its lease on the Sidney terminal, which expires in 2006.
But Washington State Ferries spokeswoman Susan Harris-Huether says her state-owned firm is still in negotiations with the Town of Sidney to extend its lease. She declined to discuss the negotiations, adding she was not going to negotiate through the media.
She says Washington State Ferries has no plans to terminate its route between Anacortes and Sidney. In 2002, the company announced its intentions to stop operating the run by 2008, but Harris-Huether says it has since decided to continue operating the route.
(Monte Stewart can be reached at monte@businessedge.ca)
3/2/2006 - Source: By Monte Stewart - Business Edge
It's a bit old, but interesting nonetheless......
------------------------------------------------------
European firms target B.C. ferry market
European ferry operators are looking to set up shop in B.C. as the company that ran a popular Nanaimo-downtown Vancouver service proceeds through bankruptcy, say industry insiders.
The new players are looking to grab a share of the provincial subsidies BC Ferries receives for seniors, medical patients and school-aged Gulf Island residents, while taking advantage of legislation that allows private operators to enter the market.
Bill McKay, former operations manager for the HarbourLynx Nanaimo-Vancouver service, who is now assisting its bankruptcy trustee, says two London, England-based companies have shown interest in taking over the run since the ferry stopped sailing Feb. 2 because of mechanical problems in its starboard engine.
Meanwhile, a source with an overseas-based shipping consulting firm, which also invests in ferry companies, says his firm may help set up a new Nanaimo-downtown Vancouver run and is involved with two investor syndicates that are looking to operate the Vancouver-Victoria, Squamish-Vancouver and Victoria-Seattle routes.
The ferries would be built by Dutch-based Damen Shipyards Group.
According to McKay, a lender placed HarbourLynx's operator, Nanaimo Harbour Link Corp. (NHLC), in receivership Feb. 17 after its shareholders balked at paying $750,000 to repair a faulty crankshaft.
The Nanaimo-based firm is $5.5 million in debt, which includes a $500,000 provincial sales tax charge that is the subject of a dispute between the company and the province.
NHLC had until Feb. 27 to resolve its receivership situation, but it's common for deadlines to be extended in bankruptcy proceedings, pending the result of negotiations.
"Not being on the inside (anymore), I'm not confident Nanaimo Harbour Link is going to advance through receivership," says McKay, who has been retained by the lender to assist with a possible sale of assets. "If I was (still on the inside), I would be more than happy to help wherever I can, but I think there are too many challenges for the company to keep going forward."
McKay says he would advise prospective Nanaimo-downtown Vancouver operators not to proceed unless they can operate smaller vessels for more trips per day, and get better deals with the province and terminal landlords - TransLink and the Port of Vancouver on the Lower Mainland side, and the Port of Nanaimo on Vancouver Island side.
The lone HarbourLynx ferry has two engines but, unlike vessels with more motors, it can't continue to operate - beyond being able to return to port - after one engine fails. Nanaimo Harbour Link could have filed an insurance claim, but would have been required to pay for repairs first.
McKay blames his former firm's failure largely on the provincial government's refusal to give HarbourLynx the same benefits for seniors and medical patients as it grants BC Ferries. On mid-week trips, seniors travel on BC Ferries free of charge and the province reimburses the former Crown corporation for 100 per cent of their fares.
Last year, the province rejected HarbourLynx's pitch for a piece of the senior-passenger pie. Transportation Minister Kevin Falcon said in a letter to NHLC that it would be "inconsistent" for the corporation to receive a subsidy when the government is trying to phase out subsidies. McKay retorted by calling on the government to subsidize his firm until all subsidies are stopped.
Meanwhile, Vancouver Island-based medical patients approved by the health ministry are also allowed to travel for free to the mainland for treatment. The province pays the actual fares and ticket-processing fees to BC Ferries.
"If they're a private company, why does the province give (BC Ferries) assistance?" asks McKay.
He says NHLC has sought a meeting with Premier Gordon Campbell on the issue, but has been rebuffed.
"The premier seems to be well insulated on this issue," says McKay. "We can't get past (Falcon) and the MLAs. They claim to be a business-oriented government. We can't understand why we can't meet with the premier."
In 2003, Campbell's Liberal government changed BC Ferries to a private firm from a Crown corporation, but the province is the company's sole shareholder. Under the terms of the new Coastal Ferry Act, BC Ferries must purchase all its vessels from its own coffers rather than government aid, and private rivals were allowed to enter the market.
McKay says HarbourLynx also struggled because of "extremely rich" leases with TransLink - which operates the Sea Bus dock where HarbourLynx berthed - the Port of Vancouver and the Port of Nanaimo, although the terminal landlords did provide relief on lease payments before this year.
Harbour Link would have had to pay $1 per passenger in lease payments each way, and another 30 cents per passenger to the Vancouver Port Authority, says McKay.
The company's total lease charges could have risen to $412,000 this year from $120,000 last year, while only six parking stalls would have been available in Vancouver. But he contends the landlords over-estimated the number of potential passengers when setting rates.
The $500,000 sales tax dispute stems from a dispute over the ship's size. Sales documents indicate the ship was under 500 gross tonnes, which would prohibit a waiver of the sales tax, but Transport Canada's measurement shows it weighs more.
The overseas-based source says his group is looking at providing capital to an operator willing to set up a Nanaimo-downtown Vancouver run. His firm evaluates ferry operations, brokers loans between banks and ferry-company investors, and also takes equity stakes in some ventures in lieu of brokerage fees.
But he questions whether the Nanaimo-Vancouver tourist and business-travel market is large enough.
NHLC shareholders would be better off folding the current company, so there would be no debt, and starting up a new venture with a vessel more suited to the West Coast environment, he adds. The Nanaimo terminal would also have to move to a new location that has more parking, near the Nanaimo-Gabriola Island ferry dock.
The source says his firm had hoped HarbourLynx would be able to stay in business in order to help mount a case for companies other than BC Ferries to receive the senior, medical and student subsidies.
He estimates the seniors subsidy accounts for $35 million - $25 million in actual fares and $10 million in ticket-processing charges - out of the more than $100 million in subsidies that BC Ferries receives annually from the province.
Meanwhile, the newcomers hope to get part of the $5-$7 million that BC Ferries receives for medical passengers and school-aged students who reside on one island and attend classes on another.
Meanwhile, a Canadian-Swedish group calling itself Cascade is looking to operate a passenger-only route between downtown Vancouver and Sidney, and a Seattle-Sidney run, among other routes.
The downtown Vancouver-Sidney run could use the Washington State Ferries terminal, now used for a route between the Anacortes, Wash., terminal and Sidney.
According to an overseas source, Washington State Ferries will not renew its lease on the Sidney terminal, which expires in 2006.
But Washington State Ferries spokeswoman Susan Harris-Huether says her state-owned firm is still in negotiations with the Town of Sidney to extend its lease. She declined to discuss the negotiations, adding she was not going to negotiate through the media.
She says Washington State Ferries has no plans to terminate its route between Anacortes and Sidney. In 2002, the company announced its intentions to stop operating the run by 2008, but Harris-Huether says it has since decided to continue operating the route.
(Monte Stewart can be reached at monte@businessedge.ca)
3/2/2006 - Source: By Monte Stewart - Business Edge
