News: Thorne says WSF plan is succeeding
June 17, 2008 · Updated 11:38 AM
The business plan is working, said Mike Thorne, chief executive officer of Washington State Ferries.
That plan, spelled out by Thorne more than a year ago, is termed 5-5-5, and has as its goal to make the system is financially secure long-term. It consists of raising fares, cutting costs and increasing revenues from other sources all by 5 percent. If successful, the plan will enable the ferry system to pay for operations, new boats and terminals.
Thornes plan is expected to remain in effect for 10 years, after which time fare hikes would be limited to the inflation rate, he said.
Assuming that the plan isnt changed, the next round of fare hikes will take place in May 2005. While fares on the sailings from Anacortes to Lopez, Shaw and Orcas will all increase by 5 percent, those on ferries to Friday Harbor will increase by 10 percent next year. Inter-island fares will rise by more than 5 percent but less than 10 percent.
The discrepancies are the result of whats called route equity, in which fares throughout the system will gradually be based on the length of each sailing. By applying that formula, the Anacortes-Friday Harbor sailing will reach route equity after 2005, but the inter-island fares will continue to be in excess of 5 percent for several more years.
Although the rate hike is small compared to those imposed for the islands in previous years, older people are saying ouch to it, Commissioner Rhea Miller said at a Ferry Advisory Committee meeting on Lopez Island July 8. Thorne acknowledged that this is true. We are mindful of this, he said. We have to keep an eye on this.
Savings of 5 percent are being achieved by arranging schedules in order to limit the amount of employee overtime which, in past years, added to payroll costs by between 7 and 8 percent. Additional savings are being achieved by cutting some service, particularly during the winter months when service to Sidney, B.C. has been eliminated, and the inter-island ferry was shut down on the weekends. These two service cuts are budgeted to remain in effect next year.
As for increases in revenue, most have come from federal grants, and by raising parking fees. In Anacortes, they are now as follows: 0-24 hours, $10; three days (72 hours), $20; seven days (168 hours), $30; monthly parking, $75.
A surprising source of the ferry systems additional revenue has been the vending machines on the ferries and in the terminals. We were making very little with (the contract with) Sodexho, the company that was providing galley food service, Thorne said. With the vending machines, the ferry system gets to keep the entire profit.
Nevertheless, the ferry system remains committed to providing food service at the terminals and on the boats, Thorne said, explaining that the new food provider at the Anacortes terminal, the Cheesecake Cafe, is proving to be a hit with travelers.
Thorne also noted that a provider serving the Vashon Island ferries is preparing food elsewhere but serving it on the ferries. He said, This could be a model. Galley food service may be a thing of the past.
In other news
Gasoline prices for 2004 are projected to be $11 million higher than budgeted, Thorne said. Nevertheless, he expressed confidence that the ferry system can deal with the situation without having to add a surcharge or cut into services.