N.S. CASH DRIES UP /Ferry gets final $2 .1m / $21m meant to last for 7 years MICHAEL GORMAN mgor [email protected] @CH-mgor man The province on Thursday advanced $2.1 million to the operators of the Yarmouth-to-Maine ferry service, the last of the money in a $21-million pot that was supposed to cover seven years. Economic and Rural Development Minister Michel Samson said the latest advance to Nova Star Cruises Ltd., which started sailing in May, is for general operations. He said the previous NDP government’s belief that $21 million would last seven years had “no hopes of succeeding. “I would dare say that the government of the day knew it was unrealistic when they announced it, Samson said following a cabinet meeting. “In no way was it an economic deal that was reflective of the realities of ferry services throughout North America. We have not been able to find one ferry service which is not subsidized by taxpayers. While that would seem to suggest the province is preparing for another subsidy, the minister wouldn’t come out and say that. Mark Amundsen, president and CEO of Nova Star, said the service will need to be supported in the first couple of years until it reaches a certain threshold and word of mouth spreads. “The input we’re getting back is phenomenal from the passengers; they’ll be back next year,” he said. “We have to get them to spread the word.” Amundsen said the ferry could have continued without the new money; the request was to provide a bit of comfort in light of lost sales when post-tropical storm Arthur forced the cancellation of four crossing around the July 4 weekend. Numbers since then have been good, with bookings averaging 400 to 500 people during the week and 600 to 700 on the weekend, he said. “It’s going to take years to build this, to get the passenger volumes back,” he said. “When you stop the service for four years, people get different vacation habits and you have to win them back.” Samson said the Liberals decided it was better to try to make the framework of the New Democrats’ deal work than start from scratch. Tory economic development critic Karla MacFarlane noted the Liberals, not the NDP, signed the final agreement. She said if there were aspects the Grits didn’t like, they could have amended them. “It seems like when things are going bad, it’s the NDP’s fault but yet (Samson’s) party for six months celebrated and took all the credit and cut the ribbons.” MacFarlane said her party supports the ferry and a subsidy to get it going, but it must be sustainable. The service has faced challenges, including a late start to ticket sales and advertising and questions of support from the State of Maine. Nova Star Cruises came to the province in May when it was unable to secure a line of credit with the help of the Maine government. The province advanced the company $5 million, which is supposed to be repaid, to help cover general operations. It also advanced the company $2 million in February to satisfy U.S. bond regulations for ticket sales and advertising. Samson said he would speak with Maine Gov. Paul LePage about the line of credit and other potential areas of support. Both Samson and Premier Stephen McNeil said the state ought to contribute since it benefits from the service. LePage’s director of communications, Peter Steele, wrote in an email that “the state is still working with several parties to secure a line of credit. The governor’s pledge was not to provide the line of credit, but to assist the company in securing it.” Steele said the state made “significant infrastructure improvements and upgrades to the marine terminal in Portland so it could accommodate the ferry. In addition, the Maine Office of Tourism is assisting by promoting and marketing the ferry service.” Samson said the government would talk with partners involved and “other potential partners” in addressing the challenges facing the service. While he wouldn’t name the potential partners, they could be other operators. The service contract stipulates that at the end of seven years or when the $21 million is gone, the province can take control of the service. Samson said the government has not talked with other operators. Amundsen said he remains confident in the company’s position. He said $12 million of the subsidy was always going to go toward starting the first year. Given that the money for the bond will be repaid and there could be support from Maine, the company isn’t far from where it thought it would be, he said. The premier said that while he’s concerned, he thinks it’s still early. McNeil said he expects a big increase in traffic next year simply as a result of the service being in place when tour operators and bus groups make their plans, which traditionally happens before Christmas. The government doesn’t have a set number for the support it is willing to provide, but “there’s not a blank cheque,” said McNeil. The premier said the Grits remain committed to the service. “It’s Nova Scotia’s international link,” he said. “We want to connect that link, but we’re also going to do it in a cost-effective way. It’s never entered in my mind, quite frankly, that we would not have that connection.”
Posted on: Fri, 25 Jul 2014 14:07:48 +0000