Regulation of Assured Loading

Background

Assured Loading Tickets (ALTs) give BC Ferries customers priority travel when presented to the Ticket Agent at least 20 minutes before the scheduled departure time on the three major routes (between Tsawwassen and Swartz Bay, Duke Point and Tsawwassen or Horseshoe Bay and Departure Bay). This is a premium product of BC Ferries: from November 1, 2007, the price for one ALT was $125 (they must be purchased ten at at time for a package price of $1250). One ALT covers one personal vehicle plus driver fare. Depending on the cost of a regular fare at the actual time of travel, this represents an “ALT premium” about $70 over a regular car-and-driver fare. A reservation is not required.

ALTs are described in more detail on BC Ferries’ website.

To date, ALT premiums are unregulated, i.e. the Commission has not included the ALT premium in its calculation of the weighted average fare for which it sets the maximum value. The number of ALT spaces on board a vessel is also unregulated. So, both the price and supply of ALT space is determined by BC Ferries.

The Commission’s concern is that, especially if traffic grows relative to capacity, more customers will find it necessary to resort to paying the premium for priority loading through ALTs. Other customers paying the standard (regulated) fare would be displaced by them, seeing longer waits than they otherwise would. Neither the price nor supply of ALTs is currently regulated, and since customers have no real alternative to BC Ferries, there is the potential of BC Ferries’ exploiting its monopoly position, effectively undermining the regulation of fares and service by the Commission.

The circumstances are analogous to those surrounding reservations on the major routes, to which the Commission has drawn attention in its Annual Reports. Like ALT premium and space, the price and number of reservations on a sailing are also unregulated and are determined by BC Ferries. However, while the Coastal Ferry Act states that the Commission shall not regulate reservations, it does not explicitly mention Assured Loading Tickets.

Commission Request to BC Ferries

October 24 2006

The Commission asked BC Ferries to show cause why the Commission should not consider revenue from assured loading tickets to be core revenue, meaning that the ALT premium would be regulated as part of the price of ferry transportation.

BC Ferries’ Response

November 23 2006

BC Ferries advised the Commission that BC Ferries believed that Assured Loading Ticket revenues were properly categorized as revenues from ancillary services (and therefore unregulated), not revenues from core ferry services, as they are a form of, or are analagous to, fees for reservations that are specifically defined in the Act as ancillary services.

BC Ferries provided an eight-page opinion obtained from outside counsel corroborating its position that assured loading tickets are ancillary services.

November 1 2007

BC Ferries increased the price of 10 assured loading tickets from $819 to $1250.