Bay Ferries CEO says uncertainty over the future led to inclusion of transition funding

By Tina Comeau

THE VANGUARD

NovaNewsNow.com

The CEO and president of Bay Ferries Ltd. says uncertainty in the travel tourism industry, along with protection for Bay Ferries, were reasons for the inclusion of a transitional fund of up to $3 million in an agreement between the company and the province when it came to The Cat.

But Mark MacDonald says at the time the agreement was struck with the previous Progressive Conservative government, the company’s preference would have been to have had a two-year funding agreement in place that would have kept the ferry service operational in 2010.

Instead a one-year deal was struck for funding of up to $12 million to help keep the ferry afloat in 2009. When the new NDP government decided in December it wouldn’t pump millions more taxpayer dollars into the service, Bay Ferries announced The Cat would end its sailing service between Yarmouth and Maine.

Up until last week there had not been any public disclosure about the transitional fee. The NDP government says it has no choice but to honour the cancellation-of-service provision. The province says it will have to make the first $500,000 payment installment by April.

But others in the tourism sector and the province’s opposition parties have argued that the up to $3 million that will be paid for a service that isn’t running should have instead been invested into keeping the ferry operational for one more year.

MacDonald told the Yarmouth Vanguard Tuesday that is a question for the province to answer, and not one for him to comment on.

But commenting on the transitional fund, and backtracking to when the negotiations occurred between Bay Ferries and the province prior to the 2009 sailing season, MacDonald said they were very concerned as a company about not getting caught late in the game in a position where the government terminated the financial agreement after one year and Bay Ferries had to reshape the company or redeploy the ferry.

The transitional funding became part of the discussion, MacDonald said, when the government was hesitant to firmly commit funding for two years to cover 2009 and 2010.

Although aside from the funding it provided in 2009, in 2008 the government had provided Bay Ferries with $4.4 million to help offset high fuel costs.

But with or without the ferry running in 2010 there are still expenses that need to be met, like payments on The Cat unless it is sold, and severance to employees. “We have an asset that’s an extremely valuable and expensive asset and costs a lot to carry,” MacDonald said, saying that is why they had hoped for a two-year deal. “One of the challenges for this service in the last few years, along with all the external challenges, has been uncertainty and existing on a year-to-year basis,” he explained. “So we felt very strongly that we needed a two-year agreement to be able to talk to our motor coach customers and our various hotel partners and give them some assurance that we were going to be around for at least that period.”

When the ability to do that vanished, MacDonald said a compromise position was struck through the creation of a transitional fund of up to $3 million to, if needed, help the Bay Ferries get through an orderly transition of its business. “It was basically designed to protect our company in just the sort of circumstance that unfolded,” MacDonald said.

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