THE CONVERSATION

As he charts a course between connecting communities and boosting efficiency, the new head of BC Ferries must also work with a provincial government that wants lower fares

As the NDP push for lower fares, new BC Ferries president and CEO Mark Collins finds himself in uncharted waters

Mark Collins grew up in a ferry-dependent community on a ferry-dependent island: St. John’s, Newfoundland. During winters in the 1970s, the president and CEO of British Columbia Ferry Services Inc. recalls, store shelves in the provincial capital would empty as ice kept ships away. That experience helps shape Collins’s approach to leading one of the world’s largest ferry companies. Last April he succeeded Mike Corrigan, who recruited him to BC Ferries in 2004.

Collins began his transportation career as an aircraft maintenance technician. Before completing a BA in marine geography at St. Mary’s University in Halifax, he went to sea as a marine engineer for shipping companies. Going on to earn an MBA from UBC in 1992, Collins joined the marine manufacturing division of Rolls-royce PLC, rising to president of its Italian and Brazilian operations.

He arrived at BC Ferries just as Gordon Campbell’s Liberals were turning the Crown corporation into a privately run, government-owned business. After almost nine years as VP, engineering, Collins left briefly to head technical services for Montreal-based shipping giant CSL Group Inc., returning in 2014. When he took the helm, the new NDP government was campaigning on a promise to cut ferry fares that have climbed more than 30 per cent on some routes over the past decade.

Why does BC Ferries matter to the province and its economy?

We are a lifeline to many, many communities. We’re the only scheduled service in or out, and so we occupy a critical place in the functioning of a community. We have a responsibility to live up to the trust they place in us to deliver reliable transportation to allow their communities to be viable.

How has the corporation changed since you first joined in 2004?

We’ve been focused on safe, reliable and efficient services. The system was not sufficiently reliable when [Mike Corrigan and I] got here, from our view, and we’ve worked very hard on that. We’ve spent $2.1 billion on new infrastructure since 2004. In the 10 years before 2004, about $1 billion was spent.

That’s not to decry what went on before. There were constraints under the Crown corporation model. The company was up against schools, roads and hospitals at Treasury Board. Under the new model, we don’t have those constraints. We raise our own money, and we prioritize the investments into the ferry system.

How financially sound is the ferry service?

We’re just coming off our best year ever in terms of net earnings. Traffic is up, tourism is strong—the system has never been busier. Average annual utilization on our fleet this year will probably be the highest it’s ever been. But we always need to be cognizant that your best year should not be taken to be your average year.

Since we were restructured in 2004, [we had] about eight pretty tough years where we under-earned. We always had positive net earnings, but they were far below target. And because we invested in those years, now we need some strong years to help us pay our debt, to continue our investment program into the future.

The new government has pledged to reduce ferry fares, but how inevitable were hikes over the past several years?

The previous government’s public policy was to keep their investment in the ferry service essentially flat, constant year-over-year. Which means that as operating costs rose, primarily due to fuel and labour and capital costs— or amortization, because we

were buying new assets—the coverage of those costs was borne by the fare box. We applied to our independent commissioner for permission to increase fares to cover those increased operating costs, because there really is no other source.

In its review of BC Ferries, do you think the government will propose big changes to the business model?

We’ll have to wait and see. Our board of directors has communicated with the [transportation] minister that we’re ready and willing to work with the new government. We understand they have questions, and we’re standing by to answer them.

The new government is coming from a different place, and affordability is a big objective, and so we’ve already said to them, “Yes, there’s ways we can do that.” We see our mandate as protecting the interests of fare-payers, and so we will be discussing with them any initiatives that we think impact the sustainability of the ferry system in a way that would be disadvantageous for the fare-payer.

How realistic is it to expect that BC Ferries can build all of its vessels in this province?

It’s totally realistic, but the shipbuilding industry needs to provide competitive proposals. We would love to build in B.C., but not at any price. If the price to build in Canada gets too high, then you have fare-payers, a relatively small segment of the population, subsidizing the shipbuilding industry.

How do you plan to keep the business viable for the long term?

We’re very busy honing our community engagement process. Sometimes there’s an impression that we make decisions which ignore communities. In fact, we don’t do that, but I know why people perceive it that way. So we’re trying to improve our practice of reaching out to the communities and making them part of our decision-making process.

Also, you’ve got to look at our environmental program and say that being environmentally sustainable is important. The public expectation now is that we will not operate at the expense of the planet.

Finally, you’ve got to be financially sustainable, or you’re not going to exist. So we have to find ways to become ever more efficient. We also have to explain our model to the public so they understand why support for the ferry system is important if they wish it to be around for our grandchildren and beyond.

This interview has been edited and condensed