Opinion: Downtown Vancouver to Vancouver Island high-speed ferries can viable

Opinion: Downtown Vancouver to Vancouver Island high-speed ferries can be viable

V2V Vacations' V2V Empress vessel berthed at the terminal at Vancouver Convention Centre in downtown Vancouver. (V2V Vacations)

Yet another privately-operated service of running a high-speed catamaran ferry route between downtown Vancouver and Vancouver Island has gone belly up.

On Monday, V2V Vacations, owned and operated by Australia-based Riverside Marine, announced it had shut down its operations with immediate effect, as “the financial prospects remain unsatisfactory to sustain the business” and its continued operation is “simply not economically viable.”

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The service, using a 254-seat, high-speed passenger jet catamaran vessel, first launched in May 2017.

But shortly after launch, beginning in August 2017, the service was sidelined for months due to mechanical issues that necessitated expensive repairs.

It was also initially intended to be a year-round service, but in August 2018 the business made a decision to cut down its operating period and turn itself into a seasonal service between the period of March and October of each year. At the time, it blamed “challenging and inconsistent weather conditions during the winter months.”

V2V Empress in downtown Vancouver. (V2V Vacations)

But there were some obvious early warning signs this service would face rough seas of a different kind.

It was branded and marketed as a luxury service with sightseeing opportunities along the way, severely limiting its potential customer base to tourists with a larger budget.

The travel time between downtown Vancouver and Victoria Inner Harbour was 3.5 hours, making a single departure from each city daily — 8 am from Vancouver, and 2 pm from Victoria. This provided visitors with few options when it comes to their schedule.

The last fares, before taxes, started at CAD $110 adult and CAD $55 child for a one-way trip, and CAD $220 adult and CAD $110 child for return trips. As a luxury service, the ferry included ergonomic leather seating, complimentary WiFi, and access to the sundeck.

And for a 50% higher fare, another class with upper deck seating provided further offerings, including a light three-course breakfast or lunch and a welcome alcoholic or non-alcoholic beverage upon boarding.

However, juxtapose this with Harbour Air’s service, with its terminal in downtown Vancouver located literally just a one minute walk from V2V Vacation’s berth.

Fares for the short flight, roughly only 30 minutes, to Victoria Inner Harbour, including taxes, start at CAD $99 during the winter season and CAD $148 during the summer season. This flight option also naturally comes with aerial sightseeing opportunities, while providing extra value through the crossing time saved.

Not to mention that Harbour Air has numerous options for departure times, varying from about a dozen daily flights each way over the winter to nearly two dozen daily flights each way over the summer.

This is not to say V2V Vacations did not provide an excellent, luxury service, as marketed. Over the years, it earned near-universal praise on Trip Advisor, with a cumulative five-star rating based on the 283 reviews — mainly by overseas tourists. As well, many of the reviews were made by older demographics.

“We flew into Vancouver and the taxi driver asked whether we needed a taxi the next day from our hotel to the ferry terminal, like many we met, he had not heard the secret about the V2V ferry which goes from the Seaplane terminal directly on the waterfront: we were able to walk down. Fantastic ferry with friendly crew going from central Vancouver waterfront to the Victoria waterfront,” read one review in September 2019 by a visitor from London.

In July 2019, a traveller from Australia wrote: “We chose downstairs to save money couldn’t see the value of being upstairs for sandwich fruit and free drinks… The decks outside were open to all no matter what fare. The staff… well done on choosing the best, smiling, informative, and lovely. Easy transit with the luggage and all. The captain explained the journey, type of conditions and what to expect. Even stopped for a whale.”

Interior of the V2V Empress. (V2V Vacations)

Ultimately the failure of the service came down to its price point, and the market demand that existed from tourists. Anecdotally, the sole vessel leaving and arriving daily at the seawall of the convention centre was regularly nowhere near its capacity — and this is based observations made over the peak tourist season over the summer.

Despite improved product and marketing efforts that led to “phenomenal double-digit growth in passenger numbers in 2019 and outstanding guest feedback,” this was simply not a viable business — it was ahead of its time.

In March 2017, Clipper Vacations announced plans to start a high-speed route between Victoria Inner Harbour and downtown Vancouver starting in Spring 2018. But in December of the same year, it cancelled those plans, instead deploying its newly-arrived, 579-seat vessel to its popular Victoria Clipper route between Seattle and Victoria. The reason for the cancellation dealt with the need for berth improvements in Vancouver to accommodate the largest vessel on the Clipper fleet.

The Victoria Clipper operates throughout the year, with two daily roundtrips during peak season from mid-May to mid-September and one daily roundtrip for the rest of the year. Its catamaran vessels have three classes — economy (lower deck), vista (upper deck), and comfort class (upper deck).

Economy fares for each sailing of 2 hours 45 minutes are higher than V2V Vacations, starting at USD $99 (CAD $129) from Victoria, and USD $115 (CAD $149) from Pier 69 in downtown Seattle. But there is strong demand for this service, fuelled by the Seattle region’s larger population and tourism industry, and the lack of a range of alternative options.

It appears what V2V Vacations needed was a proper economy class to fill seats on a large vessel that otherwise would not have been filled. Operators were quite clear in their intent of not competing with any segment of BC Ferries’ dominance, which has an adult fare of $17.20, a standard vehicle fare of $57.50, and a roughly similar 3.5-hour total journey time for the ferry sailing and the car rides between the city centres and Tsawwassen and Swartz Bay terminals.

Over the longer term, the marine industry’s eventual development of proven electric-battery, high-speed catamaran vessels could bring down the operating costs of such vessels, which currently quickly burn through their fuels when reaching top speeds.

Electricity as the chosen fuel carries a small fraction of the cost of the combustible fuels used by these vessels, but until the technology matures — especially for high-speed, high-capacity models — such electric-battery vessels would likely have a higher upfront acquisition cost, including both the vessel and charging infrastructure.

Lower fuel costs would theoretically allow such ferries to more economically speed up, reducing travel times and as a result making their services more competitively attractive to use.

But currently within the short term, the market size in Metro Vancouver for such a service has historically never been greater. A winning formula within current market conditions likely exists, but it requires smart strategy, and continued patience and reinvestment.

BC Ferries has consistently seen strong numbers in recent years, with the 2018-19 fiscal year showing record high vehicle traffic levels and the second highest passenger traffic levels in the company’s history. Net earnings for the period were up by $52.2 million.

Tourism in general has also never been stronger, with record overnight visitation, and record passenger numbers and growth at both Vancouver International Airport and the Canada Place cruise ship terminal.

The last time a private high-speed ferry service failed was in 2006, when Harbour Lynx’s route to Nanaimo, using a single 300-seat capacity vessel, folded after suffering a prolonged engine failure.

There were a few other business failures in the decades prior. The Royal Sea Link Express, using a similar catamaran vessel, operated for a few years between Vancouver and Victoria in the early 1990s, when the market for such a service was far smaller.

And in the late 1960s, the commuter Pacific Hovercraft service operated between Vancouver and Nanaimo. It could travel at speeds of up to 52 knots (96 km/h), but it only carried about 40 passengers.

But over these decades, the region’s population has grown, especially with the densification of downtown Vancouver’s residential population and office workforce concentrations. Transportation connections to the Coal Harbour dock have also improved with the Canada Line, although it has also improved the accessibility of transit bus services that reach Tsawwassen Ferry Terminal.

Island Ferries, a new private commuter ferry business that aims to learn from the mistakes of Harbour Lynx, is planning to give the downtown Vancouver to downtown Nanaimo route another attempt. It planned on launching in Summer 2019, but postponed the opening after it lost one of its two investors.

It will use two high-speed catamaran ferry vessels at a cost of $40 million, with each vessel seating 376 passengers and capable of reaching 40 knots (75 km/h).

Each one-way trip would have a travel time of just 68 minutes, which is highly competitive with BC Ferries’ crossing time of 100 minutes from West Vancouver — not including the driving time to and from the Horseshoe Bay Ferry Terminal. There would be multiple roundtrip sailings per day.

Example of Island Ferries Service vessel. (Island Ferry Service)

Earlier this decade when Island Ferries proposed its service, the business said its fares would start at only about $25.00 to attract a broad customer base that includes both economical commuters and tourists. And for added accessibility and convenience, the downtown Vancouver terminal would be located on the outside berth of Waterfront Station’s SeaBus terminal.

All required environmental assessments and permits have been completed and obtained from the Vancouver Fraser Port Authority for the modifications required for the SeaBus terminal.

Terminal construction works in Nanaimo and Vancouver still need to happen in order for the ferry service to launch.

Over the long term, the City of Vancouver has envisioned transforming Waterfront Station — including the railyard area north of the CPR building, and the SeaBus terminal — into a world-class transportation hub. It could include a new and expanded SeaBus terminal, a separate terminal for interregional commuter ferries (such as to Vancouver Island), expanded concourse space, and office developments.

Vancouver Central Waterfront Hub Framework

Site plan of the expanded Waterfront Station. (City of Vancouver)

Site plan of the expanded Waterfront Station, with the underground link between the expanded station and the new marine terminal. (City of Vancouver)

Artistic rendering of the transit concourse at Waterfront Station. (City of Vancouver)

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