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B.C. Ferries drops fuel surcharge as oil prices fall

B.C. Ferries users are getting an early Christmas present. A fuel surcharge on fares is coming off Wednesday and will stay off until at least the end of March 2016, as fuel prices slide globally.
B.C. Ferries terminal fare booths
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B.C. Ferries users are getting an early Christmas present. A fuel surcharge on fares is coming off Wednesday and will stay off until at least the end of March 2016, as fuel prices slide globally.

“With the current favourable market conditions, we have been hedging our diesel fuel costs and are now in a position to eliminate the fuel surcharge, which is great news for holiday travellers,” Mike Corrigan, B.C. Ferries’ president and chief executive officer, said in a statement.

“We know that fare affordability is an issue for our customers and we are pleased to be able to reduce the cost of ferry travel, as every bit helps.”

Removing the surcharge will shave $2.25 off the cost for a vehicle and driver between Swartz Bay and Tsawwassen, Ferries spokeswoman Deborah Marshall said Monday.

The surcharge, which averages 3.4 per cent, was imposed in January. The northern routes were the only ones not affected because of an existing provincial program supporting those runs.

Fuel surcharges have increased and decreased a number of times since 2005.

Ferry users also faced a fare increase of four per cent in April, one of several hikes that critics say have cost B.C. Ferries millions of dollars in lost fare revenue in recent years as riders stay home.

Ferries has an outstanding balance of less than $3 million in its fuel-deferral account, which represents the amount that fuel costs have exceeded predictions.

The account has been decreasing and, by locking in the latest prices, Ferries expects to see the balance reduced to zero in the first half of 2015.

In the 2013-2014 fiscal year, Ferries paid $126 million for diesel. It expects to spend $120 million this fiscal year, declining to $108 million in 2015-2016, Marshall said.

Ferries has locked in pricing on 70 per cent of the fuel it anticipates purchasing until March 31, 2016, and will continue to watch the market, she said.

Brian Hollingshead, Ferries advisory committee chairman for the Southern Gulf Islands, was not surprised by Monday’s announcement, saying he tracks the fuel-deferral account.

“The fuel surcharge was probably going to be eliminated in the new year anyway, with the bottom falling out of world fuel prices,” he said.

“I think they recognized that number one, it is the practical thing to do, and also it is good marketing around this time just before Christmas.”

cjwilson@timescolonist.com