Ferry Companies Threaten To Shut Down Without Government Subsidies

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Residents and tourists would be affected if inter-island ferry service is disrupted. St. John Tradewinds News Photo by Eliza Magro

The two St. John ferry companies plan to “significantly curtail” and possibly shut down service in their effort to get an annual subsidy from the government.

The two companies, Transpor-tation Services and Varlack Ven-tures, would stop privately subsidizing the St. Thomas-St. John ferry franchise operation, which could “shut down” ferry service between the two islands within days, the attorney for the franchisees wrote government officials on Thursday, November 8.

Transportation Services and Varlack Ventures officials vow to operate solely on the revenue received from passenger fares, and will likely have to stop ferry service within days, Atty. Attorney Claudette Ferron wrote.

“With very limited revenues to cover operations, it is anticipated that St. Thomas-St. John franchise passenger ferry boat service will be significantly curtailed within days,” Ferron wrote in her letter.

“There will be no funds to cover operations shortly thereafter, and the companies will be forced to shut down the service, unless and until the mandated funding is provided by the government,” Ferron’s letter continued. “Obviously, this will have a devastating effect on the Virgin Islands, but the companies have no other alternative.”

“The companies sincerely regret the severe disruption that curtailment and subsequent cessation of service will cause, and are taking all the necessary steps to notify the public immediately, through all available media,” the letter concludes.

Public Subsidy Required
The ferry companies, owned by the Boynes and Varlack families, respectively, blame the drastic move on the government’s failure to help fund operating costs, which is required by law, according to Ferron.

“For decades, the two local family-owned companies have been subsidizing and funding public marine mass transportation in the United States Virgin Islands, to the severe financial detriment of their private businesses, families’ and personal financial well-being,” states the letter signed by Ferron.

Revenues from the passenger fares cover just a small portion of the ferry boat companies’ operating costs, according to the letter.

The balance of the operating costs is required by law to be subsidized by the government, Ferron continued in her letter.

With the rates set by the Public Services Commission, the ferry boat companies do not break even, according to the letter.

“Brink of Financial Ruin”
“Year after year, for almost a decade, the companies have experienced increasing losses while continuing to operate the St. Thomas-St. John franchise ferry boat service, without the government funding they are entitled to,” Ferron states in the letter.

"Because of their commitment to the people of the Virgin Islands, over the years the companies have been offsetting increasing losses with personal, family and private business funds and by mortgaging their homes and the companies’ privately owned vessels, committing personal assets and securing private business loans which members of the families have personally guaranteed,” Ferron’s letter continued. “This has brought the companies to the brink of financial ruin.”

The government and the public have become “addicted” to the companies subsidizing themselves, the letter adds.

For decades, the government has failed to comply with the contractual agreement and the laws governing the funding of the ferry boat franchise, according to the letter.

The government has failed to appropriate funds as required by law and even redirected funds to other projects not related to the ferry boat franchise, Ferron’s letter states.

“Under the current circumstances, with the government failing to fulfill its obligation to pay for the franchise operation, the companies would both be far better off if they ended their franchise operation, and devoted their private assets exclusively to private ferry business operations,” according to the letter.

“Neither of the companies are financially in the position to continue to finance public marine mass transportation in the Virgin Islands, even though they have provided passenger ferry boat service between St. Thomas and St. John, and have been indispensable to the development of St. Thomas and St. John for more than 50 years,” Ferron wrote.

“Given the current situation, if the companies do not stop funding the franchise with private, family funds and collateral, bankruptcy and the end of both of these historical, locally-owned and operated, Virgin Islands companies is inevitable in the very near future,” Ferron wrote.

Government House did not issue a formal response to the letter as of press time.