by Gary Reid
The Breeze, the brand-new ferry operating between Rochester and Toronto, ran out of steam and closed down in just 80 days of providing cross-lake service.
Canadian American Transportation Systems (CATS), the private company that operates the ferry, cited several reasons for its suspension of service. However, they all boil down to money. CATS is simply undercapitalized. This is a not uncommon problem for start-up, private sector passenger services.
The company declared that the 140,000 passengers it carried in 80 days showed that it could turn an”operational profit”. An operational profit is not like a return on investment profit, a matter about which the company offered no clue. Apparently, the revenue was insufficient to cover the cost of a $1.7 million (U.S.) debt incurred because of service commencement delays related to delayed vessel delivery and necessary engine modifications.
No doubt marketing data also indicated that the people who would travel by boat on warm, sunny,summer, vacation-filled days, may be less inclined to do so in the cold wind, snow and sleet that is the normal Lake Ontario experience in the winter months from November to early May. Without a full year’s evaluation, it would difficult to determine whether the passenger traffic really would be operationally profitable.
CATS’ business plan depended on attracting a significant amount of truck traffic. Revenues from this source were expected to be $18,000 a day. It failed to obtain the necessary approvals on the U.S. side and it is unclear that such approvals are going to be forthcoming anytime soon. The importance of this money cannot be underestimated. It is likely the financial tap that would keep the ship afloat (pun intended) when the tourist traffic fades away in the winter.
CATS was forced, by law, to spend $6,000 per diem to employ pilots to guide the vessel into the ports of Toronto and Rochester. Pilotage, as it is called, is one of least known but biggest government sanctioned rip-offs in the Great Lakes. The theory behind engaging a pilot is that the certified captain of a vessel may not be familiar with local waters and their navigational hazards. In an age of up-to-date electronic marine charts, instant radio communications, global positioning systems and organized harbour authorities, requiring a pilot for such a purpose is complete nonsense. In the 21st century, a pilot on Lake Ontario is as vitally important to safe navigation as a fireman on Via Rail is to stoking the fire under the engine’s boiler.
CATS, after listing its serous financial woes, threw out a small bone amongst the juicy morsels, and stated that it had a concern that passengers might be discouraged at Toronto in the cold and damp season because of the temporary terminal facilities (big tents). Well, maybe. Tents can be readily heated and
they can be entered through heated covered walkways. And, in any event, this is simply speculative since September and October are usually some of the best weather months in the region. The new terminal is due to open in January. So, if passenger dissatisfaction with terminal facilities is a real issue, it is, at worst, only a two-month problem.
You have to feel a bit sorry for Mayor Bill Johnson of Rochester. He led his city in spending tens of millions of dollars building infrastructure for what has turned out to be simply a short-lived “adventure in the nature of trade”, as lawyers would put it. This was done on the basis of “build it and they will come”. Experience shows that the latter argument almost never works on this side of the lake to pry loose public funds. Certainly the City of Toronto has not been prepared to spend a nickel on this ferry service.
Anybody in the passenger transportation business will tell you that you do not commit millions of dollars of public money building permanent terminal facilities for such start-up ventures like The Breeze until you are sure that the operator is financially sound and that the business is going to be around for the long-term.
The smartest thing the Toronto Port Authority could do is to hold up its proposed development of a $10 million terminal until TPA is satisfied that the company’s financial problems are resolved and that CATS has not destroyed its market through its unreliable performance.
This article first appeared in The Canada Free Press.
Gary Reid is a freelance writer and the former CEO of the Toronto Harbour Commissioners. He can be reached at the e-mail address: email@example.com.