2005-09-03 / Top News

Boat Lines Hike Prices in Wake of Hurricane

By Karen Gould

In an unprecedented mid-season development, the three passenger ferry lines serving Mackinac Island have raised the price of their round-trip adult tickets by one dollar just days before the Labor Day holiday begins. Throughout the summer, the boat lines have experienced a gradual increase in fuel prices, but in the last two days, prices climbed by 26 cents per gallon, the result of Hurricane Katrina.

The new $19 round-trip fare went into effect Wednesday, August 31, for Star Line, and September 1 for Arnold Line and Shepler’s. Boat schedules are unchanged.

Crude oil production was disrupted at approximately nine oil refineries in the Gulf Coast region as Katrina slammed into Louisiana Monday with 145-mile-per-hour winds. Gasoline prices in the Straits of Mackinac area and across the county climbed to more than $3 by Tuesday morning.

“There was nothing else we could do but raise the rate, other than go broke,” said Tom Pfeiffelmann, general manager at Star Line. He said the 26-cents-per-gallon price jump adds up to about a $500-a-day increase in fuel costs because Star Line boats consume approximately 2,800 gallons of fuel daily.

“We were forced to do it. It’s just economics,” said Bob Brown, general manager of Arnold Transit Company, who agrees they, too, had no choice but to raise ticket prices. “This is the first time I can remember we’ve ever had to raise prices during the season,” he added.

Bill Shepler, owner of Shepler’s Mackinac Island Ferry said his boats use about 50 gallons of fuel running to the Island from Mackinaw City and, with fuel prices now up about $1.50 per gallon over last year, they had no choice but to increase the ticket price.

“We don’t want to do it, but we have no alternative,” he said. “It’s pure survival.”

“Fuel this year, compared to last year, is almost $3,000 more a day, and that’s with no other income,” said Mr. Pfeiffelmann.

Mr. Shepler echoes a similar example of the difficulties of running a business with a high overhead that includes the skyrocketing fuel costs and revenues based on a tourist market that has slowly been declining.

“In 2004,” he said, “fuel cost $100,000 more than the year before, and we burned less fuel.”

Mr. Pfeiffelmann said that with gas prices up this year over 2004, and with a slow start to the season, Star Line reduced the number of boats traveling to the Island by running two boats on a four boat schedule, which, he added, has worked out well. Arnold Line also made a similar move, reported Bob Brown, by not running two of their slower, “traditional” ferries this season. They are running one catamaran out of St. Ignace and two out of Mackinac City.

Bill Shepler said that, so far this year, Shepler’s is not cutting boats, but the company will be taking a strong look at reducing its schedule next year.

Star Line has cut fuel costs by only running three engines on a four-engine boat, while Shepler’s added sophisticated four-cylinder engines to its boats that has helped save 10 to 15 percent in fuel consumption.

When tourist traffic picked up this season, Mr. Pfeiffelmann said Star Line was having a pretty good year. Now with the high fuel prices and fewer visitors coming to the area as downstate schools begin classes, he figures he lost about $5,000 on Tuesday, with their largest load comprising only 39 people.

“You don’t think about it until you absorb it,” said Mr. Shepler, who’s experiencing a similar situation. “It’s pure profit that went out the exhaust pipe.”

Congressman Bart Stupak (D-Menominee) has been pressing the Bush administration to divert domestic supplies and he learned Wednesday, August 31, that President George W. Bush will release barrels of crude oil from the Strategic Petroleum Reserve (SPR) to help combat the latest record $70-per-barrel price.

He said he was happy with the decision to tap into the Strategic Petroleum Reserve to ease the pain at the pump. "With the Reserve at 98 percent capacity,” Mr. Stupak said, “we do not need to continue filling the SPR when families are paying astronomical prices for gas."

In addition to the increased fuel costs, the ferry lines received in March a franchise fee increase of 33-percent from the City of Mackinac Island. They now must pay two-percent of all gross ticket sales to the city, which could add $60,000 extra to city revenues. In 2004, the city received $174,257.96 from all three boat lines, collecting 1.5 percent of the gross passenger receipts. Earlier this year, the boat lines had asked for a reduction in that fee.

With the good weather scheduled for the weekend, Mr. Pfeiffelmann is hoping for a good Labor Day holiday. He believes people will continue with their plans to come north, they just won’t spend as much money on their trip for extras like souvenirs. Many of the people who come here are about two to three gas tanks away, so a vacation will cost about $50 more because of the high fuel costs, he predicted.

Though all three men acknowledge this was a difficult, no-choice business decision, they expressed frustration and empathy.

“I can’t see an end to it,” said Mr. Pfeiffelmann.

“We’re just feeling the ripple effect of the hurricane,” added Mr. Brown. “Imagine what it’s like down there.”

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