2009-05-16 / Top News

At City Request, Companies Cut Ferry Prices $1 From Last Year's Rate

By Karen Gould

The price of an adult roundtrip boat ticket to Mackinac Island dropped one dollar Friday, May 1, to $24, after all three boat lines agreed to reduce their fare at the urging of Mackinac Island City Council.

The fare reduction was prompted by city and business owner concerns about the rising costs tourists have to pay to get to Mackinac Island, after the ferry companies raised the ticket price $3 from last year. The city outlined its concerns at a meeting April 21 with Bob Brown of Arnold Transit Company, Chris Shepler of Shepler's Mackinac Island Ferry, and Tom Pfeiffelmann of Star Line.

Last summer, the ferry companies imposed a $3 fuel surcharge on their ticket prices to cover rising diesel fuel costs. This year, with oil prices stabilized, the companies eliminated the surcharge but raised the ticket prices $3. They said the increase was necessary as they continue to struggle with rising expenses and a decade-long decline in the number of tourists. The $1 price drop, they contend, will be difficult to absorb.

Mr. Shepler and Mr. Pfeiffelmann told The St. Ignace News Thursday, April 30, the $1 cut would affect their businesses, despite the stabilization of fuel prices.

"We're all pretty much running the same operation, so we all have pretty much the same costs," said Mr. Pfeiffelmann. "The $3 did not cover our losses with the fuel. You couldn't have raised it enough to cover our losses."

Mr. Shepler said the timing of the city's request, which came only a few weeks before the season began, makes it difficult for his business, which already had finalized its 2009 budget and marketing plans. The request from the city, he said, should have come in January.

"We are now in the red," said Mr. Shepler. "We're operating in the red. Things now have to get cut."

Arnold Transit had decided to consider a ticket reduction last fall, if fuel prices stabilized and did not climb after the winter, Mr. Brown said.

"If it spiked through the roof this spring," he said of fuel costs, "we would have been prepared for it. Now that it's steady, we were able to drop it back a dollar."

The city, which collects 2% of the gross ticket sales as a franchise fee, did not offer to reduce that fee, nor did the boat lines suggest the city consider a fee cut.

The ferry companies say a minimum wage hike, the expense to meet homeland security requirements, rising health insurance costs, and a decline in ticket sales are squeezing their budgets.

This spring, Star Line is running with an average of eight passengers per trip, and needs 40 to break even, Mr. Pfeiffelmann said.

With the 2009 budget based on a $25 adult fare, Mr. Shepler said his company now is looking to find ways to replace lost revenue and may have to cut staff, projects, and VIP passes. The company operates with about 180 employees, most hourly workers.

The company already had made cuts in its 2009 budget, reducing billboard advertising and other marketing programs to balance the budget. Now, they may have to be cut more, he said.

About 20% of Island travelers pay the full fare, said Mr. Shepler. Many travelers purchase tickets online at a reduced price, purchase travel packages that include boat tickets, or receive a group rate.

"I'm not sure one dollar will bring more people to Mackinac Island," he said. "I sure hope I'm wrong. If I am, I'll be the first to admit it."

With an agreement reached, a special meeting planned for Wednesday, May 13, to discuss the matter now will not take place.

The city is pleased with the ticket price reduction offered by the boat lines, said Mayor Margaret Doud.

"Oh, we're very grateful and appreciative of their efforts," she said. "It's the spirit of working together for the benefit of the whole Island community."

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