The two family-run ferry boat companies on St. John are being hurt by infringement upon their franchises, Public Service Commission officials were told on Friday, September 22, at the start of a weekend-long workshop at the Westin Resort and Villas to update commissioners on PSC issues.
Chartered vessels, water taxis and resort ferries infringe on the public ferry companies’ franchise rights on the route between St. John and St. Thomas, explained Claudette Ferron, legal representative for both Varlack Ventures and Transportation Services.
“There is no real enforcement of the franchise,” Ferron said. “Until there is effective enforcement, the ferry boat companies will continue to suffer. The companies can’t enforce the franchise, the government is supposed to do that.”
Barge companies, which are not regulated by the PSC, have been transporting passengers, which also is an infringement on the ferry operators’ franchise, the ferry companies’ attorney added.
Government Not Enforcing Law
“When barges were taking passengers, the PSC issued an order saying they couldn’t do that,” Ferron said. “The barge companies said ‘who are you, you don’t regulate us.’ The government is actively not enforcing their own law and leaving it up to the ferry companies, who don’t have the means.”
Even when an entity is found in violation of the franchise, a $500 fine is the only punishment, Ferron added.
“When someone can make thousands of dollars, this is not a real deterrent to infringing upon the franchise,” Ferron said. “When these entities are taken to court – racking up serious legal fees for the ferry companies – the offending party can only be fined $500.”
Also, ferry companies are being required to pay V.I. Port Authority docking fees, which does not make sense, according to Ferron.
VIPA Fees for Ferries Is Questioned
“They must pay the same commercial fees as if the ferry companies provide private service, when they, in fact, provide public service,” Ferron said. “It makes no sense for the government to tax an entity it employs to do its work.”
Instead of franchising the companies, the government should franchise the route, she explained.
“New legislation is needed,” Ferron said. “The legislation in place now is very weak and it is the routes that should be franchised. You could grandfather in persons in operation for certain amounts of time, or require those engaging in franchise route operations to pay the franchise companies the portion of the fare they would have gotten.”
The Westin, Caneel Bay Resort and various water taxis that run between Red Hook and Cruz Bay could be forced to pay the ferry companies $5 per person, she explained.
“The fares are often $80 or $90,” Ferron said. “If you require them to compensate the ferry companies, they wouldn’t be losing much money.”
Two-Tiered System Possible
If the route is not franchised, the private and public ferry boats could create a two-tiered system, the attorney added.
“Non-franchised competition will create a two-tiered system where a public boat runs for the regular fee and a private boat, at $80 per trip, runs for luxury travel to St. John,” she said. “I think it would be unfair to create a two-tiered system where you have coach and first class.”
Money earmarked for the ferry companies is often re-allocated, according to Kenrick Augustus, general manager of Transportation Services.
“There was $25 million from the Transportation Trust Fund that was used to pay retroactive wages,” he said. “The government is not meeting the needs of the ferry boat companies.”
Augustus should go to the V.I. Legislature and lobby for the money, PSC commissioners at the meeting said.
“You must be vigilant with the legislature,” said Verne David. “Step it up. Let’s work together to get the franchise to run properly and make money.”
Call To Shut Down Route
The ferry companies fighting the government is like David fighting Goliath, according to the ferry companies’ attorney.
“These are just two individual companies fighting a huge government,” Ferron said. “How can we force them to do what they need to do?”
One commissioner, Donald “Ducks” Cole, called for shutting down the route all together.
“Shut it down – there are always casualties in war,” he said, about students who rely on the ferries to get back and forth to school.
Ferry companies are also suffering from public perception that they are subsidized, Ferron added.
“Ferry boat companies do not get any money from the government,” Ferron said. “They have to pay the government for a service that the government should be providing.”
No Financial Reward to Franchise
The ferry companies would make more money if they weren’t franchised, the attorney said.
“I don’t understand why the Varlack and Boynes families stuck with the franchise,” Ferron said. “They could do better in their private businesses. There is no financial benefit in terms of the franchise agreement.”
Regardless of the struggles, Varlack Ventures and Transportation Services are moving forward, Ferron explained.
“We’re going to do a better job,” she said. “We’re trying to turn things around. The franchise routes can be profitable, but they can be undermined by infringement on the franchise.”
