The slow start for the new cruise ferry service between Portland and Nova Scotia continued in June, with the Nova Star carrying an average of 112 passengers per trip last month, just one-tenth of its passenger capacity.
The ferry operator is working with the LePage administration to find an investor or commercial lender to help the startup company avoid a looming cash crunch.
George Gervais, commissioner of the Maine Department of Economic and Community Development, said state officials are pursuing “any and all options” to find private funds to help the company fill a gap in its financing. The company has been trying to obtain a $5 million line of credit from a Maine bank, and state officials have discussed guaranteeing the loan.
“We continue to try to help fill the gap, and we will not let go until we have success,” Gervais said.
The ferry, which travels daily between Portland and Yarmouth, Nova Scotia, has seen fewer passengers than operators had anticipated and also has been forced to discount fares to attract more customers. In addition, federal law prohibits the company from spending money from ticket purchases until after the trips have been completed.
The ferry’s average of 112 passengers per trip in June was up slightly from the average of 101 passengers in May.
The ferry has a capacity for 1,215 passengers and a crew of about 120. It spends $40,000 a day on fuel alone.
Under the terms of its lease for the city-owned Ocean Gateway terminal, Nova Star Cruises reports its passenger numbers to the city every month because it must pay the city $2.50 per passenger.
Despite the slow start, company officials say business has picked up significantly in July. So far, the company has had 11,000 bookings for trips that will occur in July, they said.
Company spokesman Dennis Bailey said the service this month will be hitting its ridership target, which he said is 400 passengers per trip.
“We had a soft start for a variety of reasons, but we are still optimistic,” Bailey said. “July is really good, and we are hoping August will be equally good. It will take a while to rebuild this route. We have said this from the beginning.”
However, an official with the Nova Star’s predecessor called the June passenger count “pretty meager,” and said its July bookings are not as healthy as they need to be to support the service.
“Even 11,000 in the month of July is not going to get them anywhere near where they should have been,” said Henk Pols of Cape Elizabeth, former president of Prince of Fundy Cruises, which operated the Scotia Prince on the same route from 1982 to 2004. “With a ship of that kind, if you don’t have 500 to 600 passengers a day, then you are not going to pull it off.”
The Nova Star carried a total of 6,740 passengers in June. In June 1997, the Scotia Prince carried 21,581 passengers, and 33,817 in July 1997.
Managing cash flow for a ferry service is a challenge, said Darrell Bryan, president of Clipper Vacations, which operates a ferry between Seattle and Victoria, British Columbia.
“They are coming into a crunch period,” he said of the operators of the Nova Star. “I really feel for the Nova Star. The are in a dicey position.”
Nova Star Cruises began the service in May at the request of the Nova Scotia government, even though the company wasn’t able to finalize its contract with the province until last November.
The company wasn’t allowed to market its service or sell tickets until late March, when it finally obtained a required federal permit.
The company also missed deadlines to win business this year with major bus tour companies, which typically book their tours a year in advance. The province, which has already allocated $19 million in funding for the ferry, continues to be patient, said Toby Koffman, spokesman for the Nova Scotia Department of Economic and Rural Development Tourism.
“It’s going to take some time to rebuild ridership since there hasn’t been a ferry in four years,” he said.
The state of Maine has provided no financial help for the ferry service, even though the operator is buying its fuel and most of its food and supplies in Portland.
Nova Star Cruises has been working since last fall to secure a $5 million line of credit from a Maine bank. Officials at the Finance Authority of Maine have discussed the possibility of guaranteeing the loan. The quasi-state agency is overseen by a board that includes Gervais, Maine’s economic development commissioner.
In an interview Tuesday, Doug Ray, a spokesman for the Maine Department of Economic and Community Development, said the state is now looking for an investor in the ferry operation, rather than a loan.
“We are continuing to seek other sources of finances for this business,” Ray said. “That support and help will not likely come in the form of debt. Debt is not an option. We are helping them look for a cash infusion, an equity infusion.”
But Gervais on Wednesday said Ray misunderstood the situation and that his initial statement should be retracted because it was incorrect. “All options are on the table,” the commissioner said.
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