The problems facing BC Ferries are going to get worse unless all stakeholders — including the corporation, the province and ferry users — accept some significant changes, according to a new independent review.

In a report issued Tuesday, B.C. Ferry Commissioner Gord Macatee said declining ridership, financial losses, and the need for huge upgrades of ships and terminals are all straining the sustainability of the provincial ferry corporation.

"Specifically, ferry users will need to be receptive to changes in how services and levels of service are delivered," Macatee said in the report.

"BC Ferries needs to accept additional oversight and accountability measures, and will have to focus even more on cost control and new sources of revenue.

"The province must define a vision for the future of ferry services and provide additional financial support to ensure the system’s sustainability."

Macatee said fares have reached the tipping point, imposing a hardship on coastal communities and passengers, and ridership has declined as a result.

"Over the last nine years, fares have gone up by 47 per cent on the major routes and 80 per cent on the minor routes. During that time, inflation has risen by about 15 per cent," he said.

Reducing service levels

In his wide-ranging review of the Coastal Ferries Act, the commissioner made 24 operational recommendations, including:

Increased financial support from the province, especially for fuel prices.

Ending the increasing reliance on a user-pay system.

Future price increases should be held to the rate of inflation.

Free reservations and other improvements to the ticket sales system.

Improved use of the ferry fleet's capacity.

Larger roles for municipal and regional governments on local routes.

More oversight on capital plans and acquisitions.

More power for the commissioner to hold BC Ferries accountable, to conduct audits and cap prices.

The commissioner also found a BC Ferries proposal to reduce service levels by 4 per cent or 400 sailings per year is reasonable and would save the corporation $5.4 million a year.

'Quite a reasonable response'

B.C.'s Transportation Minster Blair Lekstrom said he is still considering the recommendations in the report, including capping fares at inflation or raising the provincial subsidy.

"Having just received the report here about an hour ago I'm not going to go into detail on any of the recommendatons until I've had a chance to read the full document," he said.

BC Ferries CEO Mike Corrigan said he welcomes the report.

"I actually think that's quite a reasonable response. In fact, it's something that I've been talking about when I've interveiwed in the media," he said.

"As well, people have said, 'What about fare freezes or reductions?' I don't think that's reasonable, but I think people can live with the notion of fares not going up more than inflation each year."

Corrigan also agrees with the idea of increasing the government subsidy to BC Ferries and reducing service on less-travelled routes.

The provincially-owned ferry corporation is forecasting a deficit of nearly $35 million this fiscal year. Former CEO David Hahn said rising fuel costs and a steep drop in tourism were to blame for the financial shortfall.

The report follows extensive public consultations launched in May 2011 by the independent commissioner's office in 27 B.C. communities.