Government Provides Support for Yarmouth Ferry as Season Wraps Up

The Nova Star made its final crossing from Portland, Maine to Yarmouth this morning, finishing a first sailing season that had about 59,000 passengers travel on the service.

While the season finished strong, passenger numbers and revenue were less than projected by the company. As a result, Nova Star does not have money to cover outstanding costs from the season. Government is providing $5 million to Nova Star through a new, interim agreement.

"While we're pleased to see the service gain momentum in recent months, revenues were still not enough to cover costs. This confirms that the original $21-million agreement and projections were unrealistic," said Michel Samson, Minister of Economic and Rural Development and Tourism.

"We're helping Nova Star cover these costs, with more reporting required by the company and more monitoring to protect taxpayers."

As part of the new agreement, a KPMG advisor with ferry experience is auditing Nova Star's costs, looking for savings and will advise on a plan for future years. The agreement requires detailed financial reporting to the province, including weekly cash-flow projections and immediate reports of any cash-flow changes. Conditions in the original agreement still apply.

Mr. Samson said government is working with Nova Star and the KPMG advisor to analyze costs, benefits and lessons learned from the first season. Mr. Samson is also seeking commitments and contributions from others involved.

"I expect others who benefit from the ferry to contribute. We're doing everything we can to have others pay their share," Mr. Samson said.

ST Marine, which owns the boat, has agreed to Mr. Samson's request to come to Nova Scotia to affirm its commitment to the ferry. A contribution by ST Marine to ferry costs will be part of the discussions.

During a recent discussion, Maine Gov. Paul LePage committed to Mr. Samson that he will introduce legislation to allow Maine to provide a $5-million line of credit to Nova Star.

Nova Star is facing significant costs this winter, when the boat is out of service.

"I have directed Nova Star to pursue every possible lead for winter work for the ferry," Mr. Samson said. "I will also be pursuing the issue with ST Marine when we meet."

A plan for 2015 will be based on benefits to Nova Scotians, discussions with ST Marine and Nova Star, advice from the KPMG advisor, and an evaluation of the first season.

While costs remain a concern, the minister noted there have been significant economic benefits from the service.

Visitors arriving in Yarmouth by ferry spent an estimated $13 million in the province this sailing season. Three-quarters of passenger vehicles arriving in Yarmouth were from the U.S. The number of New England visitors to Nova Scotia grew by 17 per cent to date over last year, including 26 per cent in July and 31 per cent in August, compared with the same months in 2013.

The number of room nights sold in the Yarmouth and surrounding area jumped by 40 per cent in July and 47 per cent in August over the same months last year. They also increased on the South Shore by eight per cent in July and 10 per cent in August.

The new agreement is available at http://novascotia.ca/econ in the Initiatives section.