Wednesday, June 9, 2010

The key to successful ferry service

Last Friday, Times City Critic Ariel Kaminer and Second Avenue Sagas blogger Ben Kabak both hopped ferries and filed reports on their experiences and ferry politics in general. Both end up heartily endorsing the prospect: Kaminer says "If a few hundred thousand more New Yorkers could commute to work with the sun on their faces and the wind in their hair, we might be so much less stressed that we wouldn’t even recognize ourselves." Ben says "If even enough people for a few boat rides a day find the taxis cheaper and more convenient than their current commutes, the ferries will have paid off."

I read Ben's blog regularly, and I consider him a comrade in arms, so it pains me to say that he's wrong here. We need to provide more access to underserved populations and get people out of their cars, and ferries can do that. But they will only have paid off if they're the cheapest way to accomplish those goals, and I'm not at all convinced that they are. We have a number of other ways, including buses and trains, that may be cheaper and more effective.

Both Kaminer's article and Ben's post attracted an uncommonly large amount of thoughtful and insightful comments, many of which pointed to problems with the proposal. One reason they're so insightful, and yet so critical, is that we've been through this so many times. I know I've seen at least three ferry services fail, and probably more, over the past fifteen years. And yet, politicians keep proposing new or restarted ferry lines, studies keep being published, and pilot projects keep being funded, only to die out when the initial funding dries up. They don't seem to ask why.

Kaminer's article contains this particularly bizarre section:
Right now, with the major exception of the Staten Island Ferry, all the city’s routes are privately operated, mostly by the NY Waterway (which gets a boost from Goldman Sachs, whose employees commute in from New Jersey) and the New York Water Taxi (which receives subsidies from the city).

It’s hard to imagine ferry service expanding very far unless it becomes a public initiative, an integrated system with coordinated schedules and MetroCard access.

Well, no. If New York Waterway is privately operated and makes a profit, why is it so hard to imagine other services making a profit? Why not examine the differences between the services and at least take a stab at what makes the difference between a profitable ferry route and an unprofitable one?

What is especially interesting is that the New York Waterway ferries are not just profitable. They have the highest operating surplus of any true transit provider: fares pay for 139% of operating expenses for NY Waterway, and 115% for BillyBey (I'll explain the difference in a minute). The only operations that make more are the inclined planes of Chattanooga and Pittsburgh, which are essentially tourist rides at this point.

These routes are so profitable that until 2005, NY Waterway paid the Port Authority $600,000 per year in rent on the land for its docks. That did eventually become too much of a burden, so Waterway sold some of its routes to a new company, BillyBey, which negotiated a new agreement where it would pay ten cents per passenger instead of that rent. (The BillyBey routes are still marketed under the New York Waterway brand.) But Waterway still makes an operating profit of almost ten million dollars a year (PDF, and BillyBey still makes over a million (PDF).

So what's going on here? Why does the same company make millions crossing the Hudson, but be unable to do the East River run without massive government subsidies? Well, I explained some of it back in 2007: sidewalks, buses, trains, hourly service, reasonable fares. But there's another reason: bridge tolls.

Is it any coincidence that the profitable ferry routes parallel the only profitable buses in the country? As I observed with the Lincoln Tunnel buses, the situation at the tunnel weeds out two classes of commuters: those who don't want to pay the toll, and those who don't want to sit in traffic. They take the bus, the train or the ferry. On the East River, those who don't want to pay the toll can take the Queensboro Bridge, and those who don't want to sit in traffic can take the Midtown Tunnel. None of those people wind up taking the bus or the subway, let alone the ferry.

There's one thing that will make the East River ferries profitable again: put tolls back on the four "free" bridges. If you're not willing to fight for that, stop wasting my money on ferry services that will fail after a few months.


Jonathan said...

Hear, hear! Great post.

Presumably the same logic applies to ferries that go up and down the East River. They won't make money unless they can bypass a cordon toll along the way.

Unknown said...

Why isn't there any traffic on the midtown tunnel?

Surely the plethora of subway lines crossing the East River (in comparison with the Hudson) also factors in.

whiteguyfromtheprojects said...

NY Waterway makes a profit because, as a private company, its purpose is to make a profit. Therefore, it charges high enough fares for it to make a profit. However, the purpose of public transportation is to allow everyone to get around. If ferries are to truly become part of New York City's transit system, they have to be run by a public entity that is about serving the people, not making money.

jazumah said...

Most of the ferries that have failed have two things in common:

1) No real utility.
2) Not priced at market rate.

As the funding crisis continues, mass transit is going to move towards the market rate (whatever that is). It will allow organic services to pop up where needed. Ventures backed by the government are trying to talk companies into running below cost without subsidies (Staten Island South Shore fast ferry) or half-baked efforts (fishing boats that are NOT high speed running below costs in the Rockaways).

IAN! Mitchell said...

Agreed completely- no bridge should be "free" to drive over.

Ferries are a chance for the private sector to do in Greater New York what it did a century ago- take risks, charge what people will pay, and make money.

The IND and Moses eras were a mistake. We could have had a staten island tunnel, no BQE, and (if city policy didn't actively dismatle them) fast, reliable trolley service over bridges.

The city was made great by the private sector- and nearly destroyed by megalomaniac government largess.