July 5, 2004
Cat fight | Can the Portland market sustain two Nova Scotia-bound ferries?
By Sean Donahue
If there's one reason Mark MacDonald wants to bring his high-speed Cat ferry to Portland, it's population. Not Portland's population, but the millions of residents of ˆ and visitors to ˆ greater Boston and greater New York City who he sees as potential Nova Scotia-bound tourists. "Portland puts us an important step closer to [the Boston and New York] markets," he says.
MacDonald, president of Prince Edward Island-based Bay Ferries Ltd., which since 1998 has run the Cat from Bar Harbor to Nova Scotia, says the company has been eyeing Portland as an expansion market for several years, ever since it learned of the city's plans for the Ocean Gateway ship terminal. Last month, MacDonald met with the Portland City Council to formally announce his company's interest in bringing the Cat to the city as soon as the Ocean Gateway facility is ready.
Though such strong interest from a transportation operator ordinarily would thrill the city, Bay Ferries' request has one major complicating factor: Scotia Prince Cruises has operated its overnight ferry from the port of Portland for 35 years under a contract guaranteeing what it calls "route protection" during its April to October season ˆ that is, the city has promised the Scotia Prince that it would not allow any other ferry to operate a Portland-to-Nova Scotia run.
Now, the city's ability to guarantee route protection at the Ocean Gateway has come into question, since some state and federal funding for the facility requires that it be open to competition. For ship operators and transportation officials, though, the more significant question is whether the Nova Scotia tourism market is big enough to support both operators in Portland.
According to Jeff Monroe, Portland's transportation director, the answer is yes. By Monroe's way of thinking, the market that could develop if Portland were a bigger water transportation hub would be enough to support both ships. He likens the current debate to conversations he heard 25 years ago, when Delta Air Lines was the only airline operating out of the Portland International Jetport. "When other airlines became interested in coming into Portland, people were wondering if there was enough business to support them," says Monroe. "Now look at the Jetport."
But with Delta currently teetering on the edge of bankruptcy, besieged like many traditional airlines by upstart, low-cost carriers, it's also obvious that the additional competition that is so good for passengers may not be as good for transportation companies themselves.
Pure transportation vs. a cruise experience
Though neither ship would provide annual passenger statistics, both MacDonald and Mark Hudson, vice president of finance and communications for Scotia Prince Cruises, say their businesses have been volatile in recent years, due to the terrorist attacks in 2001, recession and war in Iraq. A 2004 tourism outlook published by the government of Nova Scotia estimates that visitors from the United States to the province will increase 4.9% this year, to 16.3 million, but Hudson notes that the historical trend has been more troubling. He cites Canadian statistics showing that the number of visitors driving from the United States to Nova Scotia has declined 42.1% since 1975.
Still, even though both ships compete for passengers within that driving market, MacDonald believes they can coexist in Portland because they offer significantly different products that appeal to different types of travelers. The Cat ˆ which travels at 55 m.p.h. and could make the 200-nautical-mile run to Nova Scotia in 5.5 hours ˆ is pure transportation, aimed at people who want to get from point to point as quickly as possible.
The Scotia Prince, which makes an 11-hour overnight crossing, bills itself as not just a ferry but a cruise experience, complete with cabins, dining, gambling and entertainment. The company also aggressively markets itself as part of multi-day Nova Scotia vacation packages that include onshore accommodations.
Despite those differences, Hudson says the Cat's presence in Portland inevitably would cost his ship some passengers ˆ and jeopardize the estimated $53 million in economic impact he says the Scotia Prince delivers to the greater Portland region annually. "We're facing rising costs for fuel, security, advertisingˆ Another operator on the same route is obviously going to split the market," says Hudson. "The impact for the city and the greater Portland region would drop. The question is, would that [economic impact] be picked up [by the Cat]?"
The expansion also carries risks for the Cat's existing business in the Bar Harbor. Were the Cat to start sailing from Portland, it's almost certain some tourists from points south would decide not to make the additional four-hour drive to Bar Harbor. "We've thought very carefully about that, but we think [by] introducing a second port into the mix we can increase the overall volume of people using the ferry," says MacDonald. "We can make attractive offerings that allow people to leave through Portland and return through Bar Harbor, or vice versa."
For all the speculation, Mark Hudson maintains that the debate is moot, since Scotia Prince Cruises' contract with the city, which guarantees route protection from its existing berth at the International Marine Terminal, will apply to the Ocean Gateway terminal when the facility is operational. (A groundbreaking is tentatively scheduled for October, according to Monroe). But with Bay Ferries' interest in operating from the facility ˆ and questions about the legality of limiting the publicly funded terminal to one ferry operator ˆ the city recently submitted its agreement with Scotia Prince Cruises to the Federal Maritime Commission for review.
If the commission determines that such route protection is not valid, then there may be little the city or Scotia Prince Cruises can do to maintain their current relationship. If the commission upholds the agreement, though, the city of Portland may be forced to make what Monroe calls a "business decision" ˆ essentially deciding whether it's better to extend route protection to the Scotia Prince again when its current contract expires in two years, or else welcome the Cat to the Ocean Gateway. And for his part, Monroe says he'd rather see two lines competing in Portland than have the city compete against a southern New England port.
"If the Cat is determined to come south, she's going to find a port somewhere, whether it's Portsmouth or some other vacation destination," says Monroe. "And if they go to a port south of us, they're going to be closer to the drive-in market than us ˆ and those tourists will essentially go around Maine."
MacDonald, president of Prince Edward Island-based Bay Ferries Ltd., which since 1998 has run the Cat from Bar Harbor to Nova Scotia, says the company has been eyeing Portland as an expansion market for several years, ever since it learned of the city's plans for the Ocean Gateway ship terminal. Last month, MacDonald met with the Portland City Council to formally announce his company's interest in bringing the Cat to the city as soon as the Ocean Gateway facility is ready.
Though such strong interest from a transportation operator ordinarily would thrill the city, Bay Ferries' request has one major complicating factor: Scotia Prince Cruises has operated its overnight ferry from the port of Portland for 35 years under a contract guaranteeing what it calls "route protection" during its April to October season ˆ that is, the city has promised the Scotia Prince that it would not allow any other ferry to operate a Portland-to-Nova Scotia run.
Now, the city's ability to guarantee route protection at the Ocean Gateway has come into question, since some state and federal funding for the facility requires that it be open to competition. For ship operators and transportation officials, though, the more significant question is whether the Nova Scotia tourism market is big enough to support both operators in Portland.
According to Jeff Monroe, Portland's transportation director, the answer is yes. By Monroe's way of thinking, the market that could develop if Portland were a bigger water transportation hub would be enough to support both ships. He likens the current debate to conversations he heard 25 years ago, when Delta Air Lines was the only airline operating out of the Portland International Jetport. "When other airlines became interested in coming into Portland, people were wondering if there was enough business to support them," says Monroe. "Now look at the Jetport."
But with Delta currently teetering on the edge of bankruptcy, besieged like many traditional airlines by upstart, low-cost carriers, it's also obvious that the additional competition that is so good for passengers may not be as good for transportation companies themselves.
Pure transportation vs. a cruise experience
Though neither ship would provide annual passenger statistics, both MacDonald and Mark Hudson, vice president of finance and communications for Scotia Prince Cruises, say their businesses have been volatile in recent years, due to the terrorist attacks in 2001, recession and war in Iraq. A 2004 tourism outlook published by the government of Nova Scotia estimates that visitors from the United States to the province will increase 4.9% this year, to 16.3 million, but Hudson notes that the historical trend has been more troubling. He cites Canadian statistics showing that the number of visitors driving from the United States to Nova Scotia has declined 42.1% since 1975.
Still, even though both ships compete for passengers within that driving market, MacDonald believes they can coexist in Portland because they offer significantly different products that appeal to different types of travelers. The Cat ˆ which travels at 55 m.p.h. and could make the 200-nautical-mile run to Nova Scotia in 5.5 hours ˆ is pure transportation, aimed at people who want to get from point to point as quickly as possible.
The Scotia Prince, which makes an 11-hour overnight crossing, bills itself as not just a ferry but a cruise experience, complete with cabins, dining, gambling and entertainment. The company also aggressively markets itself as part of multi-day Nova Scotia vacation packages that include onshore accommodations.
Despite those differences, Hudson says the Cat's presence in Portland inevitably would cost his ship some passengers ˆ and jeopardize the estimated $53 million in economic impact he says the Scotia Prince delivers to the greater Portland region annually. "We're facing rising costs for fuel, security, advertisingˆ Another operator on the same route is obviously going to split the market," says Hudson. "The impact for the city and the greater Portland region would drop. The question is, would that [economic impact] be picked up [by the Cat]?"
The expansion also carries risks for the Cat's existing business in the Bar Harbor. Were the Cat to start sailing from Portland, it's almost certain some tourists from points south would decide not to make the additional four-hour drive to Bar Harbor. "We've thought very carefully about that, but we think [by] introducing a second port into the mix we can increase the overall volume of people using the ferry," says MacDonald. "We can make attractive offerings that allow people to leave through Portland and return through Bar Harbor, or vice versa."
For all the speculation, Mark Hudson maintains that the debate is moot, since Scotia Prince Cruises' contract with the city, which guarantees route protection from its existing berth at the International Marine Terminal, will apply to the Ocean Gateway terminal when the facility is operational. (A groundbreaking is tentatively scheduled for October, according to Monroe). But with Bay Ferries' interest in operating from the facility ˆ and questions about the legality of limiting the publicly funded terminal to one ferry operator ˆ the city recently submitted its agreement with Scotia Prince Cruises to the Federal Maritime Commission for review.
If the commission determines that such route protection is not valid, then there may be little the city or Scotia Prince Cruises can do to maintain their current relationship. If the commission upholds the agreement, though, the city of Portland may be forced to make what Monroe calls a "business decision" ˆ essentially deciding whether it's better to extend route protection to the Scotia Prince again when its current contract expires in two years, or else welcome the Cat to the Ocean Gateway. And for his part, Monroe says he'd rather see two lines competing in Portland than have the city compete against a southern New England port.
"If the Cat is determined to come south, she's going to find a port somewhere, whether it's Portsmouth or some other vacation destination," says Monroe. "And if they go to a port south of us, they're going to be closer to the drive-in market than us ˆ and those tourists will essentially go around Maine."
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