Ferry rivalry intensifies

The owners of Interstate Navigation and Rhode Island Fast Ferry are at it again.
The two ferry operators, whose rivalry has shaped the commercial ferry market in Rhode Island for the past 15 years, are jousting once again over control of local waterways.
Shuttling passengers to Block Island hasn’t been overly profitable in recent years, but both Interstate, owner of the Block Island Ferry, and Rhode Island Fast Ferry, owner of the Martha’s Vineyard Fast Ferry, want to add new routes to the island.
Interstate plans to start a new high-speed service from Fall River next summer, while Rhode Island Fast Ferry wants to sail there from its base in the Quonset Business Park.
Expanded ferry service looks like a positive for the communities involved, but it renews old questions about the impact of competition on the year-round slow ferry that brings Block Islanders, their cars and cargo to the island during the winter.
Rhode Island Fast Ferry’s proposal to open a Quonset high-speed route – which would be the fourth high-speed ferry link to Block Island – has divided towns and business groups, prompting talk of “ferry wars” on the coast.
The Narragansett Chamber of Commerce, whose territory includes the Block Island ferry docks at Point Judith and whose board includes an Interstate Navigation executive, initially opposed the Quonset route.
But after drawing complaints about stifling competition, the Narragansett Chamber earlier this month reversed its stance on the Quonset ferry proposal by an 8-5 vote. At the same meeting Executive Director Deborah Kelso resigned, although she says the timing was coincidental.
“It’s déjà vu all over again – they are making the same arguments they did when I applied to run the Athena to the island,” said Rhode Island Fast Ferry President Charles Donadio Jr. about opposition to a new ferry. Donadio in 2001 started the first high-speed ferry service to the island in the face of opposition.
“They say we’ll take revenue away from them and then jack up rates,” Donadio said about Interstate Navigation. “They’re trying to scare the island and hold them hostage because they have the only dock space on the island.”
Since Interstate’s year-round ferry route from Point Judith is a monopoly and considered a “lifeline” for residents, it is tightly regulated by the R.I. Public Utilities Commission. To raise passenger or cargo rates on the traditional ferry, Interstate must go through an exhaustive application process with the commission, which historically allows much smaller changes than are requested that are locked in for five or more years.
Seasonal high-speed ferries, on the other hand, can charge higher prices and don’t have to keep boats running at a loss during the off-season as a public service.
Despite Interstate’s objections, the Public Utilities Commission allowed Donadio and his business partners, then called Island High-Speed Ferry LLC, to run the Athena from Point Judith to Block Island. It proved successful enough that Interstate purchased it.
Donadio then founded Rhode Island Fast Ferry, which runs seasonal high-seed service from Quonset to Martha’s Vineyard and sightseeing tours around Narragansett Bay and Newport. (Donadio also lists a ferry contract with the government of Bermuda.)
In its 2012 application to the Public Utilities Commission to raise rates for this season, Interstate said it had lost about $500,000 annually on the traditional ferry service during the previous four years. Only a $208,000 cross-subsidy from the high-speed ferry was preventing an even larger rate request, according to the filing.
In addition to the high-speed Point Judith ferry, Interstate has run a since-aborted high-speed route from Providence to Block Island and the current high-speed route from Newport to Block Island to help support the year-round ferry with alternative revenue streams.
A company owned by relatives runs a high-speed, seasonal ferry from New London, Conn., to Block Island and another company runs high-speed, seasonal service to the island from Montauk, N.Y.
Interstate Vice President Joshua Linda said there is little doubt a Quonset high-speed ferry will divert passengers from the Point Judith traditional and fast boats. “The main concern is it will eat into ridership and cut into revenue, which will cause us to raise rates or reduce our service,” Linda said. “All the revenue is in the summer months and that keeps the ferry running all winter.”
Linda said the final passenger and revenue numbers for the 2013 season are still being calculated, but he expects the fast-ferry figures from Point Judith to be similar to 2012 and the traditional ferry to be close to last year, although July was slightly slower than expected. Recently, Interstate has been focused on making its Newport to Block Island ferry profitable.
It has switched from a slow- to high-speed boat and moved from docks at Fort Adams to Perotti Park downtown that Linda said has brought the service to “nearly break even.”
Next year Interstate hopes to break into the black by beginning the Newport run to Fall River, where Mayor William Flanagan has been trying to attract a Block Island ferry for more than a year.
Originally Interstate was cool to the Fall River concept, but that changed after it bought and repaired the Islander, which opened up the possibility of a high-speed connection with the Newport line.
From Fall River to Newport takes about 45 minutes and Newport to Block Island another hour on the high-speed boat. Fares from Fall River have not yet been set, but Newport to Block Island is $25 each way.
Rates for the proposed Quonset ferry, estimated at 50 minutes to Block Island, have also not been set and it could be some time before anything concrete is put in place.
For Donadio, finding a place to dock on Block Island may become a bigger challenge than state regulators.
Donadio has proposed three docking options, with the first choice being for the town of New Shoreham to rebuild the old Mount Hope Steamship pier.
Donadio said he is willing to help fund the pier rebuilding project, but that it would be wise for the town to explore it regardless of his ferry, because it would provide an alternative if something happened with Interstate. He offered the current dilemma facing Prudence Island, whose lone ferry and dock owner has announced his intention to stop, as an example.
If it’s approved and finds a place to dock, Donadio said the Quonset ferry would run Memorial Day to Columbus Day.
Although many Block Islanders say the number of visitors coming off the boats on peak summer weekends is almost as much as the island can manage, the Block Island Tourism Council has supported the Quonset ferry in the hope it will add a few more well-healed midweek and shoulder-season visitors.
“We want people to come to Block Island, have an easy time getting here and want to get back,” said Block Island Tourism Council Executive Director Jessica Willi. “There is a tipping point of too many people not always [being] a good thing, but as to where that point is there is a lot of debate.” •

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