ATLANTIC CANADA: SUDDEN FERRY SERVICE CANCELLATION

UNCLAS HALIFAX 000093

SIPDIS

E.O. 12958: N/A
TAGS: EWWT ETRD CASC ASEC CA
SUBJECT: ATLANTIC CANADA: SUDDEN FERRY SERVICE CANCELLATION

REF: HALIFAX 059


1. The abrupt cancellation of one of the two seasonal ferry
services between Maine to Nova Scotia will likely cut the number
of American visitors to Atlantic Canada this summer. After
announcing its 2005 sailing schedule and working for months with
tour operators on packages and bookings Scotia Prince Cruises
e-mailed employees and posted an announcement on its web site
April 5 to say its season was cancelled. The company claims
that the city of Portland, ME, failed to provide safe terminal
facilities for passengers, crew and U.S. border officials,
forcing the cancellation. The company cites "toxic mold" as the
problem and has reportedly sued the city for US$20 million. The
terminal was closed last season and temporary structures erected
because of problems with mold in the ageing terminal buildings.


2. For its part, Portland has terminated Scotia Prince's
docking lease, citing unpaid back rent of more than US$200,000.
The city manager said that Portland had invested US$1.2 million
in renovations to the terminal and that a Scotia Prince
representative had visited the terminal and given no indication
of displeasure with what had been done. Relations between the
city and the ferry company have been rocky for some time, mainly
because of Scotia Prince's allegations that Portland was failing
to live up to its side of a deal to provide a new terminal.
Scotia Prince has also alleged that its main competitor, Bay
Ferries, received defacto subsidies from the Canadian government
which helped its competitiveness.


3. The Scotia Prince cancellation caught tourism operators in
New England and the Maritimes by surprise. As many as 185,000
people disembarked from the ferry each season in Yarmouth, NS.
Of those a significant percentage traveled on to other parts of
Nova Scotia or to Prince Edward Island. For Nova Scotia's
struggling southwest (reftel) losing the Scotia Prince service
is another hit to the regional economy. Bay Ferries has been
asked to look at picking up the Scotia Prince's runs, but the
earliest it could do so would be 2006.


4. COMMENT: Responsibility for the problems will probably take
some time and a court case or two to sort out. Scotia Prince
has left the door open to resume service at a later date,
although given the company's supposedly precarious financial
situation this may be the end of the road for the ferry. There
is no question that Bay Ferries' high-speed catamaran service
from Yarmouth the Bar Harbor, ME, was a formidable competitor
for the older, slower, U.S.-based Scotia Prince, regardless of
whether or not the subsidy allegations were correct. Tourism
operators in New England and the Maritimes, already uncertain of
what 2005 would hold because of high fuel prices, are extremely
concerned by the ferry's demise. END COMMENT. HILL