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Ferry Case Studies 47 Ocracoke Island, the only access is via ferry. During an emergency, ferries from the Ferry Divi- sion are called to aid once the disaster warning has been released. Ocracoke Island has an onsite emergency coordinator and, as part of Hyde County, is part of an overall county emergency plan. During an emergency, the Ferry Division follows the protocols of Hyde County. U.S. Virgin Island Ferries Quickfacts Operator Service # of # of Annual Annual Fleet Age Category Routesa Vessels Passengers Vehicles (years) Transportation Transit 2 3 2,100,000 950,000 1530 Services of St. Ferry John, Inc. Intercity Varlack Transit 2 3 Ventures Ferry Intercity a Only franchised routes are considered in this case study. History The U.S. Virgin Islands are made up of three islands in the Caribbean Sea: Saint Thomas, Saint John, and Saint Croix. Charlotte Amalie, the territory's capital, is located on Saint Thomas. The population of all three islands, according to a 2009 estimate (CIA Factbook, accessed March 20, 2010), is 109,825. Much of the population is split between Saint Thomas and Saint Croix, with Saint John functioning mostly as a tourist and resort destination. This is reflected in the distri- bution of government services, which are located mainly in Saint Croix and Saint Thomas. As a territory, the U.S. Virgin Islands system of government is similar to that of a state, with three branches of government: the Executive Branch, the Legislative Branch, and the Judicial Branch. The U.S. Virgin Islands are governed by the laws of the United States Constitution, as well as the Revised Organic Act of 1954 that further defined the laws and rights for citizens in the U.S. Virgin Islands (United States Virgin Islands, accessed March 21, 2010). Currently, the U.S. Virgin Islands have a proposed constitution that is before the United States Congress for review. Saint Croix, which is 83 square miles, is the largest of the three islands. Saint Croix is also the furthest distance from Saint Thomas and Saint John--40 miles south of Saint Thomas. Saint Thomas is the next largest island in the territory at 31 square miles. It is the closest island to Puerto Rico, another U.S. territory. Saint Thomas and Saint John are only separated by 4 miles (3.5 nautical miles). Saint John is the smallest of the three islands at 20 square miles. It is also the only island without an airport and is completely reliant on ferries for inter-island travel. Water travel is a necessity for residents of the islands of Saint Thomas, Saint John, and Saint Croix, and thus the U.S. Virgin Islands require a robust ferry service. Ferry service has tradition- ally been offered by small, private operators who met demand for travel between the main islands of Saint Thomas and Saint John, where most of the government services are located. In 1972, the government created a franchise agreement with two private ferry operators to maintain passenger- based ferry service between Saint Thomas and Saint John (Interview with Transportation Services, January 29, 2010). The franchise agreement gave the ferry operators the right to operate on approved routes between the two islands and regulated ferry fares through the public services commission. Only the two contracted ferry operators were given the right to provide ferry service between the two islands. The two ferries provide non-competition-based services dictated by the franchise. Other for-profit ferry services exist for vehicle transportation although services are not as frequent as the franchised service (United States Virgin Islands, accessed March 21, 2010).

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48 Guidelines for Ferry Transportation Services Organizational Structure Under U.S. Virgin Islands Code Title 25, Chapter 3, regularly scheduled ferry service between Saint Thomas and Saint John shall be maintained in accordance with regulations by the Gover- nor (Virgin Islands Code, Title 25, Chapter 3). For the purpose of maintaining transportation facilities and services between the Islands of Saint Thomas and Saint John, the Governor shall contract for, purchase, or otherwise acquire all such equipment, labor, services, and facilities as are necessary or appropriate. Title 25 is the precursor to enacting the ferry franchise agreement. In 1986, the U.S. Virgin Islands enacted a franchise agreement to operate ferry services between Saint Thomas and Saint John, as well as bus services on Saint Thomas. The franchise agreement is part of Act No. 5168 of the 1986 Regular and Special Legislative Sessions. The fran- chise agreement exclusively gave the right to Transportation Services of St. John, Inc., and Var- lack Ventures to operate marine services between the two islands (Virgin Island Session Laws, Act No. 5186, 1986). The franchise agreement requires maintaining existing service levels from 1986 for the length of the 10-year franchise. The two franchises are on a temporary extension and as a result are still operating under their 1986 franchise agreements. As part of the franchise agreement, the two operators are considered as a public utility, to be regulated by the Public Ser- vices Commission. Ferry services between Saint Thomas and Saint John currently continue to operate under the franchise agreement established in 1986 by the same private ferry operators. Both operators pro- vide duplicate routes between the two islands, with demand split evenly between the two oper- ators. Because the franchise agreement eliminates competition between the two operators and fares are regulated by the Public Services Commission, the two operators in essence operate as one unit, although the internal functioning of the two entities remains independent. U.S. Virgin Islands Code Title 25, Chapter 3 mandated that vessels in service under the fran- chise agreement be under the auspices of the Governor. Since the franchise agreement was insti- tuted in 1986, the two contracted operators have continued to operate their own private vessels in service. Both operators own and operate similarly sized vessels, one vessel for each route plus one space boat, for a total of three boats for each operator. The two boats in daily service are approximately 300-passenger vessels. Operational Structure System/Service Routes The franchise agreement mandates ferry service between Saint Thomas and Saint John. Pills- bury Sound, which separates Saint Thomas from Saint John, is considered part of the federal high- way system; this classification of Pillsbury Sound is the basis of the franchise agreement and the government's sponsorship of the route. By contrast, the crossing between Saint Thomas and Saint Croix is not considered part of the federal highway system, thus there is no franchise mandate. The two franchise operators provide identical service with identical service schedules and very similar fare structures. Passengers can board either ferry for passage between the two islands. The two terminals on Saint Thomas are located in the most populated areas on the island--the capital, Charlotte Amalie, and Red Hook on the eastern side of the island. Cruz Bay on Saint John is the main entry point to the island. As 75 percent of Saint John is part of the National Park Service, only one terminal is necessary. Table 5-12 outlines the ferry routes. Figure 5-10 shows a route map. Red Hook has more frequent service compared to ferries departing from Charlotte Amalie. This is due to the shorter travel time between Red Hook and Cruz Bay (approximately half the duration of one-way travel on the Charlotte AmalieCruz Bay route) and the fact that most of the local population lives closer to the Red Hook terminal. The Charlotte Amalie terminal pro-

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Ferry Case Studies 49 Table 5-12. Ferry routes between Saint Thomas and Saint John. Route Service Schedule Service Trip Time Frequency Red Hook, Saint 6:30 a.m. to 7:30 a.m., 8 a.m. 60 min 15 to 20 min ThomasCruz Bay, to 12:00 a.m. Saint John Charlotte Amalie, Saint 7:15 a.m., 9:15 a.m., 11:15 a.m., 2h 40 to 45 min ThomasCruz Bay, 1:15 p.m., 2:15 p.m., 3:45 p.m. Saint John (leaving Cruz Bay), 9:00 a.m., 11:00 a.m., 1:00 p.m., 3:00 p.m., 4:00 p.m., 5:30 p.m. (leaving Charlotte Amalie) vides easy ferry access to tourists heading to Saint John, especially tourists who have arrived to the island via cruise boats. Both operators of ferry service between Saint Thomas and Saint John provide identical service with almost identical service headways. While ferry operation is non-competitive due to the fran- chise agreement, it is important to note the similar service schedules and ridership demand that allow for both entities to provide similar services. Ridership is generally split evenly between the two franchised operators, since fares and schedules are held constant. Together, the two opera- tors transport approximately 2 million passengers a year between Saint Thomas and Saint John (Interview with Transportation Services, January 29, 2010). Ridership experiences some seasonal peaks, notably during Carnival, when daily passenger loads spike to 10,000 to 15,000 passengers. Figure 5-10. U.S. Virgin Island ferry service routes.

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50 Guidelines for Ferry Transportation Services Otherwise, daily ridership is generally constant throughout the year, as local residents depend heavily on the ferry service to travel to work and school and make daily foodstuff purchases. The U.S. Virgin Islands are a year-round tourist destination, so tourist patronage does not make up a large proportion of seasonal ridership. (Interview with Transportation Services, January 29, 2010). Ferry service between Saint Croix and Saint Thomas is not mandated by the government, and the route between the two islands is not a popular one. Unlike Saint John, Saint Croix is largely self-sustaining, with jobs and housing located on the island. In addition, the journey between Saint Croix and Saint Thomas by water is very uncomfortable because of rough water, and peo- ple prefer to travel by air. In this instance, inter-island air travel is more attractive than water travel. Travelers travel by seaplane for inter-island travel. Facility and Vessel Maintenance Both franchise operators own and operate their own vessels for the Saint ThomasSaint John route. Until now, the island government has been unable to secure federal capital financing to purchase government-owned vessels for use on the route. The island government is currently working with the federal government to secure a $5-million capital funding grant that would be used to purchase two new ferry vessels, one for each franchise operator (Interview with Trans- portation Services, January 29, 2010). Both operators generally operate three vessels on the two routes. Because the Red Hook to Cruz Bay route has the more frequent service, there are two vessels in operation. There is one vessel on the Charlotte Amalie to Cruz Bay route. Both operators use similarly sized vessels, rang- ing from boats that can carry 149 passengers to boats that can carry more than 300 passengers. One operator uses a 149-passenger boat for the Charlotte Amalie run to Cruz Bay and two pas- senger boats that can each carry 280+ passengers for the Red Hook run. Daily vessel maintenance is conducted by each operator's own maintenance staff. One fran- chise operator has four mechanics on staff to conduct daily checks on the vessels. The vessels are put in dry dock twice a year--one time for Coast Guard inspection and the second time for removal of barnacles from the bottom of the boat because they can affect vessel operation. Vessel replacement of boats on the franchise routes has been performed by the operators with their own resources and in accordance with individual requirements. The U.S. Virgin Islands received federal funding for new vessels in 2011 and expects to receive these vessels in the next several years. It is hoped that the new vessels on order with monies from the federal grant will arrive sometime in fall 2010. Staffing Levels Staff comprises crew members, mechanics, and administrative personnel. Both operators have a staff of 45 to 50 people. The staff comprises 4 or 5 mechanics and 25 crew members; the remain- der is administrative staff. Both ferry operators are family-owned enterprises. Financial Structure Fares Regular adult fares run between $7 and $11 per one-way trip, as shown in Table 5-13. Dis- counted trips are available for students, seniors, and government workers. The island govern- ment purchases tickets in bulk at a reduced price to distribute to its workforce. In contrast to the usual one-month ticket book, government-purchased bulk tickets are good for 90 days. Tickets can be purchased in advance (mail or online) or at the ferry terminal. A recent upgrade to the ticket collection system discontinued the practice of having an onboard ticket collector;

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Ferry Case Studies 51 Table 5-13. Fare structure. Route Fare Franchise #1 Franchise #2 Red Hook, Saint Thomas $7.00 adult one way, $2.00 child fare, $6.00 one way Cruz Bay, Saint John $2.00 senior rate, $3.00 luggage charge Charlotte Amalie, Saint $11.00 one way, $3.00 luggage charge $12.00 one way ThomasCruz Bay, Saint John now an outside ticket company distributes tickets and collects fares for both operators jointly. The U.S. Virgin Islands Port Authority is currently testing a turnstile pilot program where pas- sengers can use swipe cards for entry. This program will hopefully be spread to all the terminals once the testing phase is complete. Fares are set and approved by the Public Services Commission, which oversees all utilities on the islands. The franchise agreement creating the government-sponsored ferry routes deliber- ately states that fare increases or decreases must be approved by the Public Services Commission because ferry service is considered as a utility on the islands (Virgin Island Session Laws, Act No. 5186, 1986). Funding Sources Because the ferry is an integral part of residents' daily travel, any increase in fares is met with intense public resistance. The private operators have been unable in the past few years to work out an agreement with the Public Services Commission to raise fares. This dispute has caused the operators to threaten to go to the court, as they allege that they are continually losing money (Interview with Transportation Services, January 29, 2010). Another source of discontent between the franchise operators and the government is the cur- rent use of private vessels when the government is mandated to use publicly purchased vessels on the Saint ThomasSaint John ferry routes. Federal funding is the main source of capital proj- ects, and federal funding of over $5 million is scheduled to be granted for new ferry boats (Inter- view with Transportation Services, January 29, 2010). Planning Issues Environmental and Regulatory Issues The U.S. Virgin Islands follow current federal standards and regulations. The territory does not have its own set of environmental compliance regulations. The increase in the cost of fuel that began in 2008 has forced the ferry operators to begin to investigate new technologies to reduce fuel consumption. At least one operator has started to welcome overtures from companies selling new technologies, such as fuel additive, that are pur- ported to reduce the amount of fuel burned by the engines. Fuel can be purchased from only a few purveyors on the island and because the operators lack space to store large amounts of fuel, they pay for fuel at prices listed on the day that the vessels fill up (Interview with Transportation Services, January 29, 2010). Land Use Issues On Saint Thomas and Saint John, ferry terminals are located in well-established areas. Charlotte Amalie is the island's government seat, while Red Hook and Cruz Bay are points of local devel- opment and commerce. The majority of the ferry service between the two islands is passenger day travel, with residents using ferries as a commute mode.