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Marine Atlantic 2022-2023 Annual Report

By Jaymie White Local Journalism Initiative Reporter PORT AUX BASQUES — On Tuesday afternoon, Dec. 19, Marine Atlantic held their virtual Annual review of activities for the period of April 1, 2022 to March 31, 2023. Gary O’Brien, Chair of Marine Atlantic’s board of directors, welcomed everyone to the event alongside Murray Hupman, President and CEO of Marine Atlantic, and Sean Lehman, Vice President of Finance. “In 2022/2023, we witnessed a rebound in passenger traffic, increasing 56 per cent over the previous year as people once again began to travel to visit loved ones and take part in leisure travel. Commercial traffic, steadfast throughout the pandemic, experienced an increase of approximately two per cent. Thank you to our customers and the marina landing team for a positive year as we continued to experience a rebound in traffic levels following the pandemic. During last year’s annual review of activities, I noted the devastation caused by Hurricane Fiona that adversely impacted many employees, families, and friends in this region,” said O’Brien. “I am pleased to share that this recovery work continued during the year and remains ongoing. Many employees worked selflessly to support one another, their communities, and our region in the rebuilding process. Thank you to all who have been a part of the process.” Marine Atlantic’s stated mission is to ensure safe, efficient, and affordable ferry service to everyone. “Our strategic plan is designed to focus on attaining our corporate vision. The four key areas of focus include number one, our customers and stakeholders by ensuring capacity and service levels to provide a service that meets customer needs while maintaining affordable rates. Number two, our financial and public stewardship by protecting people, the environment in which we operate, and our property. Number three, our internal processes by using innovation to provide a modern, sustainable and effective ferry service and number four, our people, tools and skills by focusing on building and retaining a diverse and inclusive team that will enable us to succeed from an infrastructure perspective,” said O’Brien. “There was significant progress on two key capital projects, namely the construction of a new vessel, the Alasunu, and a new administration building in the town of Channel-Port aux Basques. We’re thrilled with the progress on these two projects and are looking forward to their completion in the coming year. Embedded in the philosophy of these projects is our commitment to providing a workplace and travel options that are accessible to all Canadians. I am pleased to share that the new charter vessel will incorporate modern, accessible features that aligned with the most recent accessibility transportation for persons with disability regulations. When the vessel enters service, it will be one of the most accessible passenger vessels globally as we look to the future.” Updates to the harbour were also on the agenda. “Recognizing the ever changing environmental landscape, this board acknowledges the value in seeking change in developing Port aux Basques harbour. Removing Vardy’s Island remains a board priority as it enhances the harbour development with a focus on safety and improving services,” said O’Brien. “This past fiscal year demonstrated the continued need to adapt to ever changing environments as we navigate a new post-pandemic world and as our communities continue to experience the power of nature. We are dedicated to working to minimize our impact on the environment with a goal of net zero carbon emissions by 2050. This past year, we implemented initial actions towards that goal and are working towards a full action plan. We will continue to be successful through the adaptability and resiliency of our team.” Murray Hupman spoke next. “For the 2022/23 fiscal year, we transported approximately 360,000 passengers, 142,000 passenger vehicles and 92,000 commercial vehicles. The greatest difference from the previous fiscal year was a significant increase in passenger traffic. We carried approximately 130,000 more passengers along with approximately 60,000 additional passenger vehicles. Overall, our fleet on time performance was 86 per cent. During the year, our customers told us we met or exceeded their expectations 90 per cent of the time. They were also pleased with our frontline employees during their travels, with 96 per cent of customers stating they were highly satisfied. Our commitment to provide our customers with a safe, reliable and accessible ferry service remains unwavering. Understanding and supporting their needs means we can make their travel as efficient and enjoyable as possible. We always strive to improve our services. We are focusing on building a culture of innovation that will modernize our customer’s journey. Central to our success is our continued focus on harnessing the value of information. For example, over the year we have made significant enhancements in providing commercial customers with real time information, enabling them to make effective and time sensitive decisions,” said Hupman. “One of the more significant customer enhancements we made during the year was the introduction of pet friendly cabins. I am pleased to share that these cabins have been in very high demand with very positive feedback from our customers. Most of our passenger traffic has traditionally traveled during the summer months, leaving capacity for people with more flexibility to travel during the shoulder seasons. To encourage increased travel during these times, we offered a discount campaign. In the spring, we partnered with the province of Newfoundland and Labrador as part of their come home year activities and offered a 25 per cent discount on passenger and passenger related vehicle fares. During the fall, we partnered with Newfoundland and Labrador Outfitters association and offered a 22 per cent discount as a critical element of the Canadian supply chain infrastructure.” The new Marine Atlantic vessel is expected to be in service by June. “Early in 2024, we will begin sharing more information about the new vessel. Another key infrastructure project that began during the fiscal year is the construction of a new administration building in Port aux Basques. The new building is scheduled to be open in the summer of 2024.The building is being constructed with the goal of being energy efficient, minimizing the impact on the environment and attaining lead certification, as well as being a safe, modern and accessible facility for our team,” said Hupman. “The weather has always been an integral part of our operation as our captains include environmental conditions in their daily operational decisions. Recently, we have been experiencing changing weather patterns that are resulting in more intense and frequent storms. The impact of climate change is significantly impacting the decisions we are making for the future. We are committed to doing our part to lessen the impact on our environment in which we operate for generations to come. This includes achieving net zero emissions by 2050. As a member of the Green Marine Environmental Certification program, we are focusing on continued improvements beyond regulatory requirements.” The year looked a lot brighter financially than it did during the pandemic according to Sean Lehman. “The year represented a major step in our road to recovery following the significant decline in travelers using the service during the COVID-19 pandemic. By summer 2022, restrictions had been dropped and people were able to return to regular travel. Overall, during the year, we experienced a 65 per cent increase in passenger traffic volumes compared to the previous year. The total commercial units traveling during the year also increased by 2.7 per cent year over year,” said Lehman. “In total, revenues for the organization were $269,000,000. Approximately $139,000,000 was generated in user pay plus ancillary revenues, and the Government of Canada provided a subsidy of approximately $130,000,000. The Marine Atlantic ferry service operates on a balanced budget approach, which means the organization does not make a profit. To that end, the organization’s total revenue is utilized to cover the cost of providing the ferry service. These revenues are a combination of user pay fees and a subsidy from the Government of Canada. From an expense perspective, our primary budgeted expenditures for the year included employee wages and benefits, vessel charter costs, fuel repairs and maintenance, materials, supplies, service costs, insurance, rent, and utilities.” Fuel costs were a major concern for the transportation company. “Fuel expenses were $24.6 million higher than the previous year as oil prices continued to be extremely volatile. The corporation’s cost of fuel per litre was 65 per cent higher than the previous year. In addition, the organization’s vessel fleet completed 108 more trips during the year to transport the increased traffic volume, resulting in increased consumption of fuel during the year. Charter fees were $300,000 higher than the previous year due to higher average daily rates. Labour costs were $13.5 million higher compared to the previous year. Increased staffing was needed to meet operational requirements related to increased passenger numbers and sailings,” said Lehman. “Additionally, negotiated wages were higher than anticipated because of high general inflation rates. Materials, supplies and services were $2.6 million higher compared to fiscal year 2021/22, as consumables costs were higher due to the increase in traffic and inflationary pressures. Repairs and maintenance costs were $900,000 higher than the previous year, the increase mainly driven by shore infrastructure project and inflation. Insurance, rent and utilities were $800,000 higher than last year, mainly resulting from higher insurance premiums. From a cost recovery perspective, the organization attained a rate of 59.9 per cent for the year. This fell short of the 65 per cent cost recovery target set by the shareholder.” For more detailed financial information, individuals are encouraged to visit marineatlantic.ca to view the complete financial statements.

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