Audit suggests fewer ferry runs

Washington State Ferries could save nearly $97 million over the next 10 years if it eliminates some underused runs, according to auditors.

But the state Department of Transportation (DOT), in its response, said it's not as simple as reducing ferry runs to match demand. The state Office of Financial Management, in another response, said that some of the savings are likely overestimated and that the changes would likely be highly controversial.

The audit, released Tuesday, is the third performance audit of state entities released by the state Auditor's Office since voters gave the office that authority in November 2005.

In the report, Ernst & Young LLP, which was hired for the audit, suggested cutting as many as four runs a day on some routes to save money.

"Other transportation industries fluctuate supply in order to reduce costs, especially in the transit and airline industries," the audit said. "For example, passenger airlines cut back operations significantly after Sept. 11, 2001, as air traveler volumes plummeted."

In its response, the DOT thanked the auditors for the cost-saving suggestions but said there are barriers to simply cutting service to match the lower demand.

"As a mass-transit provider, there must be a balance in accommodating peak demand periods with providing some level of connection and usefulness to customers in off-peak hours. In the manner that highways are not closed during hours of low utilization, canceling off-peak ferry sailings must consider factors in addition to utilization," the DOT said in its response.

DOT communications director Lloyd Brown said the ferries and the department are pleased with the audit process and results.

"Overall, we're pleased that they found some things, and we're going to do what we can to take a look at those findings," he said.

Any major changes to ferry schedules, such as those suggested in the audit, would likely have to go through the Legislature, Brown said.

Fuel costs for the state ferries more than doubled between 2003 and 2006. As a result, fares have increased and vessel speeds have been slowed to reduce fuel consumption. Additional money from the Legislature also has helped cover the higher fuel costs.

The review looked at traffic surveys and found some runs "where significant underuse of each route adversely impacts the overall cost-effectiveness of WSF."

The audit recommended that at times when there are two runs sailing at 45 percent capacity or lower, that one of the round-trip runs be removed, allowing the remaining run, ideally, to have a 90 percent vehicle-capacity usage.

The audit did not specifically identify particular round-trip runs that should be eliminated. But it did include a table of possible routes that could be reduced for all seasons.

For example, one run could be eliminated at the end of the day during summer on the Seattle-Bremerton run, but runs could be eliminated at the beginning and the end of the day on that same route in the winter. Similar suggestions were made for all current routes.

The DOT agreed that some of the sailings had space during off-peak hours and said it is studying ways of attracting more riders.

The Office of Financial Management, which also responded to the audit, said it was premature to assume cost savings of $10 million in the first year could come from service cuts.

"Not all the passengers will catch the next boat," the agency said. "This, in turn, means revenue decreases. Another problem with the theory is that it does not consider the value of time for those that must wait for the next run.

"Such schedule adjustments would be highly controversial, even though they could potentially generate fuel and labor savings."

The performance report also had nine findings and several recommendations related to the ferry's Eagle Harbor maintenance facility, where major ferry maintenance is done.

The report suggests changing shifts at the facility to better meet demand, reducing some overtime charges and adding more Washington State Ferries managers to the Eagle Harbor facility.

The Auditor's Office is to hold a public hearing to receive public testimony about the report within 30 days.

The Associated Press contributed to this report.

Brian Alexander: 206-464-2026 or balexander@seattletimes.com