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Then in October 2024, BC Ferries updated its strategy to take a phased approach of building the seven new vessels. In its submission to Eva Hage — the independent BC Ferries commissioner responsible for approving major capital projects — the ferry corporation proposed building five vessels as part of the first phase, with entry into service planned between 2029 and 2031. This includes four replacement vessels and one additional vessel to serve as a spare.

A subsequent second phase would deliver the remaining two vessels, with service entry anticipated around 2037. In the interim, two of the aging C-class vessels — the Queen of Surrey and Queen of Oak Bay — would undergo upgrades at local shipyards to extend their operational lifespans by several more years.

Built in 1981, the Queen of Surrey and Queen of Oak Bay are comparatively younger than the other three C-class vessels, the Queen of Coquitlam, Queen of Cowichan, and Queen of Alberni, which were all built in 1976.

Four new ships approved, instead of the requested five

This vessel order represents BC Ferries’ most expensive capital project to date. The ferry corporation’s proposed phased approach is a response to the rising global shipbuilding costs observed since the pandemic. By spreading expenditures over a longer period, BC Ferries aims to address the most pressing medium-term needs for capacity and reliability, while minimizing the impact on its overall fiscal health. As another to measure to prioritize this project and mitigate its high cost pressures, it removed or delayed other capital projects.

“By splitting the vessel replacement project into two phases, BC Ferries optimizes its investment, ensuring a prudent use of resources and softening the impact on price caps compared to constructing all seven vessels in a single phase. This meets customers’ travel needs, while also supporting affordability by not putting unnecessary upward pressures on fares earlier than required,” reads BC Ferries’ application to the commissioner to receive final approval for the order of five new vessels.

Much to BC Ferries’ disappointment, the independent commissioner issued a decision in late March 2025 approving only four replacement vessels, deferring the fifth vessel — intended as a spare, and the 12th major vessel for the entire fleet — to a future phase. All decisions made by the commissioner — which is independent of the provincial government and the ferry corporation — are final.

The commissioner’s decision provides BC Ferries with the permission to replace the Queen of Alberni, Queen of Coquitlam, Queen of Cowichan, and Queen of New Westminster.

Ironically, just yesterday, BC Ferries announced reduced sailings for the busy 2025 Easter long weekend on the key Horseshoe Bay–Langdale (Sunshine Coast) route, and warned of very limited standby availability.

The Queen of Surrey remains out of service due to delayed planned maintenance and is not expected to return until early summer. The Queen of Oak Bay recently resumed service in late March after undergoing its planned maintenance. Typically, the Queen of Coquitlam would provide additional sailings on this route, but it is currently filling in for the Queen of Surrey. The planned maintenance periods for both the Queen of Oak Bay and the Queen of Surrey — usually carried out during the low season — were significantly delayed due to the unplanned, six-month-long repairs of the Queen of New Westminster after its propeller detached. The fix for the Queen of New Westminster occupied shipyard time previously allocated for the Queen of Oak Bay and Queen of Surrey.

This is like playing a game of maritime musical chairs, with one ship’s unexpected breakdown triggering a cascading logistical shuffle that throws off the entire maintenance and service schedule.

But such a precarious game is a far cry from the resilient coastal ferry system that British Columbians expect — and deserve — for what is supposed to be a critical transportation lifeline to the Sunshine Coast and Vancouver Island, and a seamless continuation of the provincial highway system.

Resiliency comes from redundancy — and that’s exactly what BC Ferries’ request for a fifth major vessel, intended to serve as a spare, would have delivered had it been included in the first phase of the order.

BC Ferries has noted that the Queen of New Westminster’s recent unplanned downtime for repairs, spanning about 200 days, cost the ferry corporation about $14 million in the combined cost of repairs and lost fare revenue.

A “fragile” ferry network without at least one spare vessel

After the commissioner released her decision permitting an order of only four ships, Brian Anderson, the vice president of strategy and planning for BC Ferries, told media in a briefing that the Queen of New Westminster’s impacts to the overall ferry network’s capacity was “another reminder of just how fragile the system is without a dedicated backup vessel.”

“[This is] a challenge that could have been mitigated with a relief vessel to provide critical support during maintenance and breakdowns. It’s agreed that a relief vessel would reduce the impact of service disruptions, allow for better maintenance scheduling and provide backup during mechanical failures,” said Anderson. But the commissioner deemed such a spare vessel to be unreasonably expensive and not essential at this time.

“When the Queen of New West went down for 200 days, the system suffered, people suffered, businesses suffered, community suffered. We need a vessel inside the relief pool that allows us to respond when bad things happen,” said Nicolas Jimenez, CEO of BC Ferries, during the media briefing.

This fifth vessel would have provided additional service on the busiest route of Tsawwassen-Swartz Bay (Victoria) during peak periods, and serve as a relief vessel for the various major routes during the off-peak periods, such as for the planned maintenance or the mechanical breakdowns of other vessels.

“Without a relief vessel, customers are gonna continue to experience congestion, longer waits and reduced flexibility when breakdowns and unscheduled maintenance occurs. This decision delays, but it does not eliminate the need for a fifth vessel. In our view, it’s not a cost-saving decision, it’s a cost deferral decision,” said Jimenez.

In other words, this decision pushes the problem even further down the road — despite the fact that BC Ferries already delayed action once before in response to the initial impacts of the pandemic.

Furthermore, as with any construction project, delaying its implementation only ultimately leads to overall higher costs due to cost inflation — and this is particularly an issue for the global shipbuilding industry.

There are also economies of scale from ordering a larger of batch of vessels.

“This is the most affordable a fifth vessel will ever be due to what we describe as unique market conditions, fixed-price bids, and economies of scale. Building a series of five ships right now will be significantly cheaper than building one or two at a time,” continued Jimenez.

“What’s more, independent market experts agree that the favourable conditions for the current ship building procurement processes that we’ve been conducting will not be repeated, meaning that cost for future ships and fare pressures will certainly be higher tomorrow than they are today.”

This is not to say the four new approved ships will not provide a net gain in capacity.

This future new generation class of ship will have a capacity for 2,100 passengers/crew and 360 vehicles, with a displacement of 11,800 tonnes.

In contrast, each C-class vessel can accommodate up to about 1,500 passengers/crew and 300 vehicles, with a displacement of about 6,500 tonnes.

In fact, these future ships will be similar in size, if not sightly larger, than BC Ferries’ existing largest vessels — the Spirit of British Columbia and the Spirit of Vancouver Island.

As a result of the four new major vessels, the Tsawwassen-Duke Point (Nanaimo) route would see its vehicle capacity rise by 17 per cent, while passenger capacity would increase by 50 per cent.

These new vessels would also increase vehicle capacity by 12 per cent and passenger capacity by 18 per cent on the Tsawwassen-Swartz Bay route, but it does not keep up with this route’s expected demand over the next 10 years.

With the introduction of five new-generation vessels and the retirement of four aging ships, all four major routes would see a reassignment of the vessels that serve them. The Tsawwassen–Swartz Bay route would be operated by three new vessels alongside two Spirit-class ships. The Horseshoe Bay–Departure Bay (Nanaimo) route would be served by two Coastal-class vessels, while the Tsawwassen–Duke Point (Nanaimo) route would be served by two new vessels and one Coastal-class ship. The Horseshoe Bay–Langdale route would continue to be served by two C-class vessels until their retirement in 2037, when new ships from a second-phase order are expected to arrive.

“A system in crisis” with four new ships, instead of five

In Summer 2025, the three major routes between Metro Vancouver and Vancouver Island already hit 90 per cent of average capacity utilization, with the Tsawwassen-Swartz Bay route hitting 92 per cent between April and September. On this busiest of routes reaching the provincial capital city, it is estimated that 17 per cent of travellers who can be flexible with their travel plans have already shifted from peak sailings onto off-peak sailings. More broadly, it is estimated that about 70 per cent of travellers use BC Ferries for non-discretionary reasons.

Sailing cancellations are estimated to have cost the commercial trucking industry over $100 million per year. BC Trucking Association estimates that one cancelled sailing with 20 commercial vehicles could cost just the motor carriers $20,000, and the overall commercial sector over $100,000.

This fifth new vessel could have potentially served to lower the cost of goods for Vancouver Island residents and businesses.

“Significantly, the twelfth vessel will also benefit affordability for BC Ferries customers — and all island communities served by or through the major routes — in another way. By enabling a step change in capacity that supports supply chains and commercial shippers, the BC Trucking Association believes the additional vessel helps to reduce shipping costs that otherwise would have been passed directly to consumers,” reads the application.

BC Ferries asserts it is now approaching the limit of what additional demand management strategies it can rollout to encourage travellers to sail during off-peak times if possible, such as discounted fares/dynamic pricing, schedule changes, and marketing strategies. Increasingly, these strategies provide diminishing returns.

A decade ago, the average capacity utilization was about 87 per cent for the month of August, with the busiest days being mainly Fridays and Sundays. In 2024, the utilization rate for this month grew to 96 per cent on average, with only some flexibility on Tuesdays and Wednesdays.

After population and economic growth is accounted for, by 2034, the services could be overwhelmed, with an average utilization rate of 98 per cent. Even with a fifth vessel, the average utilization rate would still be at a relatively busy 84 per cent.

These three major routes generate over 83 per cent of all fare revenue on the entire BC Ferries network; in 2024, the major routes generated operating revenue of $684 million, while all other routes generated $137 million.

For decades, BC Ferries has maintained that its major routes are highly profitable, with their net revenues helping to subsidize the operating costs of lower-ridership minor routes. In its application, the ferry corporation suggested that a fifth vessel — bringing the total number of major vessels in the fleet to 12 — would also enhance revenue generation on major routes.

“Although New Major Vessel Project vessels will sail on the major routes, the Project has significant benefits for customers on every ferry route. With the major routes currently operating at extreme capacity utilization in the peak season, growth itself becomes constrained across the ferry system. Without the benefit of overall growth, the non-major routes will be exposed to higher financial self-reliance or increased government support as their operating costs continue to escalate despite efforts to contain them,” reads the application to the commissioner.

“BC Ferries is reaching an inflection point where, without additional capacity on the major routes, a chokehold will be placed on the system. Adding a twelfth vessel to the fleet that can serve the passenger and goods demand expected from population growth, along with its revenue, will ensure a strong backbone for the system as a whole.”

While there are greater revenue opportunities with these new ships, there are also higher operating costs, as these larger vessels require more crew and fuel to run than the old vessels entering retirement. In its application, BC Ferries acknowledged “all options are forecasted to have an unfavourable net operating impact.”

But with capacity increasingly falling short of demand, there is also a growing amount of unserved, latent demand as a result.

BC Ferries estimates that by 2034, it will see an increase in annual traffic of 129,000 vehicles with the approved first phase scenario of four new vessels, and 198,000 with its requested scenario of five new vessels.

“Customers traveling for business who don’t have flexibility since they can’t miss their meetings. People traveling for medical reasons who require a specific sailing in order to make their appointments. Sure, schedule adjustments may spread demand slightly across the major routes, but they won’t address peak system capacity limits or the impact of service disruptions,” said Anderson.

“Current demand is already straining the existing capacity during the peak season. There will be very few opportunities to accommodate forecast growth through demand management without increasing the supply through a fifth vessel.”

According to Anderson, BC Ferries estimates that a fifth vessel would generate $45 million annually in additional tourism, support supply chain growth valued at $240 million per year, and contribute to job creation estimated at $140 million annually.

Jimenez warned that by 2034, “if we only have the four vessels in the mix, we will be again, a system in crisis,” adding that “our concern is that it sets us up for more congestion, longer waits, and less resiliency when mechanical issues happen, and let’s face it, they do happen,” continued Jimenez.

Fundamentally, says Jimenez, numerous ferry users, businesses, and economic and tourism stakeholders have overwhelmingly told the ferry corporation they want to see improved capacity and reliability. An independent economic analysis was also created to confirm the economic impacts of not pursuing a fifth vessel.

BC Ferries notes that there has been no major change to the capacity or service levels of the three major routes for about 30 years, since the two Spirit-class vessels entered operations, yet the population of the province is expected to rise by 44 per cent by 2046.

“Overly optimistic” demand growth, says commissioner

However, according to the commissioner’s written decision — based on a third-party analysis conducted by MMK Consulting — BC Ferries’ projected traffic demand increases over the coming decade were deemed “overly optimistic” when compared to historical trends. The consultant placed greater emphasis on a potential correlation between fare levels and demand, noting that periods of higher fare increases generally result in weaker demand growth, while lower fare increases are linked to stronger growth.

In the 2024 fiscal year, BC Ferries recorded a total of 9.6 million vehicles — a steady increase from 7.7 million in 2014. It also saw 22.6 million passengers in 2024, up from 19.7 million in 2014.

This includes 2.1 million vehicles and 6.3 million passengers on the Tsawwassen-Swartz Bay route, 1.2 million vehicles and 3.1 million passengers on the Horseshoe Bay-Departure Bay route, 1.2 million vehicles and 2.7 million passengers on the Horseshoe Bay-Langdale route, and 930,000 vehicles and 2.1 million passengers on the Tsawwassen-Duke Point route.

These major routes account for 59 per cent of overall vehicle traffic and 63 per cent of overall passenger traffic on the entire BC Ferries network.

The commissioner also highlighted MMK Consulting’s concern that BC Ferries’ forecasts failed to adequately consider potential economic disruptions, such as financial crises or recessions, fluctuations in the Canadian dollar affecting tourism, major spikes in gasoline prices, or the absence of significant public transit infrastructure investments that could shift demand away from vehicle travel.

All cost estimates, fare increase pressures, and other pertinent figures and details were redacted from the public versions of BC Ferries’ application document, the commissioner’s written decision, and the consultant’s report to protect the ferry corporation’s competitiveness in the vessel procurement process. There have been some suggestions, based on previous comments by BC Ferries’ leaders, that the cost of this order could be as much as up to over $1 billion, following a 40 per cent increase in global shipbuilding costs over the last four years. And in specific response to recent advocacy by major B.C. shipyards to build these vessels domestically, BC Ferries pushed back and cautioned that doing so could drive costs even higher — potentially driving the total into the multi-billion-dollar range.

There is also a cost premium associated with the specific lower-emission design of the vessels, as they will be diesel-electric hybrids designed for future conversion to full electric propulsion. In the interim, the hybrid system will allow the vessels to operate using smaller, more efficient engines, with additional power provided by batteries. These batteries will be recharged by the engines during periods of lower power demand.

Similar to TransLink’s ongoing fiscal challenges, BC Ferries also has a structural funding gap emerging out of the pandemic to consider. In November 2024, Jimenez warned that in order for BC Ferries to keep up with its growing operating and capital costs, the equivalent revenue increase of a 30 per cent fare hike would be needed in 2028. The ferry corporation is seeking a more stable and sustainable funding model from the provincial government.

The commissioner suggests that the fifth vessel “will come at a significant incremental cost and will have a long-term financial impact on the Company” by increasing its debt load and reducing its equity position, with these associated figures redacted.

Contradicting the commissioner’s claims, Anderson said “the incremental cost of proceeding with the fifth vessel is relatively small in relation to the challenges facing this overall system.”

It is also noted by the commissioner that a fifth vessel would require the construction of a lay-by-berth at Tsawwassen ferry terminal, but this was not included in the project’s total cost considerations. Other upgrades are also needed at the Departure Bay, Horseshoe Bay, and Langdale terminals to accommodate these larger vessels.

Nonetheless, based on MMK Consulting’s “high-level” analysis, the commissioner concluded that neither the four-vessel nor five-vessel scenarios would be affordable to ferry users without substantial and sustained financial support from the provincial government on behalf of taxpayers. The commissioner ultimately endorsed the four-vessel option due to the pressing need to replace the oldest and most unreliable vessels serving the major routes.

The commissioner suggests that the forthcoming fare increases to support the cost of any order scenario will be higher than the rate of inflation, and result in lower traffic demand, with the assumption that this would delay the need for more of the new generation vessels.

In summary, the situation presents a chicken-or-egg dilemma: investing in more vessels requires fare increases, but higher fares are expected to suppress demand — potentially weakening the case for expansion. At the same time, without new vessels, capacity constraints persist and unserved demand grows. This cycle creates a tension between keeping fares affordable and ensuring the ferry system can meet current and future needs, ultimately pointing to the necessity of sustained government support to break the impasse.

“Given BC Ferries’ current financial situation, the Commissioner is of the opinion that future fare increases will most likely be higher than inflation to contribute towards the cost of the New Major Vessels and will have a dampening effect on demand,” reads the decision.

What about vital economic, supply chain, tourism, and jobs considerations?

The commissioner serves as a key “checks and balances” mechanism for decisions made by the provincially-owned private company, with responsibilities that include final approval of fare increases, the implementation of temporary fuel surcharges or discounts, and major capital projects and long-term capital plans by BC Ferries. This oversight extends to capital costs for new vessel orders exceeding $50 million, terminal construction or upgrades over $40 million, and information technology or other capital investments exceeding $25 million.

While these approval thresholds have historically been periodically updated, they have not kept pace with inflation in recent years. For example, the $50 million threshold for new vessel orders was established well before the pandemic, despite shipbuilding costs having risen sharply over the past few years.

Some of the questions posed by the commissioner to MKK Consulting included: “Has BC Ferries demonstrated what the net financial cost or benefit is of the additional vessel? Are the assumptions reasonable? Is the cost-benefit analysis based on sound assumptions, and are the net present value calculations correct and reasonable?”

However, in making her ruling, the commissioner appears to have demonstrated a narrow scope of considerations, in contrast to the broader range of concerns raised by BC Ferries, ferry users, the general public, businesses, and other stakeholders. Such broader considerations would also be typically considered for major capital projects by the B.C. Ministry of Transportation and Transit, TransLink, BC Transit, Vancouver Airport Authority, and BC Hydro, for instance.

In the commissioner’s 32-page written decision and the consulting firm’s 41-page report, there are zero mentions on the potential net benefit of the new vessels for the provincial economy, tourism, jobs, trade, and supply chains and logistics.

Under the provincial government’s Coastal Ferry Act legislation, the commissioner has no explicit mandate or authority to directly consider such factors. The legislation stipulates the commissioner to make a decision on major capital expenditures based on whether or not the proposed project is “reasonable, affordable, and prudent; consistent with the approved and current 12-year capital plan submitted to the Commissioner for the current performance term; consistent with the current Coastal Ferry Services Contract; and consistent with any government long-term vision for the future evolution of coastal ferry services.”

In evaluating BC Ferries’ proposed capital plans, the legislation governing the commissioner’s role also states that “ferry operators are to be encouraged to meet provincial greenhouse gas emission targets in their operations and when developing capital plans,” but it makes no reference to broader economic, tourism, and/or job-creation factors.

While the commissioner did not provide the consultant with any questions related to economic and tourism performance, which was a very major focus of BC Ferries’ application, there were numerous questions related to environmental performance: “Has BC Ferries demonstrated what the reduction in greenhouse gas emissions is expected to be if the vessels are operated on diesel (before electric infrastructure is in place) and what the reduction will be once the vessels operate on electricity? Are the estimates based on sound assumptions? Does the consultant agree that the proposed technology is the best option for BC Ferries to reduce GHG emissions?”

All other questions centred on essential service considerations, such as financial performance, traffic demand, and corporate risk. Climate action emerged as the only additional consideration beyond the core operational and financial factors.

Altogether, this arguably positions the commissioner to adopt a more short- to medium-term cost impact perspective, rather than the long-term, broader-based approach that such significant decisions demand. It may also limit BC Ferries’ ability to remain nimble and take proactive, rather than reactive, action. As a public transit authority in all but name, BC Ferries has less flexibility than comparable agencies like TransLink and BC Transit, or even Vancouver Airport Authority.

“That’s likely to be the most consequential regulatory filing that this company has ever undertaken,” said Jimenez.

Renewed focus on domestic trade begins with improved transportation corridors

Amid ongoing economic uncertainty driven by the threat of U.S. tariffs on Canadian goods, political leaders across the spectrum have been calling for the creation of “one Canadian economy” by dismantling internal interprovincial trade barriers. Achieving that vision starts with high-capacity, efficient, and reliable transportation infrastructure.

According to the Vancouver Island Economic Alliance, Vancouver Island contributes roughly 14 per cent of B.C.’s total annual GDP. Based on the province’s total GDP in 2024, this equates to approximately $45 billion per year — more than four times the economic output of Prince Edward Island and slightly surpassing that of Newfoundland and Labrador.

Provincial government estimates indicate that Vancouver Island’s population grew from 683,000 in 2001 to 932,000 in 2024, with half residing in the Capital Regional District of Greater Victoria. That represents about 16 per cent of British Columbia’s total population. The island’s population is projected to reach 957,000 by 2031 — when the final vessel of BC Ferries’ upcoming order of four new major vessels is expected to enter service — and 1.05 million by 2046, including 537,000 in Greater Victoria alone.

Vancouver Island’s population is now more than five times that of Prince Edward Island (and it benefits from the fixed road link of Canada’s longest bridge, the Confederation Bridge), roughly double that of Newfoundland and Labrador or New Brunswick, and approaching the population size of Nova Scotia or Saskatchewan. In terms of land area, Vancouver Island is 11 times the size of Metro Vancouver, over five times larger than Prince Edward Island, and nearly equivalent in size to Taiwan.

Short of building a fixed road or rail link to Vancouver Island — which is, to say the very least, both unfeasible due a range of overwhelming geotechnical and financial factors — maintaining the three major ferry routes between the island and Metro Vancouver at high capacity, with frequent and reliable service, should be considered the absolute bare minimum.

In an era of renewed economic nationalism and growing emphasis on strengthening domestic trade, prioritizing robust connections between the regions within Canada is becoming increasingly vital.

While high-speed passenger rail between Vancouver, Seattle, and Portland continues to be explored as a long-term, cross-border economic and transportation initiative, the case for enhancing the major ferry routes between Vancouver Island and Metro Vancouver should represent an even greater provincial priority — supporting internal trade, tourism, and reducing regional disparities in access and mobility.

The future of Vancouver Island and B.C. as a whole depends on bold action, not overcautious delay.

But for now, that bold action remains highly elusive. Following the commissioner’s approval of an order for four new major vessels, BC Ferries expects to award the construction contract to a shipyard by June 2025. Over the past two decades, such contracts have typically been awarded to European shipyards due to their cost competitiveness. Although Canadian shipyards are invited to bid, they have generally chosen not to participate.

If all goes as planned, the first new major vessel is expected to arrive in Spring 2029, with the remaining three ships in this order arriving at approximately six-month intervals.

In 2027, BC Ferries is also set to receive four additional Island Class battery-electric vessels for use on minor routes. This will expand the recently introduced Island Class fleet to a total of 10 vessels, each capable of carrying approximately 50 vehicles and 400 passengers.

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