US embassy cable - 05HALIFAX93

UNCLAS HALIFAX 000093 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EWWT, ETRD, CASC, ASEC, CA, Transportation 
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