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August 2008 Dear Guests, We don’t take lightly any increase in ticket price. We agonize over even the smallest increase. It is therefore with a great deal of wringing of hands that we announce that, due to the unprecedented increase in the cost of diesel fuel, we must impose a fuel surcharge on each ticket. At the beginning of August of last year, fuel cost us $2.22 per gallon. This month’s prices are currently running at $3.80 per gallon. That’s an increase of over $2,000 per day, vs last year, to our operation! Sadly, we are unable to sustain that increase on our own. Our margins do not allow for it. We wish to assure you that we do not profit from this surcharge and pledge to decrease it on whole dollar increments should our fuel costs drop accordingly. If there is any good news in this, it is that Bay State Cruises continues to operate one of the least expensive fast ferry trips in the entire country on a per mile basis and, therefore, provides you, our guests, with a strong value. We are also now only charging the same amount that we charged back nine years ago when we began high speed ferry service to Provincetown; back when fuel was 40 cents per gallon, no less! The other good news in all this is that the environment is benefiting. The EPA passed a law late last year requiring that ferries burn diesel fuel with an ultra low sulfur content. Although the additional refining processes required for the cleaner fuel has added significantly to the cost of the fuel, the ferries have now become an even more environmentally friendly way of traveling to the Cape. Thanks very much for your patronage. We appreciate your confidence and your business.
Sincerely,
A frequent question this season: Why is your fuel surcharge $3 for one way tickets and $8 for round trip tickets? We follow the logic that would lead passengers to ask that question. There's a short and long answer. Short A short answer is that we added $5 to last year's one way rate of $44 and $10 to last year's round trip rate of $69; a weighting of increases that falls better into your logic's line of reasoning. Prior to the fuel surcharge of this season, our original 2008 pricing added $2 to the 2007 one way rate and only $2 (not the more logical $4) to the 2007 round trip price. That original scheme of 2008 pricing (unequal weighting) was due to our interest in covering the predicted fuel price increases by creating more round trip riders. It was intended to effectively create more revenue through an incentive for passengers to return with us at a discounted round trip rate instead of returning by another means. Our average ticket would drop, but we'd hopefully have more overall revenue. We thought that by selling more roundtrip passes, we would create more travel commitments and keep pace with what we thought would be fuel prices in the high $2 per gallon. Clearly, fuel prices have gone far beyond that. Long The more complicated, but thorough, answer is this: we had a couple of processes to lead us to those price increases. Step One) The simple math that drives the surcharge overall is : ((this year's price per gallon of diesel minus last year's price per gallon of diesel) x total gallons consumed in a season) divided by the number of passengers we expect to carry in the season. That math brought us to $5.80 per passenger leg, or, $11.60 per roundtrip. To then add that to last year's rates (we set prices not to get rich, but, only to cover increased expenses) would have meant that last year's $44 one way would go to $49.80 (we would have rounded to $50 as making change never makes sense). That also means that last year's $69 round trip would go to $80.60 (again, we would have rounded to $81). Step Two) We then take a step back and look with horror at those prices and ask ourselves: what should we do to balance our need to not lose a lot of money, but, also not risk driving our passengers away due to high prices? With that in mind, we decided that both prices appear too high and that three things would take place: 1) we would not charge the full surcharge needed to cover the fuel costs (an effort in preserving the market for hopefully better times to come). We set our sights on breaking even this year. 2) with such onerous fuel prices and surcharges we would be more sensitive to those who do occasionally travel with two one ways than to those who travel with a round trip ticket, as they (the one way travelers) already pay a significant penalty for their uncertainty of travel plans. At today's rates, pre surcharge, one way travelers pay $92 to get back and forth vs the round trip traveler with more easily predicted return dates who pays $71. As was mentioned above, we know that some of the double one way traveler occasionally return by another means. 3) we would look for a price point that "feels" right. This is where ducking under the $50 and $80 threshold by a dollar comes in. So, there you have it; the not so sexy inner workings of a pricing decision. Not everyone may agree with it, but, we wanted to give you a courtesy of a response to an often asked question. We value each and every rider that comes aboard, or, that even just considers coming aboard. We've hung in for the past 36 years by doing our best at meeting the needs of our passengers while having enough money come in to keep us in business and serving Provincetown. Thanks for considering us as your transportation connection to Provincetown. Bay State Cruises |