B.C.'s Transportation Minister Mary Polak is asking the public to take part in a consultation process on the future of BC Ferries to help find a better balance between service and costs.

As part of the process, the government will host open houses and small group meetings in coastal communities and webinars online, Polak announced Monday.

"Taxpayer contributions to our coastal ferry service are at an all-time high of $180 million this year," said Polak.

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B.C. Ferries vessel Spirit of Vancouver Island passes between Galiano Island and Mayne Island while traveling from Swartz Bay to Tsawwassen, B.C. (Darryl Dyck/Canadian Press)

"This open public consultation process will ensure that coastal communities, ferry users and taxpayers all have the opportunity to inform decisions about service adjustments that will ensure we have a sustainable, affordable and efficient ferry service."

The public process was created in response to a report by the province's independent ferry commissioner that said the BC Ferries Corporation and the government must consult the public about the future of the service.

In his January report, B.C. Ferry Commissioner Gord Macatee said declining ridership, financial losses, and the need for huge upgrades of ships and terminals are all straining the sustainability of the provincial ferry corporation.

Macatee said fares have reached the tipping point, imposing a hardship on coastal communities and passengers, and ridership has declined as a result.

"Over the last nine years, fares have gone up by 47 per cent on the major routes and 80 per cent on the minor routes. During that time, inflation has risen by about 15 per cent," he said.

Rising costs and declining ridership

According to the Ministry of Transportation, declining ridership and rising costs resulted in a loss of more than $16 million in the year ending March 31, 2012.

Increasing operational costs and the need to replace aging vessels and infrastructure could drive the funding shortfall to $114 million per year within five years. The two largest operational costs are fuel and labour.

"Between 2004 and 2012, BC Ferries cut annual fuel consumption by 3.7 million litres (three per cent of total annual fuel consumption), but annual fuel costs increased 140 per cent, from $50 million to $121 million," said a statement released by the ministry.

"Between 2004 and 2012, labour costs rose 24 per cent from $245 to $305 million, partly due to increased staff levels mandated by federal safety regulations.

"Most coastal ferry routes are operating well below 50 per cent capacity, with some carrying more crew than passengers," said the statement.

BC Ferries receives $150 million from the provincial government and $30 million from the federal government to operate each year, plus a $79 million funding bonus from the provincial government spread out over the next four years.