Horluck wants 50 percent fare hike
June 12, 2008 · Updated 10:00 AM
"Horluck Transportation owner Hilton Smith, once passionate about snagging a cross-Puget Sound passenger ferry route through a possible public-private partnership with Kitsap Transit, has turned his back on the idea.Smith's latest business maneuvers involve trying to jack foot ferry rates from $1.50 to $2.25 per person, per ride. And he's seeking a much heftier ridership-reimbursement contract with Kitsap Transit.In late January, Smith positioned for a shot at a cross-Sound route by announcing plans to merge Horluck and Waterways Marine Group, a lucrative Seattle-based charter business he also owns. The idea was to reduce Horluck's overhead and provide ample capital to purchase more cost-efficient and reliable boats for both Sinclair Inlet and cross-Sound runs. But Smith apparently changed his mind after Horluck experienced extensive revenue losses in February and January.I'm not going to merge a losing company with a winning company--period, Smith said. Waterways is irrelevant to the Horluck situation, anyway. They should be kept separate.So he's looking elsewhere to salvage the Horluck fleet of foot ferries.Smith blames Horluck's revenue losses on lower ridership. About 150 riders a day have decided to either drive or carpool. They're not riding Horluck,' he said. Ridership dropped, he contends, when Kitsap Transit hiked the cost of montly ferry passes from $25 to $50.Smith wants a higher reimbursement plan with Kitsap Transit to cover the loss in ridership.Officials at Kitsap Transit say, however, that it's hard enough making ends meet at KT without pouring more funds into Horluck. Kitsap Transit Executive Dick Hayes has said reimbursements won't change until Horluck's fleet is working properly, anyway.Meanwhile, before Smith can impose a 50 percent fare hike, the Washington Utilities and Transportation Commission must first authorize it. Smith has to wait for permission because the commission in 1924 issued Horluck a certificate allowing the fleet to operate a monopoly in Sinclair Inlet. In other words, an enterprising citizen with an extra boat wouldn't be allowed to compete with Horluck. When Smith bought the company in 1995, he bought rights to the certificate.Commission accountants are considering Smith's request. Under scrutiny are Horluck's revenue records, ridership and projected revenue sources. Officials said the Waterways group, Smith's other business, is exempt from the study. Commission accountant Danny Kermode said because Kitsap Transit is a capital source for Horluck, staffers will also assume it provides a certain level of revenue.That assumption, however, doesn't obligate Kitsap Transit to change its reimbursement plan.Kermode said staffers are trying to cut a middle ground between what is a fair, just and reasonable cost to the public and what is considered sufficient to the business itself.A decision is expected as early as March 22.Smith said if he doesn't get approval on the higher rates, he will either appeal the decision or abandon Horluck altogether. But he doesn't want to give up the ship, he said. I've put a lot of time and effort into the company, and it would be difficult to give that up, he said.Smith isn't confident about securing the heftier rider reimbursement contract with Kitsap Transit, since the Utilities and Transportation Commission decision doesn't obligate Kitsap Transit. Transit officials also say they're not convinced Smith requires more capital to cover the costs of his business.Horluck receives $1.40 in subsidy from Kitsap Transit for every Horluck rider. Smith wants more than that. Trouble is, a contract he signed in January with Kitsap Transit locked him into $1.40. Before that, Horluck received as much as 90 percent of the commission-approved rate.At the time it was as if, 'Take it or leave it,' Smith said. So I took it."