E. Discussion of the Evidence

Red & White presented evidence showing that the average round trip passenger load was less than 45 per day on vessels with a capacity of 444 passengers. (Exh. 10.) A smaller vessel was available to Red & White, but the cost of running that vessel was approximately the same as the larger vessel and the smaller vessel was slower than the vessels used in the commute. (Tr. 49.) Speed of the trip is important in attracting riders. (Tr. 122.) Testimony presented by Red & White's Chief Financial Officer indicated that the commute service has never reached the break-even point, and that with the current vessels there was little likelihood of ever achieving profitability. Red & White is being supported by its parent, Golden Gate. The extent of this support cannot be readily determined from this record, since the accounting methods employed by the parent and various subsidiaries, including Red & White, do not permit easy discrimination of intra-family charges. (Exh. 20.) Since many of the exhibits and all of the testimony in this proceeding were covered by a protective order we shall not go into detail on the numbers in evidence. However, we are satisfied that there has been a showing that the commute service is being operated at a loss, though the extent of this loss is not clear.

Friends stipulated that Red & White could present testimony that it had made a sincere effort to increase patronage by various marketing strategies. Red & White stipulated that Friends could present testimony that marketing, if done differently could have increased patronage. (Tr. 316.)

We are distressed by the fact Red & White, knowing of this loss, informed its auditors in March 2000 (Tr. 268), that it intended to suspend the commuter ferry service but did not choose to share this information with us. In Exhibit 20, which is the consolidated financial statement of Golden Gate and its subsidiaries, the following note is found on page 11:

"During 2000, the Companies scaled back their commuter ferry services and now plan to suspend remaining services to stem the large operating losses from that segment of their business."

At that very time Red & White had an application pending before this Commission seeking an expansion of its authority so that it might provide weekend service to Pacific Bell Park. (Exh 14.) Instead of submitting new financial statements, Red & White urged the Commission to rely on the financial findings in the decision in which it received its original authority (Exh. 23), submitting that "...the Commission's prior findings that Applicant is financial [sic] fit applies equally to this requested Amendment." (Exh. 14, p. 6.)

Red & White has been less than forthright with this Commission and the commuting public. The losses which it claims in operating after September 28, 2000, could have been avoided if it had filed for cessation of service in March, at which time it had already determined to end the commute runs. Earlier notice would have given the commuters some opportunity to seek a replacement service. Red & White offered no reason why it chose to create an emergency.

The parties agree that some form of subsidy is necessary to operate ferry service between Richmond and San Francisco. There is a dispute as to whether Red & White has been sufficiently active and/or resourceful in assisting Richmond to obtain a subsidy. Witness Escher, the President and General Manager of Red & White, and Witness Koenig, Vice President of Sales and Marketing, testified to the lobbying activities undertaken in Washington D.C., Sacramento, and the East Bay. (Tr. 322, 355-356.)

Witness Frank of Friends testified that she was informed by the staff of Metropolitan Transportation Commission (MTC) that MTC would only provide funding for ferry service that was already operating. (Tr. 369.) No regulation, rule, or policy statement of MTC was offered and no MTC witness was presented. During cross-examination Friends asked Red & White witnesses about any requirement of a two-year operating commitment before a subsidy would be considered. Both Witness Escher (Tr. 356) and Witness Koenig (Tr. 324-325) denied any such requirement, and no proof of its existence is in this record.

In its brief Friends puts forth a proposal that Red & White be permitted to reduce its service to one round trip per day, with the boat being berthed in Richmond. It asserts that such an operation could be profitable, based on adjustments to the cost information supplied by Red & White, changes in the existing labor contract, and information supplied by unidentified experts admittedly not presented on this record. Had this proposal been made on the record it could now be considered. Since it was not, we shall give it no further consideration.

Issue 3 set forth in the Scoping Memo of September 7, 2000, related to the joint use of the dock in Richmond by Red & White to serve Pacific Bell Park, if offered next year, and a competitor ferry for commute service. Red & White Witness Koenig stated that Red & White owned only the float, the ramp, and the pilings, and that these facilities are moveable. (Tr. 339.) Richmond owns all other facilities, such as the parking lot, and the lighting. (Tr. 339.) Witness Koenig indicated that Red & White would be willing to negotiate with another carrier for use of the dock for commute service. (Tr. 326-327.) Thus there appears no problem for a competitor providing service for the commute run.

At the evidentiary hearing Red & White did not specifically address the issue of why its authority should be suspended rather than revoked. (Scoping Memo, Issue 2.) Friends argues in its protest and in its brief that revocation is proper. Red & White favors suspension, arguing in its brief that having a potential operator in a position to provide service might be helpful to Richmond in obtaining subsidies. It also calls our attention to the provisions in The Richmond-Red & White Interim Service Agreement. (Exh 15.) The license agreement expires on June 1, 2001, and permits immediate termination by Richmond if service ceases. We believe that if service is to cease, then the opportunity to provide new service should be equally open to all groups. Red & White should not be able to assert any competitive advantage by virtue of a "suspended" certificate. Therefore we believe it in the public interest to revoke Red & White's authority, rather than merely suspending it indefinitely.

We note that with the revocation of the Richmond-San Francisco commute service, all operations regulated by this Commission will terminate. Red & White was granted authority to serve between San Francisco and the USS Hornet by D.98-09-003, but this authority was suspended at the request of Red & White in D.00-04-056. The Pacific Bell Park service authorized by D.00-055-011 (Exh. 24) ceased at the end of the Giant's baseball season. Red & White has not committed to renew this service next year, and if it wished to renew the service would have to renegotiate with Richmond for a new license. (Tr. 326.) As with the commute service, we believe that it is not in the public interest to continue suspended authority indefinitely, in that it might discourage others who wish to provide the service. Therefore we shall revoke all of the tariffed authority currently held by Red & White without prejudice to it competing with other carriers should it believe that any of these services are viable.