VANCOUVER -- The former Crown corporation that operates British Columbia's coastal ferry service is adding a fuel surcharge of 3.5 per cent to most of its routes, an unexpected price increase that comes in a period of rising fares and deep service cuts.

BC Ferries is blaming an unexpected increase in the cost of diesel for the surcharge, which takes effect on Jan. 17 and could remain in place for more than a year. All but northern routes will be affected.

For travellers, the dollar value of the increase will vary depending on where they are headed and how they're getting there. A foot passenger sailing between Gulf Islands will pay an extra 20 cents, while a family of four travelling by car between Vancouver and Victoria will be charged an extra $3.25 each way.

BC Ferries made the unexpected surcharge announcement Thursday, midway through three-consecutive years of fare increases.

The increases began last April with a 4.1 per cent hike. Fares will increase by an average of four per cent this April and by another 3.9 per cent next year.

Those yearly hikes were originally expected to be about eight per cent per year, but the provincial government stepped in with $80-million to cut them by half.

Corporation spokeswoman Deborah Marshall said the fuel surcharge is independent of the planned fare increases.

"If the price of fuel hadn't climbed as high as it currently is, then we wouldn't need to put in a fuel surcharge -- they are two separate issues," Marshall said in an interview.

"Certainly, our customers don't like to pay any more, but unfortunately we're in a place ... where we have to act now or we would have to implement a much higher fuel surcharge in the future."

The province's independent ferry commissioner sets a maximum average fare increase but has also left BC Ferries with the power to implement fuel surcharges or rebates when diesel prices fluctuate, said Marshall.

She said current diesel prices are 14 cents per litre higher than predicted.

A deferral account used to manage fuel price fluctuations now sits at more than $5 million in the red, which the surcharge is designed to eliminate. BC Ferries expects the surcharge will wipe out that balance owed in about a year and a half, but Marshall said the corporation will be keeping an eye on fuel prices to determine whether that timeline will change.

Late last year, the provincial government announced a number of changes designed to overhaul the ferry service.

Thousands of sailings will be eliminated beginning in April, seniors will no longer receive discounts and the government is considering installing slot machines on some vessels.

Transportation Minister Todd Stone was not available to comment Thursday.

The Opposition NDP's transportation critic, Claire Trevena, said the Liberal government has mismanaged and under-funded the ferry service.

"This is a highway system that people are being gouged to use," Trevena said.

"Other ferry companies have budgeted for (diesel price increases); BC Ferries has not. The problem is, they're turning around to ferry users, saying, 'You pay for our mistake,' rather than the government."

BC Ferries is a former Crown corporation that was partly privatized in 2003. While the government no longer directly controls the ferry service, the government is BC Ferries' only shareholder and negotiates a contract with the corporation to determine service levels and the amount of public funding the corporation will receive.