The BC Ferries corporation is currently carrying a fiscal year-end loss of $16.5 million, despite raising rates eight years in a row – and critics warn the company is a sinking ship that could soon go under if problems aren’t addressed.

Fares have increased 40 per cent in recent years, and on Monday the British Columbia Ferry Commission announced they will jump a further 12 per cent by 2016.

But a local ferries watchdog says increasing prices is counterintuitive, and already driving a serious slump in ridership.

“I believe they’ve hit the tipping point already,” said BC Coastal Transportation Society president Gregg Dow. “We’re seeing the drops in traffic. We’re at a 20-year low.”

Some riders complain that the cruise line-styled service is being tailored more for international tourists than British Columbians, many of whom feel the cost is prohibitively expensive.

But reducing rates is a tough sell given the company’s finances. Besides dwindling passenger numbers, there are fuel rates, which increased 140 per cent this year, and the fact that the company’s fleet is so old 15 vessels need to be replaced in the next 15 years.

The NDP ferries critic believes the approaching need for new vessels could be solved by bringing back B.C.’s ship building industry, and promises his party would do so if elected to power.

“We’d build our vessels in British Columbia, and ensure they are the right size,” MLA Gary Coons said. “We’ve seen some of the ships built are over capacity.”

Some savings could also come from converting the existing ships to run on liquefied natural gas, but BC Ferries CEO Mike Corrigan told CTV News in August the process presents “a challenge right now.”

Corrigan declined to be interviewed for this story, but previously blamed the drop in ridership on a myriad of factors.

“It’s a microcosm of everything that’s going on. Fares are a contributing factor, but so is the weather. So is the Canadian dollar, the price at the pump, the overall economy. It all fits together,” Corrigan said.

The company is currently being kept afloat thanks to $80 million of ballast poured in by the province. The government promised the much-needed cash injection on the condition that BC Ferries find $30 million in savings.

So far, 80 positions have been eliminated and a freeze has been imposed on hiring and salaries.

A public consultation process is also about to begin to decide what runs can be cut to further save costs.

For more on the state of BC Ferries, tune in to CTV News this week for the exclusive three-part series, Sink or Swim

With a report from CTV British Columbia’s Peter Grainger