An “innovative” ferry proposal for Tauranga has been shelved over cost and patronage concerns.

Auckland water taxi company Hauraki Express was prepared to build two ferries for the service if local councils subsidised the fares.

The ferries would run from Salisbury Wharf in downtown Mount Maunganui to Tauranga city centre.

The company asked Tauranga City Council and Bay of Plenty Regional Council for $1.4m each.

Hauraki Express made a formal proposal to the councils in April. The city council agreed to pay for half if the regional council paid for the other half.

The regional council declined to help fund the service at a meeting on Thursday after the city council confirmed its support in August.

Bay of Plenty Regional councillor Kat Macmillan said the reduction in funding from government left the council no choice. Photo / John Borren

Regional councillor Kat Macmillan said the concept aligned with the council because it was ‘‘innovative’', but the challenge was funding.

Government national land transport funding would be 13 per cent less so there was about $16m less for public transport in the Bay of Plenty, she said.

This left the council with no choice, said Macmillan, who had previously expressed support for the service.

“I’m absolutely devastated about that. I want to see Hauraki Express succeed.

“It’s not a ‘no’, it’s a ‘not yet’.”

Hauraki Express special projects manager Amy Bourke said the business was disappointed not only for itself but for the community and other businesses.

Peter and Amy Bourke are disappointed their ferry proposal wasn’t supported by the regional council. Photo / Alisha Evans

It meant there would still be congestion in Tauranga, low use of public transport and excessive car use, she said after the meeting.

“We know the ferry service isn’t the solution to Tauranga’s traffic woes, but it’s part of it.”

The fully covered ferries would have room for 30 people and 15 bikes. Hauraki Express proposed to do 40 trips a day, 330 days a year with an estimated 40 per cent patronage for each trip.

A trip would cost $6 each way and take about 17 minutes.

At the meeting, council public transport director Oliver Haycock said reduced funding for public transport meant the current system would likely need to be reprioritised.

Staff compared the proposal to a 2023 feasibility study into ferries, which said there would be significant cost barriers with ferry operations.

The labour costs were lower than the study as were fuel and maintenance costs which was a risk, said Haycock.

There was also a national shortage of trained skippers, he said.

An artist's concept of the interior of the proposed Tauranga ferry. Photo / Supplied

The council’s high-level estimates showed there could be a funding deficit of up to $500,000 per year, he said.

There would be minimal to zero fare recovery coming back to the council to offset its funding, said Haycock.

The financial risk sat with Hauraki Express, but the council should consider the implications of the trial not operating as proposed due to financial difficulty, he said.

There were also concerns about the estimated patronage numbers of 158,400 passengers per year.

Haycock said that was more than double the 70,000 bus passengers who travelled between Tauranga CBD and Mount Maunganui North each year.

The total cost for the bus service in Tauranga from July 2023 to March 2024 is $22.7m.

Tauranga ratepayers paid a $251 targeted rate for the service last year.

Harbourmaster Jon Jon Peters.

Harbourmaster Jon Jon Peters said because of the constraints around the high number of shipping movements in the harbour and speed restrictions, he believed a trip would take longer than 15 minutes.

Bourke said they understood the funding restrictions the council faced but not the other risks it suggested.

Hauraki Express would manage the risks and, as a commercial operation, understood financial risk, she said.

The ferries would be electric and newly built with warranties, so these were not risks to the operation, Bourke said.

“We’ve been flooded with young, qualified mariners keen to be involved in an exciting opportunity, and we see this as a career path for rangatahi.”

The service would be for commuters and tourists, school and university students and people wanting a day out, she said.

More than 80 cruise ships would be visiting Tauranga in summer and a ferry service would give them a reason to stay and explore instead of going to Rotorua or Waitomo, said Bourke.

It was not the end for the service because Hauraki Express would look for other partners, she said.

- LDR is local body journalism co-funded by RNZ and NZ On Air.

LDR is local body journalism co-funded by RNZ and NZ On Air.