BC Ferries is reporting losses of more than $16 million this year, with vehicle traffic on its ships at a 13-year low and the fewest passengers in 21 years.

BC Ferry Services Inc., reported a net loss of $16.5 million Friday for the fiscal year that ended March 31. Last year, BC Ferries reported net earnings of almost $4 million.

Mike Corrigan, BC Ferries' president and chief economic officer, tried to put a positive spin on the losses, saying the company actually forecast a $20-million loss at the start of the year, but company-wide cost-saving measures cut the final figure by $4 million.

He said a return to a buoyant economy, continued belt-tightening and the influx of the BC government's $80-million investment this spring are behind the company's forecast of a balanced bottom line within two years, but that still depends on increasing traffic.

"We have to hope that the economy starts to turn around in the foreseeable future," said Corrigan. "People just aren't travelling and getting in their vehicles like they used to, and if they aren't driving around in their vehicle, they are certainly not going to drive onto a BC Ferry."

For much of the year, a family of four taking a return trip from Victoria to Vancouver was paying about $200 to take the ferry.

Following a review of the ferry system that concluded fares are almost at the tipping point for passengers and some routes are losing too much money, the government passed the Coastal Ferry Act this spring that included the five-year, $80 million investment to help keep fares in line.

But Corrigan and Transportation Minister Blair Lekstrom warned that service cuts to many coastal communities and late-night sailings on the major routes from Vancouver Island to the Lower Mainland are likely to be cut as the system looks to save costs.

Corrigan said BC Ferries is also looking to cut $30 million from within its system and wants communities served by ferries to begin consultations on their service levels.

NDP ferries critic Gary Coombs said higher fares are the reason BC Ferries is losing so much money.

"It comes down to a key issue: affordability and the impact on ridership. Fares have skyrocketed and ridership's at record lows, so there's no surprise there and no surprise for those that use the ferries."

The year-end statement reported BC Ferries carried 20.2 million passengers this year and 7.8 million vehicles.

It said vehicle traffic dropped 3.5 per cent during the fiscal year while the number of passengers fell 2.8 per cent.

Revenues dipped by one million dollars to $738 million, but operating expenses jumped by $10 million to $682 million, mostly because of higher fuel and amortization costs.

One of the world's largest ferry operators, BC Ferries runs on 25 routes and 35 vessels throughout coast British Columbia.