The future of the fast ferry service across Bass Strait should be known by the end of June.

By then, the State Government will have made its review of this summer's George Town Melbourne service.

It is also highly likely that a proposal by the Burnie and Mornington councils and a major Australian company to operate a twice-daily service between Burnie and Stoney Point will be finalised one way or the other.

The State Government has said it will not operate a fast ferry if a private operator can be found. Last year, the summer Devil Cat service lost more than $3 million. The State Government argues that such losses are not sustainable in the long term, despite the benefits of the service to the general Tasmanian economy.

Premier Jim Bacon is confident that with almost twice as many sailings this summer, the losses will be reduced. But industry sources, including ferry builder Bob Clifford, say it is almost impossible for the service to operate profitably on its present schedule.

The six hour sailing to Melbourne, at 227 nautical miles, is the longest possible option. For much of its charter period it will make only one daily sailing, lying idle for almost 18 hours a day.

TT-Line has set catamaran fares in line with those of the conventional ferry Spirit of Tasmania, ensuring there is no real competition. The Devil Cat picks up the summer market that the Spirit of Tasmania can't cope with.

A private operator, running twice daily on a shorter route, could conceivably make a profit at the moment. However the service becomes much more attractive when the diesel tax cuts promised by the Coalition as part of its tax package cut fuel costs by more than 40 per cent next year.

Fares considerably lower than the Spirit's could see real growth in the visitor market. If a campaign to convince the Federal Government that a passenger equalisation scheme similar to that now in place for freight succeeds, fares could drop to around $60 one way.

A Government report in 1995 suggested that such cheap fares could see passenger numbers across Bass Strait increase fourfold, with as many as four large fast ferries servicing a number of ports in Tasmania and Victoria as well as Flinders and King Islands.