A long-awaited analysis of the Alaska Marine Highway System was released by an Anchorage-based economic analysis firm on Jan. 15.
Alaskan lawmakers and state officials have been waiting on the report before making any substantial changes to the ferry system, which featured a $40 million funding cut under the Legislature’s 2020 budget.
The report is still being reviewed and its conclusions will be used as a guide for lawmakers as they decide the future of AMHS. The report could also guide the future of the Prince Rupert ferry to Alaska.
“Some suggestions see increased service, lower service or no service to Prince Rupert.
“The City respects the State’s challenge and is encouraged that Prince Rupert was not cut in every scenario proposed. Ferry transportation between our two nations is important for commerce, tourism, and connectivity for Alaska and British Columbia residents. It is our sincere hope that the Prince Rupert terminal proves to remain an important component in the Alaska Marine Highway service,” stated the City of Prince Rupert.
Five take-aways from the report
1) Analysis suggests some kind of public corporation:
Out of the 11 options suggested by the report, Northern Economics suggests creating two public corporations to take control of the ferry system. The report says the public corporation model proposed by the AMHS Reform Project and Southeast Conference would be a good basis to start from.
However, even under a public corporation subsidized in part by the state, certain routes may be cut entirely from the system.
In the suggested option, “several route groups go without any service for extended periods of time. External service on the mainline runs to Bellingham and Prince Rupert is severely curtailed,” according to the report.
A public corporation would have increased fares and most likely decreased pay for AMHS employees.
2) Cost cutting over revenue generation:
Given the size of the AMHS’ losses, the report says, reducing costs could be more important than generating revenues. That would mean reductions in one or more areas, the report ways. Reducing the number of boats, operating days, staffing levels and pay for AMHS employees are all ways costs could be cut according to the report.
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3) Prices are going to go up
“Increasing fares is the most direct way to boost revenue,” the report says. That doesn’t mean that fares would go up for every route. Some routes could potentially see a decrease in fares but most lines would see their prices go up for both passengers and vehicles.
4) Wages are likely to go down
Many of the options in the report call for the “re-negotiation” of labor contracts. In addition to proposing decreased wages for AMHS employees, smaller crews and fewer hours were suggested as a way of reducing costs.
“Demand for ferry services is highly seasonal,” the report says. “In order for AMHS to minimize its operational subsidies and to continue to operate, vessels need to have the flexibility to change operating parameters during the course of the year.”
5) Selling or leasing to private companies is not viable
The analysis says private companies would not find many of the current AMHS routes profitable, and thus would not provide service to many communities which depend on the ferries.
“Private companies would find that operations in Lynn Canal and Metlakatla-Ketchikan are the only currently services routes for which ferry service could be provided at break-even levels of costs and revenues,” the report says.
In order to provide service to non-profit generating communities, some kind of state subsidy is needed, according to the report.
Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.
