LeConte ferry (J Weber, Creative-Commons)
Alaska’s Marine Transportation Advisory Board met Wednesday to discuss a long-awaited study on the Alaska Marine Highway System. Research firm Northern Economics was hired by the state to examine options for restructuring the ferry system in light of recent budget cuts. The study provides guidance for reducing costs and increasing revenues, but difficult questions remain about the level of service that is acceptable.
In April, Northern Economics was hired to find ways to reduce the state’s financial obligation to the ferry system. The firm researched ways to reshape the system so that it could run on a $24 million subsidy from the state.
That amount is similar to the level of funding Governor Dunleavy proposed for the current fiscal year. Marine Transportation Advisory Board chair Robert Venables says it is not necessarily a level of funding the state is working towards.
“I don’t know anyone that accepts that as a funding level for the marine highway system going forward. That is something the policy makers will respond to. Regardless of the number, which is hopefully much much higher than that, we have a lot of service needs across the entire system,” Venables says.
Northern Economics concluded that it would be extremely difficult to provide ferry service to communities served by the marine highway with $24 million in state funding.
The preferred structure recommended by the firm is to divide AMHS assets between two public corporations, one for Southcentral Alaska and another for Southeast.
The study also suggests that dropping costly routes that attract fewer passengers could save money, and the state could contract private operators to step in to serve those communities.
Venables says there is a minimum level of service that needs to be ensured for the most remote communities.
“Certainly there are routes that have higher revenue opportunities, but quite honestly the need is much greater in the more rural communities that have no connection. The question’s going to be what is the type of service that is appropriate and what is the frequency of service,” Venables says.
The economic analysis of the Lynn Canal was more promising than other ferry routes. Juneau and Haines are among the top three ports for bringing in revenue for the system. The study found that increasing the number of sailings in Lynn Canal appears to increase revenue more than it increases costs.
Even so, Venables says ticket sales aren’t covering enough of the operating costs.
“The downside is farebox recovery is still only just barely above a third. The costs are still much much higher than the revenue to provide that service. Even in Lynn Canal changes will have to be made especially if the fleet shrinks and that same boat has to serve multiple communities throughout the region.”
