Work group to recommend cost-cutting reforms for the Alaska Marine Highway System

JUNEAU, Alaska (KTUU) - The Alaska Marine Highway System Reshaping Work Group is set to recommend that the governor and the Legislature enact a series of reforms to reduce the cost of running Alaska’s ferries.

Some of the recommendations include reducing or eliminating some services, increasing fares on most routes, renegotiating labor contracts and selling some ferries that are currently sitting idle.

The governor created the work group in January by administrative order to take a broad look at Alaska’s ferries following a $43 million cut to the system’s budget. The group’s final report is due to be sent to the governor on Sept. 30.

“You cannot afford the current system you’ve got and it doesn’t work well anyway,” said Tom Barrett, a retired Coast Guard admiral, on Tuesday.

The work group, headed by Barrett, will recommend that the governor create a new nine-member operations board to help oversee the system.

The idea of the new board, which would largely supplant the Marine Transportation Advisory Board, would be to provide long-term guidance for the ferry system. Its goal would also be to look at ways to reduce costs for the state’s ferries.

“Someone is going to have to do the detail planning, it’s not us,” Barrett said, before explaining there may need to be more investment in maintenance to avoid ferries breaking down which saw the system grind to a virtual halt last winter.

Final revisions to the report were being made on Wednesday.

A majority of members recommend that ferry services to Southwest Alaska be reduced, a minority of members recommend eliminating that service entirely.

“Lopping off service to a whole region of coastal Alaska is not acceptable,” said Sen. Jesse Kiehl, D-Juneau, by phone. “We want to make smart reforms, keeping the weird and radical out of the final report will help us actually make the marine highway system more efficient, more effective, and cheaper.”

Barrett said a possibility could be to run a single sailing to Southwest in spring and a second in the fall compared to roughly one sailing per month during summer months.

Ouzinkie, Port Lions, Old Harbor, Seldovia, Tatitlek, Chenega Bay, Pelican and Tenakee Springs could also potentially be on the chopping block to lose state ferry service. The idea would be to give these communities at least a year’s warning if service is set to be cut.

The group is set to recommend that local communities, tribes and private companies look into providing their own commercial services for these communities, potentially with state subsidies.

“The problem is that every one of our routes loses money,” Barrett said.

Kodiak Republican Rep. Louise Stutes said the elimination of service to any community would cause outrage. “It is treating Alaskans poorly, and that rubs me the wrong way,” she added.

Other recommendations from the work group include:

Calling on the Department of Transportation commissioner to renegotiate labor contracts with ferry unions to reduce labor costs.
Increase fares on most routes but do so in a way to reduce the impact on Alaskan passengers.
The Chenega, Malaspina and Fairweather could be decommissioned and sold. All three ferries have been sitting idle for more than a year.
That the ferry system be forward funded for two years to provide more budget certainty and allow scheduling more than a year in advance.
Invest in projects such as a ferry terminal at Cascade Point north of Juneau which could cut operations costs.
Moving forward with the Tustumena replacement project but that it may need to replace two ships.
End the sailing across the Gulf of Alaska in Whittier instead of Homer as passengers are on the road system in Whittier.

The governor commissioned a $250,000 report in February of 2019 to look into reshaping the Alaska Marine Highway System.

The Northern Economics report released in January of 2020 concluded that privatizing the system is not feasible. Instead, the firm advocated for a public corporation to take over the management of Alaska’s ferries.

Barrett said the work group found there were more immediate concerns than immediately installing a public corporation model similar to how the Alaska Railroad Corp. manages the state’s railroads. “It’s still out there,” Barrett said about the idea of a public corporation one day running Alaska’s ferries.