Alaska Marine Highway comes back from the brink

M/V Malaspina sails to Ketchikan, where it will be used as a museum ship, after retirement from the Alaska Marine Highway System earlier this year. Photo by Frank Flavin and Scott Strimple, via AMHS


Story By Alan Earls

When the Alaska Marine Highway System (AMH) vessel M/V Matanuska returned to Prince Rupert, British Columbia, late in the evening on June 20, 2022, it marked the end of a three-year service interruption to a port that had once been a key southern terminus. The immediate cause of the interruption had been new border crossing requirements between Canada and the U.S., resolution of which was delayed by the pandemic.

But in truth, AMH had been wrestling with challenges for some time. For instance, passenger traffic, the principal reason for the organization’s existence, had peaked way back in the 1990s and, in general, had been slowly declining since. In 1992, the Southeast route, popular with tourists, handled 373,000 passengers. That number had fallen to 152,000 in 2019. Likewise, while the system has always been subsidized, the degree of those subsidies have been of concern to policy makers. In 1992, passenger fares covered 60 percent of operating costs, but only 35 percent in 2019.

To be sure, by then, politics and other state fiscal challenges had also helped to change the game, particularly the 2018 election of Gov. Mike Dunleavy, who initially sought to pare expenses within the system, leading to sharp service cuts. One result of those cuts was the formation of the Friends of Alaska Marine Highway, a non-profit group that advocated for improvements. Percy Frisby, a founder who hails from Ketchikan, explains that there was a sense that “nobody in the Department of Transportation was listening.” Friends of AMHS aimed to “inform Alaskans of the pressing issues affecting their welfare. “

But, more recently, the group has faded since there is now a new oversight organization in place within AMH. And, as Dunleavy’s administration insists, things are changing for the better

Evolution and Revolution

Dating back to 1959, the year Alaska became a state, AMH has grown to serve much of the 3,500 miles of coastline, reaching ports from Bellingham, Wash., in the south, to Dutch Harbor in the Aleutians far to the northwest. It counts some 30 terminals between those points.

Because of the state’s reliance on water transport and dearth of roads, the AMH even earns special treatment as part of the National Highway System when it comes to allocating money to the states.

But, for years, equipment got older and older, the levels of subsidization increased and then, there was the 2018 election. Shortly after taking office, facing a shortage of revenues, Dunleavy established the Alaska Marine Highway Reshaping Work Group to start with a clean slate and consider options – including privatization – that would provide a more financially viable future for the system. He also proposed a maximum subsidization of $24 million, far below what previous administrations had been willing to allocate.

And while the legislature ultimately settled on a more generous $30 million, the ceiling was still stringent enough that it forced sharp – some would say draconian – cuts in service. In some cases, communities that had no other meaningful connection to the rest of the state or the world were left completely without service.

“The service and number of passengers were declining before Dunleavy took office; the big problem is that over the decades, no one in a position of leadership planned ahead for replacement vessels,” says Sam Dapcevich, Public Information Officer at the Alaska Department of Transportation. “There were a few one-offs and then the fast ferries in the early 2000s,” he says, but the latter proved expensive to operate and maintain, so they were sold to a Spanish operator. But the passenger numbers were already on the decline and then the pandemic caused even greater declines, he says.

In fact, according to Jeff Turner, deputy communication director for Dunleavy, the first year that he took office, the state faced a $1.6 billion deficit. “That was immense,” he adds.

“The Governor’s goal has always been to make the system more efficient and to stabilize service, and he has made a lot of progress,” Turner says.

For example, while there was an aging fleet in place, vessels are now being methodically replaced, according to Turner. In addition, “There is now an 18-month schedule rather than 12, providing more opportunities to plan trips and stabilizing the revenue picture by providing more clarity about demand,” he explains.

“If people can book 18-months out, the system can plan and get a better picture of when to expect the greatest traffic,” he adds.

These days, on the other hand, there is actually an upswing in traffic levels, with vessels operating full or nearly full.

The first of two Alaska class ferries, M/V Tazlina, was christened in 2018. AMHS photo

New and Improved

Dapcevich says there is now a plan and investments are beginning to flow.

“We don’t know all the factors that drove down passenger traffic but it could have been a combination of more competitive airfares and then, eventually, declining service levels themselves, “ he says.

For example, in Sitka, which is even more isolated that most communities in the southeast, and thus more dependent on AMH, the service levels went down dramatically. “They used to get pretty good service but now it is just one ferry a week and that makes it hard to plan travel, for example, to Juneau,” he notes.

Obviously, AMH would like to increase those service levels, he adds.

Most recently, post-Covid, with car rental prices up and more people looking to get out, they are flocking to the ferries again, he says.

Although AMH is unusual in being so dependent on passenger revenue, Dapcevich does not see a need or reason to change that.  “We are not a freight carrier,” he says, other than vehicles driven on and off under their own power.

The biggest challenges are now staffing, especially in the near-term, and the number and reliability of vessels in the fleet. “Now that we have all our fleet running we can begin to work on staffing,” he says.

“We are throwing a lot of resources into a solution,” says Dapcevich. For example, AMH is offering $5,000 bonuses for on-vessel positions. “So, we are attempting to get people and we have a lot of recruits but it takes time to get them to work, namely four months to get a Mariner License and then there are drug tests to pass,” he notes.

But the biggest challenge is definitely the aging fleet. “The US Coast Guard defines the things we must take care of so that often leads to gaps in service,” he says.

The Matanuska that runs the loop through Bellingham to Skagway, and was recently welcomed back to Prince Rupert, is the oldest vessel in the fleet. It is one of the `mainline’ vessels along with Kennicott and sometimes the Malespina. None of them have backups, he notes.

Matanuska went into service in 1963, though it was re-powered a few years ago. However, on a 60-year-old vessel the overhauls become longer and longer, he says. There is rusty steel that must be replaced and compartments that need to be rebuilt.

“People tell us they want consistent and reliable service but it is difficult when we don’t really have a backup for Matanuska or the other mainline vessels,” he says.

The smaller vessels don’t run that circuit but serve other routes in the system. Many of those vessels were built in the 1970s. “The Management team says 30 years is usually the service life for these vessels so we are pushing the limits with these,” says Dapcevich.

Right now, AMH is also making plans to replace Tustumena, which was built in 1964.

“We reached out to shipyards and put out an RFP but we got no response. So, we are now communicating directly with shipyards,” he says. The cost estimates AMH is getting are in the range of $200 to $250 million. “That is a step forward, and our legislature appropriated $30 million toward another mainline ferry that we hope to move on as well,” he adds.

The $1.1 trillion federal infrastructure package also could provide the state with a fresh infusion of money that can be used to rebuild its fleet and terminal infrastructure.

So, all things considered, AMH may be heading for brighter days. “We feel we are now at a turning point,” Dapcevich says. “Things were going in a negative direction for a while but now with the boost in funding and potentially new ships on the horizon, we feel like we are coming back.”

By Casey Conley