The Alaska Marine Highway System cannot be profitable and fulfill its public service mission, according to a draft report on ferry operations.
The Southeast Conference, a regional development nonprofit, on Tuesday released a draft report with recommendations on operations of AMHS as a public corporation.
The report is the first draft in the second phase of an effort to develop a strategic plan for state ferry system operations.
In May 2016, Gov. Bill Walker tasked the Southeast Conference with development of the 25-year plan. The project was funded by a number of coastal communities, including the city of Kodiak, and is overseen by a steering committee.
The first phase concluded in November and examined possible governance models for AMHS. Ultimately, the group recommended a change in governance to a public corporation model.
Phase two examines revenue, operations and the structure of AMHS as a public
“There are no reasonable scenarios for AMHS to recover all expenses through revenue,” the draft states.
However, the draft makes recommendations on how to use the public corporation model to maximize earning potential while decreasing costs.
The service has significant room for growth in the tourism sector, according to the draft. Dependability issues and last-minute scheduling make it difficult for visitors to rely on the system when planning trips, said Southeast Conference Executive Director Robert Venables on Wednesday to Kodiak City Council and Kodiak Island Borough Assembly members at a joint work session.
Currently, non-resident ridership accounts for 42 percent of operating revenue.
According to the report, forward funding to allow scheduling 18 to 24 months in advance would increase dependability and, in turn, profitability.
“Forward funding is essential for the system to take full advantage of its revenue opportunities,” according to the draft.
According to the draft, service to Bellingham is also necessary, as 44 percent of the AMHS operating revenue comes from trips to and from the Washington city.
The report recommends partnering with private freight carriers to maximize revenue and community service.
A public corporation would allow the service to continue receiving federal capital funds and would reset labor agreements, potentially allowing for management of employees under a single collective bargaining unit.
Changes to the fleet would also increase revenue, according to the report, which recommends standardizing a modern, automated fleet and terminals.
The full report can be viewed at amhsreform.com.
According to Venables, the group will work with the state legislature to initiate discussions on the recommendations.