A state Senate subcommittee had asked the Department of Transportation what it could do if it had more money to cover some of the gaps in the Alaska Marine Highway schedule. Part of the answer would be improved winter service to Wrangell - if the Legislature appropriates the money and the governor accepts it.
An additional $4.5 million in state dollars - separate from passenger and vehicle revenues - could improve service for "those communities that were struggling this winter," Matt McLaren, the ferry system's business development manager, told the Senate Finance Subcommittee, which is reviewing the Department of Transportation budget, on March 3.
This past winter, Wrangell saw a single northbound ferry in November, no port calls in December, and one southbound ferry in January. Weekly ferry service in each direction resumed mid-February.
The funding, about an 8% increase over the governor's budget request for the Alaska Marine Highway System, would allow the Aurora to operate throughout the winter season in Prince William Sound instead of going into a money-saving layup, freeing the Kennicott to spend more time in Southeast, McLaren said.
That would include more service between Bellingham, Washington, and Southeast ports, specifically Wrangell, he said.
The additional funding also could be used to keep the Tustemena in service four additional months for Southwest Alaska communities
Senate Finance Co-chair Bert Stedman, who also serves as chair of the transportation budget subcommittee, said he had asked the department to develop a plan for how it could improve service if it had more funding.
"We asked them if we were to take the appropriation dollar amount roughly to what we had a couple of years ago ... what would the system would look like," said Stedman, who represents much of Southeast, including Wrangell.
Wrangell was not the only community hit with greatly reduced winter ferry service. Cordova went seven months without a ferry during the winter season of 2019-2020, and Kodiak did not see a ferry for more than three months that winter.
The additional funding could add 33 weeks of vessel service to the Alaska Marine Highway schedule for the fiscal year that starts July 1, with the boost coming in the winter months. If the money is appropriated and the schedule adopted, the fleet would operate a combined 275 weeks over the fiscal year, up from 242 under the governor's budget proposal.
Legislative committees are reviewing the governor's proposed budget, hoping to complete their work and adjourn in April. State finances are tight and any spending increases will be hard to achieve.
The ferry system has endured steady cuts in state funding since Fiscal Year 2015, with this year's state general fund dollars expected to come in at about half the level of six years ago, according to the Transportation Department's presentation to the finance subcommittee. The steepest budget cut came two years ago, in the first year of Gov. Mike Dunleavy's administration.
Passenger and vehicle revenues also have declined in the past six years, especially as service has been reduced.
Then the pandemic significantly cut into travel revenues the past 12 months. So much so that the ferry system could need $6 million in additional state funding just to finish the fiscal year on June 30, Rob Carpenter, the Transportation Department deputy commissioner, told the Senate Transportation Committee on Feb. 23. He said the number was still under review.
Senate President Peter Micciche, a member of the transportation committee, said the state needs to look at the long-term decline in passenger traffic as it decides on an appropriate level of service, suggesting people are flying more instead of taking the ferry.
For next winter, however, under the requested budget-planning scenario, the Department of Transportation assumes that the improved winter service would generate an additional $3 million in vehicle and passenger revenue to help cover the costs along with the extra state dollars.
The revenue assumption "looks hypothetical," Micciche said, questioning whether the traffic would return to the routes.
The revenue estimates are based on years of traffic, McLaren said, noting that the high-demand service between Bellingham and Alaska in particular is a consistent revenue generator.
Post-COVID and with improved service, "hopefully the traveling public comes back," McLaren said at the Senate Transportation Committee meeting. The loss of cruise ships to Alaska also may help drive more travelers to the ferries, he said. "We hope to get a bump."
In an effort to boost passenger and vehicle revenues, particularly on popular routes, the state in October 2019 instituted what it called a "dynamic pricing" structure, where fares move higher as the ships fill up - much like the airline industry has done for years.
As a sailing nears capacity, passenger fares can be as much as 30% higher, with vehicle and stateroom rates as much as 50% higher.
The variable pricing has boosted revenues about 9%. In a normal year, without pandemic-inflicted reductions in travelers, that could add up to about $4.5 million more in the fare box, the department reported to the Senate Transportation Committee.
Juneau Sen. Jesse Kiehl did not dispute that higher prices generate more revenue, but said he would like to see the reverse - fare discounts - when traffic is light. "This is dynamic pricing hiking," he said of the one-way fare movement.
The Department of Transportation said it is trying to meet "at least minimum needs" of ferry service to coastal communities as best it can with available funding, Rob Carpenter, the department's deputy commissioner told the Senate Transportation Committee. "Whether we're doing that, I'm not sure."
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