Panel recommends privatizing parts of ferry system

DOT advisory board suggests marine highway system be modeled after British Columbia Ferry Services

Posted: Friday, November 21, 2003

Big changes in Alaska's ferry system, including turning over some duties to the private sector, may be in store if the state Department of Transportation follows an advisory board's recommendation to run it more like a business.

DOT's Marine Transportation Advisory Board voted unanimously Thursday to establish a transition team to build a commercial model for the operation of the Alaska Marine Highway System.

DOT Deputy Commissioner Tom Briggs said the new business model could draw from a Canadian ferry service known as British Columbia Ferry Services Inc. He said that system works much differently than the Alaska ferry system, but the commercial model they use could be applied to Alaska's marine highway.

"One of my observations of the Marine Highway System over the years ... is it doesn't react to change," said David Kensinger, a Petersburg resident who is the board's chairman. "My hope is that with a different type of model, the system would be able to react to the changes in a fashion that is necessary, so that we continue to have a good marine transportation system in the future."

Briggs said the organizational model breaks the management of the system down to finance, operations, labor relations/human resources and communications.

"What's more critical to us is how do we reduce our subsidy necessary to operate our systems as a percentage of our total operating cost without laying up vessels," Briggs said. "The challenge is going to be how do you improve or optimize service and reduce the general fund subsidy."

He said he hopes to reduce the state's subsidy from $43 million in 2004 to about $39 million in 2005. That would reduce the ferry system's subsidy from about 51 percent to 47 percent.

"I don't think (the Legislature) has the appetite to continue the large 51 percent subsidies," he said, noting the industry standard for government subsidizing ferry systems is 20 to 30 percent.

Briggs recommends the ferry system also explore the possibility of giving each ferry master the authority to operate their vessel like a small business.

"They will be given a budget just like another department," he said. "I think we can reduce our shoreside management considerably by giving them a lot of the management system decision responsibility and supporting them. The way it is now they never see the budget."

Vessel management duties are not the only thing the marine highway is considering outsourcing to the private sector.

DOT already has informed three state unions of its intent to study contracting out some of the shoreside functions of the ferry system. The analysis of shoreside functions will focus on ticket sales, reservations, maintenance, terminal operations and marketing.

He said DOT will meet with representatives from the Alaska Railroad next month to explore merging the reservations functions of the two entities. The Alaska Railroad runs from Seward to Fairbanks and is owned by the state but run like a private corporation.

Briggs said outsourcing the shoreside functions is only a small part of an analysis of the entire system.

"All aspects of the system are on the table - all of them," Briggs said.

• Timothy Inklebarger can be reached at

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