State ferry fares would go up 10 percent for passengers and 5 percent for vehicles next summer under a proposal for a seasonal rate structure from the Alaska Marine Highway System.
The first across-the-board fare increase since the early 1990s is aimed at bringing in $2 million more revenue during the five-month period when out-of-state visitors dominate ferry ridership, said AMHS General Manager George Capacci.
Capacci is seeking public comment on the proposal, even though Transportation Commissioner Joseph Perkins has the authority to make the adjustment without legislative approval.
"It doesn't have to be in statute," Capacci said. "But I think it's only appropriate we take public comment on this one because it's a basic part of life, especially in Southeast Alaska."
Although ferry service is not part of a regular routine for most Juneau residents, it is an essential lifeline in smaller cities and villages in the region.
Loren Gerhard, executive director of the Southeast Conference, a nonprofit organization that represents municipal governments and businesses throughout the region, said AMHS officials provided him with a copy of a study by the Juneau-based McDowell Group outlining the need for a fare increase.
"We understand their reasons for needing to do so," Gerhard said. "Obviously, nobody enjoys price increases. ... We all know fuel prices have gone north, so no big surprise."
He said the Southeast Conference won't formally oppose the increase but is encouraging AMHS to offer as many discounts as possible, such as for round trips.
The McDowell Group concluded: "More business cannot be generated without additional marketing, and more revenue cannot be generated from the current market without increasing prices." Passenger fares were last increased in 1994, except for some recent adjustments in the Upper Lynn Canal, and vehicle fares were last increased in 1991.
The study recommended increasing passenger fares by 30 percent and cabin charges by 20 percent, along with the 5 percent hike for vehicles. The actual AMHS proposal accepts the recommendation for vehicles but goes for a more modest 10 percent increase for passengers and cabins.
Hoonah City Manager Keith Bettridge said a recent round of open houses held by ferry officials probably will blunt the reaction to the fare increases. "There'll probably be some concerns, but from my point of view, they provide a good service," he said.
Hoonah residents probably would be more alarmed by service cutbacks, Bettridge said.
"Even if there is a fare increase, they probably wouldn't be too angry because we need it so bad," said Hoonah Mayor Albert Dick. A couple of months ago, direct barge shipments from Seattle were terminated, making AMHS critical for freight movement, he said.
The fare increase would go into effect from May 1 to Sept. 30, establishing a seasonal differential, Capacci said. About 80 percent of the travel on ferries is by nonresidents during those months, he said.
That's not the only revenue strategy, Capacci said. The system has hired a marketing director, former state tourism official Sharon Gaiptman, to work on promotional packages and discounts aimed at boosting ridership by residents and nonresidents. Ridership has declined 13 percent in the past decade, even though customer satisfaction is high, according to surveys.
The McDowell Group recommended an annual marketing budget of $2 million to $4 million, well over the $50,000 to $100,000 AMHS has spent, Capacci said. He'll be asking the Legislature for more.
But flat funding by the Legislature has contributed to the system's money crunch, Capacci said. Annual general funds have declined from about $30 million in 1992 to just over $27 million now, even as costs have gone up, he said. Fare revenue is about $38 million to $40 million a year.
Meanwhile, the ferry reserve account is being tapped for up to $10 million a year, and it will be exhausted in 2002, Capacci said.
He's recommending regular cost-of-living adjustments to fare increases, which might be easier politically, he said.
Public comment on the proposed fare increase can be mailed to General Manager, Alaska Marine Highway System, 3132 Channel Drive, Juneau, AK., 99801, or e-mailed to firstname.lastname@example.org. More information, including the McDowell Group study, is available on the AMHS Web site at www.state.ak.us/ferry.
The deadline for comment is Jan. 15. The new rates tentatively are scheduled to go into effect Jan. 20, so Capacci is urging Alaskans to take advantage of the current rate structure with early reservations.
Bill McAllister can be reached at email@example.com.