Alaska Marine Highway System: Alternative Approaches

MV Fairweather underway. Photo by Jordan Roderick. Original photo and License 

By Quinn Townsend and Sarah Montalbano

The state-owned Alaska Marine Highway System (AMHS) provides ferry transportation to 35 Alaskan coastal communities, contributing to the economic and social well-being of those communities.[1] Unfortunately, it is a huge drain on the state budget and is unreliable for the populations it serves.[2] Over the years, recommendations have been made by various groups to make AMHS more efficient and economical for the state. This report will examine some of those recommendations, as well as offer ideas that may not have been considered before.

Cost and Economic Impact of AMHS
Alaska spends a large amount of state General Funds on AMHS – in Fiscal Year 2021, state General Fund appropriations for AMHS were over $100 million.[3] The highest state General Fund appropriations for AMHS in the last decade were in FY13, at over $163 million.[4]

The most recent economic impact study done on AMHS was published in 2016 with 2014 data. It found that there were 1,700 direct and indirect jobs in Alaska due to AMHS, which led to $103.7 million in wages. Additionally, “AMHS’ economic activity resulted in total spending of $273.0 million in 2014, including $184.7 million in direct spending and $88.3 million in indirect spending.”[5] Clearly, the economic impact of connecting Alaskans through transportation is not to be ignored. While there is no hard data about the economic impact of all transportation infrastructure in Alaska, it is safe to assume that alternatives to AMHS that replace or work in concert with it would also create jobs, wages for Alaskans, and additional economic activity. Thus, it is important to make AMHS more sustainable and less reliant on state funds, as well as explore other transportation infrastructure that could connect Alaskans.

Current State of AMHS
Currently, AMHS struggles with reliability and is often unable to utilize its entire fleet of ferries due to workforce issues and ship breakdowns. A 2020 working group found that the ferry fleet is aging, which makes it more expensive to operate and maintain.[6] Routes are poorly matched with the needs of communities—in fact, some communities’ population and ridership may not warrant the amount of service being currently provided. Additionally, there is limited flexibility for making business decisions, union labor agreements are costly, and equipment breakdowns occur often.[7]

Some argue that the problems AMHS faces are due to a lack of funding, and that simply increasing state funding will make AMHS more reliable.[8] This argument misses the fact, however, that most of AMHS’s efficiency and reliability problems started long before recent budget cuts. It also misses the point that to truly make AMHS a sustainable, useful service for Alaskans, major restructuring must occur. The goal should not be to simply apply a bandage, enabling AMHS to limp along but to address the underlying issues that have caused so many problems for AMHS, those who utilize the service, and the state budget.

Four underlying problems have contributed to the struggles AMHS currently faces. First, because of both state and union politics, there is little flexibility for major business decisions. AMHS is caught in the tug-of-war that is politics.[9] Second, because of ever-changing policies, funding is unreliable – businesses typically plan for years in advance, but AMHS has no idea what its funding will be year-over-year. Third, poor business decisions were made in the past, such as mismatched ships and ports, because politicians and unions were making the final calls, rather than informed maritime stakeholders.[10]

In addition, slow population growth in Southeast Alaska and reduced operating schedules have contributed to declining ridership and vehicles carried.[11] With few exceptions, the AMHS passenger and freight volumes from 2009 to 2018 show dramatic decreases on most routes.[12] Reductions in volume are partially mitigated by fare increases but that can tend to depress ridership leading to an inexorable cycle requiring further fare increases and fewer passengers.

Untenable Solutions
As previously noted, the state has reduced its overall appropriations to AMHS over the last several years. Some propose that AMHS’s inefficiencies would be solved by simply restoring the funding to the same amounts as the state’s highest contributing years. However, there are no indications that throwing more money at a government-run system would lead to improvements. Operating revenues in FY20 were only $28.3 million while operating expenditures totaled $94.6 million.[13] This means that 70 percent of AMHS operations expenditures came from state funds. AMHS should find ways to succeed without relying so heavily on state government funds. The rest of this report explores a variety of ways for AMHS to become more self-reliant, thus allowing the state to reduce the amount of state fund appropriations dedicated to AMHS.

One recent proposal would steer $15 million in federal highway dollars into renovating one of two Alaska-class ferries to include crew quarters.[14] Though adding crew quarters would expand the ferries’ range for round trips exceeding 12 hours by allowing the vessel to carry two crews, spending nearly $30 million renovating freshly constructed Alaska-class ferries would negate the advantages in operating costs. Because personnel costs were 66 percent of vessel operating costs in 2018, cutting crew costs represents incredible savings to AMHS; adding crew quarters to the two ships specialized for shorter voyages adds consequential ongoing personnel costs as well as up-front capital costs. Alaska-class ferries need only 14 crew members, while other conventional AMHS vessels can require between 38 and 63 crew members.[15] In addition, adding crew quarters triggers requirements such as galleys, showers, and laundry facilities, all of which add ongoing costs. Finally, the main purpose of the Alaska-class ferries is to make shorter day trips; however, they can be used on longer voyages by overnighting in a destination port, which is a much sounder solution than adding crew quarters. Squandering federal dollars on adding crew quarters to vessels clearly not intended for longer voyages would only add operating costs and neutralize their advantages.

Possible (But Not Ideal) Solutions
One popular recommendation is to transition AMHS into a public corporation.[16] However, establishing a public corporation will not obviate the impact of politics on budget funding. A public corporation will more likely advocate for its own funding increases and superfluous improvements to vessels rather than pursuing cost-saving collaborations like raising fares, privatizing some services, and renegotiating labor contracts. Additionally, transitioning AMHS into a public corporation could take more years than AMHS has in terms of current funding. Reworking current governance under the Alaska Department of Transportation and Public Facilities (DOT&PF) would be more feasible.

One proposal to address the cost of routes to Southwest Alaska are small airplanes, which can be used for both freight or passengers.[17] Flights are faster than ferries to those towns with airstrips, which is especially pertinent given that ferry travel times to Southwest destinations range from 1.5 hours to 19 hours.[18] Alaska Airlines flights from Kodiak to Cold Bay, with an intermediate stop at Ted Stevens International Airport, have a total travel time of four hours and 20 minutes, while the comparable ferry route lasts 37 hours, not including stops. Unfortunately, planes frequently find themselves grounded or delayed due to weather conditions, while ferries tend to run no matter the weather, assuming the ships are seaworthy. Overall though, even a delay of several days for a grounded plane is comparable to several days of travel time on a ferry.

Increasing road access to certain communities may be able to streamline several routes and help downsize AMHS. For instance, the Juneau Access Road project, or Lynn Canal Highway, would have created an additional 48 miles of road to connect Juneau and Skagway (albeit still requiring a much shorter ferry trip).[19] The project was stopped in 2016 by the Walker Administration due to concerns about the environmental impact of the road, but the idea is sound, and creating roads in some areas will have environmental and economic benefits compared to ferries because roads produce less pollution than ferries and dramatically decrease costs to travelers.[20] The Final Environmental Impact Statement states that the “cost per mile for a family of four traveling on the AMHS in Lynn Canal is three to six times higher than the cost to make an equivalent-length trip by highway.”[21] Creating the Juneau Access Road would add another benefit, by way of bringing a greater influx of independent visitors than AMHS now attracts; “therefore, it would create the largest economic benefits to the region.”[22]

The Traffic Forecast Report for the Juneau Access Road estimated an average of 500 vehicles traveling every day on the highway, which improves overground access to freight for the communities, decreases the shipping costs of fresh and frozen seafood from Southeast Alaska, and also improves access to the state capital for Alaska residents to make their voices heard.[23] However, the cost of roads to these communities – the Juneau Access Road project was estimated to cost $574 million, not including maintenance – is quite expensive.[24] Considering that the state’s initial contribution to the Juneau Access Road would be $407 million (with additional federal funds needed) compared to $378 million annually for AMHS to continue serving Juneau, Haines, and Skagway without changes, it may be worth establishing a road, especially to avoid unexpected ship maintenance, reduce travel times by half, and increase tourism to these communities.[25] Compared to the cost of building and maintaining AMHS vessels, roads may be far more cost-effective for communities that can be reached by them.

Selling assets of AMHS is one way to avoid costly port and mooring fees for vessels too dilapidated to rehabilitate for further use. Often, however, vessels are instead sold simply because the purchase was not well-thought-out. Two fast ferries, the Fairweather and the Chenega, were purchased for $34 million each and proved extremely popular with passengers despite occasional mechanical breakdowns. Yet both were sold together for a total price of $5.2 million to Spain, marking a loss of $30.8 million after only 15 years of service.[26] Considering that mooring the vessels cost $2 million a year once they were out of service, cutting the ongoing costs of mooring vessels by selling assets is sensible and allows the proceeds to be reinvested in AMHS. One current difficulty in selling vessels is an oversaturated market, leading to extremely low prices.[27] The working group report also suggests giving away or selling the 60-year-old Malaspina, which costs $450,000 a year to moor and would cost $16 million to repair.[28] Recent cost estimates of returning the Malaspina to service in Alaska have skyrocketed to $45 million, and the Dunleavy administration has offered the vessel to the Philippines for free due to tepid interest by buyers.[29]

Raising fares and implementing dynamic pricing, in which ticket prices change based on demand, on mainline routes as a standalone solution will do nothing if AMHS cost-saving solutions are not also implemented. The System Analysis of AMHS claims that “rate increases of three times CPI are not sufficient to absorb anticipated wage increases, let alone other cost escalation.”[30] At worst, raising fares will almost certainly decrease ridership in the process. Though some will purchase ferry services no matter the price, as alternatives like airplanes become faster, less expensive, and offer more service to rural areas, ridership will decrease, especially considering that approximately 40 percent of AMHS revenue derives from tourism, which is inherently optional.[31] Raising fares will only work in concert with changes to service, stabilized funding, and reevaluating labor contracts.

Filling AMHS governance with business and maritime leaders would allow it to fix several logistics woes, as well as think past the two-year budgetary cycle, leading to less reliance on state funding. Though public input from the communities being served is laudable and necessary, AMHS governance ought to appoint more community leaders with business acumen and maritime experience to enhance revenue, cut costs, manage personnel, and maintain ships. AMHS governance that has worked extensively in the private industry could develop a long-term strategy that mirrors the goals of a private corporation. The working group report suggests that the Governor appoint a nine-member board with three business members, three with marine experience, two public members, and a union representative. In fact, a nine-member operations board recommended by the working group report was passed in Alaska HB 63 and became law on August 16, 2021.[32],[33] Under this law, the legislature appoints four of the members of an executive-branch board, which raises constitutional questions.[34] Assuming the board appointments are constitutional, it is a sound idea: AMHS governance needs to be headed by those knowledgeable about business and marine issues.

The Most Sensible Solutions
Another ferry service in Alaska is the Inter-Island Ferry Authority (IFA). It is a public, non-profit corporation organized under the Alaska Municipal Port Authority Act and is governed by a board of directors selected from each community that it serves in southern Southeast Alaska: Craig, Klawock, Hydaburg, Thorne Bay, Coffman Cove, Wrangell, and one “At-Large.”[35] One of the main reasons IFA was created was due to unreliability of the Alaska Marine Highway System and the tendency for ferries to arrive at inconvenient times (especially around midnight). Fare revenue covers 85 percent of IFA’s operating costs – a far cry from the 33 percent that AMHS covers. Because IFA is not governed by the state the same way AMHS is, the board can  make better and more timely decisions for IFA. AMHS could potentially be restructured into one or more public corporations similar to IFA, releasing control of AMHS from the state to the communities AMHS serves.[36] This type of restructuring would of course take time, funding, and cooperation among communities.

A different restructuring for AMHS would be to change the route system to a “hub and spoke” system with day boats operating out of “hub” towns and transporting to smaller, outlying communities.[37] The system would only need several main line vessels to move passengers and vehicles through the Southeast, the Gulf, and Southwest Alaska. Passengers would travel from outlying communities to the hubs on day boats and then catch a main liner heading north or south. Day vessels without crew quarters are less expensive to build and maintain than current ships, such as the previously mentioned Malaspina.[38] A similar “hub and spoke” system is utilized by some cargo airlines in Alaska to maximize efficiency and cut travel costs.[39]

The most critical long-term need for AMHS is stabilization of its funding, insulating it from political tug-of-war. Because budgets are not finalized for the year until spring, schedules for summer ferry routes cannot always be prepared more than a few months in advance. This leads to lost revenue opportunities for tourism (as tourists often plan farther out than AMHS) and imposes administrative burdens to manage late changes and refunds due to canceled trips. The working group report suggests forward funding two or more years of AMHS operations, and a three to five-year rolling General Fund budget plan.[40] The current administration recently established an 18-month schedule for AMHS, which is a step in the right direction.[41]

In a related short-term solution, Alaska ought to use federal funds to make AMHS more self-reliant, rather than using the funds to kick the can down the road. Federal pandemic relief of $76.9 million from the Federal Transit Administration was proposed to fund AMHS for 18 months, rather than the standard 12 months, which would theoretically help stabilize the system and give riders more time to book, thus increasing sales.[42] Though forward-funding is commendable, it is critical that this one-time infusion of funds not be used on standard operating costs, paying wages, and mooring fees for dilapidated vessels. Addressing long-term overhauls, such as bringing vessels up to date or purchasing new vessels that can be used for decades, is a far more appropriate use of one-time aid than waiting to address AMHS’s systematic problems in 18 months when the federal spending spree is over.

AMHS reliability and cost to the state would be improved by managing labor costs and tailoring bargaining agreements to avoid strikes and the consequent loss of revenues. The working group states that “Labor costs in 2018 were 66% of vessel operating cost, and alone exceeded overall system revenue by more than $12.5 million. (NE pg. 7).” [43] The report also suggests several means of managing these costs, including using dayboat vessels when possible, privatizing several routes, and reducing or privatizing crews. In particular, the group suggests reducing vessel capacity and adjusting service frequency on a seasonal basis, running mainline vessels with 50 percent capacity, and reduced crews in off-seasons.

However, these solutions from the working group run into one thorny problem: marine union labor agreements. Implementing these cost reductions requires renegotiating labor contracts in order to match vessel operation and crewing mode to seasonality and demand. To illustrate the costly nature of union strikes, consider the 2019 Inland Boatmen’s Union (IBU) strike: the state was forced to refund $3.2 million in tickets over the nine-day strike.[44] Additional costs mounted as the state needed to arrange with the private sector to transport travelers stranded by the IBU during the week of the Southeast Alaska State Fair. Indeed, considering the criticality of transporting individuals needing medical care elsewhere, strikes must be avoided whenever possible – not all users of AMHS are on a pleasure cruise. One important lesson from the 2019 IBU strike is that the private sector is capable of filling the transportation needs of many Alaskans and can work complementary to AMHS.

Another, less obvious solution to reducing the cost of AMHS is for Congress to repeal the Jones Act and the Passenger Vehicle Services Act (PVSA), two archaic laws from 1920 and 1886, respectively, that require ferries shipping vehicles and passengers between two U.S. ports be conducted by U.S. flag ships, meaning that the ships must be built in the United States.[45], [46] Ferries belonging to AMHS are subject to the Jones Act and the PVSA, which leads to unnecessarily high prices.[47] U.S.-built ships cost six to eight times more to build than equivalent ships built in other locations, and AMHS has borne the costs of both the Jones Act and the PVSA before.[48] In the case of the MV Wickersham acquired in April 1968, it was only allowed to make Washington-Alaska trips with an intermediate stop in Prince Rupert, BC.[49] A temporary waiver was granted only after the construction of a replacement was commissioned, and the Wickersham was sold in 1974. The detrimental impact of the Jones Act on Alaska (and thus AMHS) is so widely recognized that the governor of the state is required by law to persuade U.S. Congress to repeal the law.[50]

The British Columbia public corporation ferry system, though similar in many respects to AMHS, does not have to buy ships built in Canada. If they needed to purchase from BC shipbuilders, each ship would cost an additional 30-50 percent of the purchasing price and would result in a 25 percent fare increase.[51] AMHS suffers from the effects of the Jones Act and the PVSA, and the exorbitant prices that are paid for vessels could be decreased substantially if it were allowed to purchase from foreign shipyards.

While there is not one single solution that will completely solve AMHS’s reliability problems or one simple way to appreciably reduce state funding to AMHS, there are many strategies to start down the path of AMHS self-sufficiency. Additionally, AMHS may not be the best way to serve all Alaskans’ transportation needs; the conversation regarding Alaskans’ transportation needs should be on-going rather than simply focusing on more funding for AMHS.  One thing is quite clear: increasing state general fund appropriations for AMHS will not solve any problems, only create more. Instead, Alaska must work to release AMHS from the arms of the state, allowing it and other transportation services to independently flourish, innovate, and positively impact Alaska’s economy.


[1] “Alaska Marine Highway System: Our Communities,” Alaska Department of Transportation and Public Facilities, last accessed May 20, 2021,

[2] Bill Walker, “Memorandum of Understanding Between the State of Alaska and the Southeast Conference,” May 19, 2016,

[3] “2021 Legislature – Operating Budget Allocation Summary: FY21 Management Plan,” Alaska Legislative Finance Division, last accessed May 20, 2021,

[4] “2021 Legislature – Operating Budget Allocation Summary: FY13 Budget,” Alaska Legislative Finance Division, May 14, 2012,

[5] McDowell Group, “The Economic Impacts of the Alaska Marine Highway System,” Alaska Marine Highway System, January 2016,

[6] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Department of Transportation and Public Facilities, October 20, 2020,

[7] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Department of Transportation and Public Facilities, October 20, 2020,

[8] Rich Moniak, “Opinion: The feigning champions of the ferry system,” Peninsula Clarion, May 2, 2021,

[9] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Marine Highway Reshaping Work Group, October 2, 2020, pp. 13,

The working group explains: “AMHS policy, fleet vessel composition, business practices and funding have experienced frequent shifts over time due to changing decisions of different Governors, Commissioners, the Alaska legislature, and other state government and policy directions. ”

[10] Ibid. pp. 7

[11] Northern Economics, ”Draft Appendix A: AMHS Volume and Revenue for each Route Group,” Alaska Department of Transportation and Public Facilities, January 2020,

[12] Alaska Marine Highway System, “2019 Annual Traffic Volume Report,” Department of Transportation and Public Facilities, pp. 3, 8-9, accessed September 29, 2021,

[13] Alaska Marine Highway System, “Alaska Marine Highway System Fund Annual Financial Report,” Department of Transportation and Public Facilities, 2020, 8-9.

[14] Eric Stone, “Governor, Lawmakers Unveil Plan to Use $76.8M Federal Windfall to Fund Ferries for 18 Months,”

Alaska Public Media, April 23, 2021,

[15] Alaska Marine Highway System, “Vessel Information Table,” Alaska Department of Transportation and Public Facilities, last accessed July 5, 2021,

[16] “Alaska Marine Highway Reform Project,” AMHS Reform Committee and Southeast Conference, last accessed May 20, 2021,

[17] Jacob Resneck, “Alaska Marine Highway Taskforce Finalizes Recommendations,” KRBD, October 2, 2020,

[18] “Alaska State Ferry Route: Alaska Marine Highway System,” Alaska Marine Highway System, accessed June 3, 2021,

[19] “Juneau Access Improvements. AK DOT&PF Project No. 71100. Federal Project No. STP-000S(131),” Juneau Access Improvements, Alaska Department of Transportation and Public Facilities, Southcoast Region, accessed June 3, 2021,

[20] Alexander E. Farrell, Deborah H. Redman, James J. Corbett, James J. Winebrake, ”Comparing air pollution from ferry and landside commuting,” Transportation Research Part D: Transport and Environment, Volume 8, Issue 5, 2003, pp. 343-360,

[21] “2018 Final Supplemental Environmental Impact Statement & Record of Decision,” Alaska Department of Transportation and Public Facilities, pp. 1-20,

[22] “2018 Final Supplemental Environmental Impact Statement & Record of Decision,” Alaska Department of Transportation and Public Facilities, pp. ES-8,

[23] “Appendix C: Traffic Forecast Report,” Juneau Access Improvements, Supplemental Draft, Environmental Impact Statement, Alaska Department of Transportation and Public Facilities, October 2004,

[24] “Ketchikan Wins Ferries; Juneau Road EIS Released,” Alaska Journal of Commerce, September 25, 2014,

[25] “2018 Final Supplemental Environmental Impact Statement & Record of Decision,” Alaska Department of Transportation and Public Facilities,

[26] “Alaska Marine Highway System Sells Fast Ferries to Spain for a Loss,” The Maritime Executive, March 12, 2021,

[27] “Alaska considers sinking laid-up ferry to save money for Marine Highway,” Insurance Marine News, April 1, 2021,

[28] Mike Swasey, “In an Effort to Save Money, the Alaska Marine Highway Considers Sinking One of Its Oldest Ferries,” KTOO, March 25, 2021,

[29] Jacob Resneck, “Free to Good Home: Gov. Mike Dunleavy Offers Alaska Ferry to the Philippines,” KTOO, June

22, 2021,

[30] “Alaska Marine Highway System Analysis,” Alaska Marine Highway System Analysis § (2011), pp. 18-19,,

[31] Elwood Brehmer, “Effort to Transform Ferry System a Lift for Next Legislature,” Alaska Journal of Commerce, August 22, 2018,

[32] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Department of Transportation and Public Facilities, October 20, 2020,

[33] “HB 63: Alaska Marine Highway Operations Board,” Alaska State Legislature, accessed June 3, 2021,

[34] Jacob Resneck, “Unanimous Ferry Reform Bill Prompts Constitutional Challenge from Alaska’s Governor,” Alaska Public Media, May 6, 2021,

[35] “About Alaska’s Inter-Island Ferry Authority,” Alaska’s Inter-Island Ferry Authority, last accessed June 3, 2021,

[36] Frank Murkowski, “A Star and a Ferry System,” Anchorage Daily News, April 26, 2021,

[37] Win Gruening, “Opinion: Facts, Not Tales, Tell Story of Alaska’s Ferry System,” Juneau Empire, April 5, 2019,

[38] Win Gruening, “Ferry Changes Needed,” Must Read Alaska, January 10, 2020,

[39] “Alaska: North to the Future,” Inbound Logistics, April 23, 2018,

[40] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Department of Transportation and Public Facilities, October 20, 2020,

[41] Office of Governor Mike Dunleavy, ”Governor Dunleavy Restores Budgetary Discipline to FY22 State Spending Plan,” News Release, July 1, 2021,

[42] Eric Stone, “Governor, Lawmakers Unveil Plan to Use $76.8M Federal Windfall to Fund Ferries for 18 Months,” Alaska Public Media, April 23, 2021,

[43] Alaska Marine Highway Reshaping Work Group, “Report to the Governor,” Alaska Department of Transportation and Public Facilities, October 20, 2020, pp.8,

[44] Gilbert Cordova, “AMHS Says It Will Resume Sailing on Sunday after Union Strike Ends,” Alaska’s News Source, August 2, 2019,

[45] “Jones Act,” Legal Information Institute, accessed June 3, 2021,

[46] Colin Grabow, “Alaska Lawmakers Must Get Serious About Jones Act Repeal,” The Hill, October 10, 2018,

[47] Colin Grabow, “U.S. Ferry Systems Soaked by Maritime Protectionism,” Cato Institute, January 24, 2020,

[48] John Frittelli, 2017, “Revitalizing Coastal Shipping for Domestic Commerce,” Library of Congress, Congressional Research Service, R44831, pp. 6,

[49] Dave Kiffer, “The ‘Wickersham’ Sailed on after Leaving Alaska ,” SitNews, October 11, 2006,

[50] Jones Act Repeal, Alaska Statutes 44.19.035,

[51] Andrew Duffy, “Building Vessels Overseas Maintains Low Fares Says BC Ferries CEO,” Vancouver Is Awesome, March 7, 2019,