The cost of your favorite state ferry trip is likely going up.

Fares for most Alaska Marine Highway System routes will increase 4.5 percent Jan. 1 or shortly thereafter, said Reuben Yost, deputy commissioner of the state Transportation Department, during a Dec. 12 Marine Transportation Advisory Board meeting.

The fare increases will first affect the 2015 summer schedule, Yost said, which begins May 1.

Trips planned before the new rates are released for the upcoming spring and summer will not be impacted.

“Any travel that’s already been paid for will be at the current rates,” he said.

tourists is $89. At that price it is 68 percent more than the average fare for a comparable route, so it will not be a part of the general fare increase.

The Northern Economics report commissioned by the department recommends ways to standardize and simplify the current fare, or tariff, structure.

Yost said there have historically been system-wide and terminal specific fare increases but little reasoning between the two.

“The relationship you see between fares has been in place for 30 years or more,” he said.

In addition to freezing unusually high fares, the report recommends AMHS adopt a two-tiered structure to meet winter and summer demand periods. The seasonal adjustment should be standardized, but somewhere between 5 percent and 30 percent for passenger fares and 30 percent and 40 percent for vehicles. Commercial vehicle rates should be 60 percent to 120 percent of passenger vehicle tariffs, according to the report.

The system also was encouraged to set a “target farebox recovery” of 39 percent to 65 percent of its operating expenses, Yost said.

Fare income of $46.8 million in state fiscal year 2005 accounted for 54 percent of total AMHS revenue, with the remainder coming from the general fund. Despite growing generated revenue by more than 16 percent since 2010 without a system-wide fare increases, the need for general fund help has grown with escalating operating costs.

AMHS officials expect to gross about $56.2 million in fiscal year 2015. Yost said the fare increase would help offset a $1.8 million reduction in funds designated for the system in former Gov. Sean Parnell’s budget, which was released but not endorsed by Gov. Bill Walker.

Marine Transportation Advisory Board Chair Robert Venables said anecdotally that people in Southeast have told him that they would rather see a fare increase than reduced service.

“Nobody wins if you tie up the boats,” Venables said.

Alaska class vessel construction underway

Vigor Alaska held a keel-laying ceremony Dec. 13 for the Alaska class ferries being built at its shipyard in Ketchikan.

The twin 280-foot “day boats,” intended to service Lynn Canal between Haines-Skagway and Juneau, are entirely state-funded and will be the first AMHS ferries built in Alaska.

Scheduled for completion in 2018, they also will be the first vessels added to the state’s 11-ferry fleet since the fast ferry Fairweather in 2005.

The shipyard operated by Vigor Alaska is owned by the state through the Alaska Industrial Development and Export Authority.

Vigor Alaska was awarded the contract to build the ships Oct. 16, but it was always the state’s goal to build them there at the largest shipyard in Alaska. The ability to control the construction location and eschew federal contracting procedures is the primary reason no federal money will be used to fund the vessels.

The state has appropriated $120 million to a vessel replacement fund to build the two ferries. Initially meant for one mainline vessel, it was determined the two smaller ferries would be a cheaper way to add to the fleet.

“It was quite an effort to get to (awarding the contract),” AMHS General Manager Capt. John Falvey said. “We all know we only had so much money to work with and we were able to sign that contract within that figure.”

Putting the 33,000-pound bulbous bow sections in place was not only a good way to kick off the vessels’ much-anticipated construction, but it also saved the system money by sneaking in a work window just before an Environmental Protection Agency deadline.

Falvey said many new vessels constructed after Jan. 1 will need to meet Tier 4 EPA emissions standards.

AMHS has four, 3,000-horsepower Tier 3 power plants purchased and ready for installation in the day boats when the time comes.

“(Tier 4 engines) are going to be much more expensive to purchase and much more expensive to operate because of the filtration that is required to hold the emissions,” he said.

Falvey added that the La Grange, Ill.-based Electro-Motive Diesel Inc. engines also are dual-fuel, meaning the ships could be converted from diesel to liquefied natural gas to save money and lower emissions if a fuel source ever becomes available.

Replacing the ‘Rusty Tusty’

The Marine Transportation Advisory Board also got a look at the features of the vessel that will someday replace the M/V Tustumena.

The concept ferry will likely be bigger, 34 feet longer and 11 feet wider, than the Tustumena to add capacity and better handle the rough seas often encountered on the open-ocean Aleutian route it will primarily serve. 

Still, it will be smaller than the M/V Kennicott that fills in for the 50-year-old Tustumena so it can call on some of the small docks in the Aleutians that aren’t state-owned.

Total cost for the vessel is currently projected to be $211 million to $237 million early in the design phase.

At 330 feet, the replacement will carry 250 passengers, 76 more than the Tustumena, and have 24 more staterooms and roomettes.

Space on the Tustumena is often limited, particularly in the summer months.

The concept is based on the design study report released in September. Final design is expected in about a year.

It also will add 415 feet of vehicle space from the Tustumena, which equates to 16 additional full-size pickup trucks.

With a 15-knot cruising speed the vessel will be 1.5 knots faster than the Tustumena as well.

It will not have a bar, which is ultimately a revenue drain on other mainliners because of staffing expenses, according to Yost.

A public participation period regarding the Tustumena replacement’s characteristics wrapped up in May.

Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.

The decision to increase ferry fares is left to the discretion of the DOT commissioner. The expected rate hike comes after legislators last session requested a tariff analysis and rate report be done between sessions and presented to them in February.

AMHS fares have not been changed since 2007, according to Yost. Also noteworthy, the ferry system derives about 30 percent of its total revenue from fares at the current rates.

Nearly all special fares except for a winter “driver goes free” and in-state senior and child discounts have been cut in recent years to grow revenue without implementing an across-the-board fare hike, AMHS General Manager Capt. John Falvey has said.

Yost said that falling gas prices should help mitigate the impact of fare increases to ferry passengers, particularly to those traveling with vehicles.

“We think we are doing this in a good year,” Yost said.

Not all fares are going up, however. Routes with fares that are at least 25 percent higher than the average per nautical mile rate for similar length trips will be frozen, Yost said, until they are in line with the general fare structure.

For instance, the passenger fare on the Whittier to Valdez route that is popular with