Correction: Marine Highway Rates story

November 20, 2017

KODIAK, Alaska (AP) — In a story Nov. 17 about possible ticket price increases for the Alaska Marine Highway System, The Associated Press reported erroneously the projected source of a 21 percent reduction in expenses. The reduction would come from a combination of changes and some automation, not from a rate increase alone.

A corrected version of the story is below:

Report: Alaska Marine Highway System should increase rates

A report by Alaska’s Southeast Conference calls for the state marine highway system to increase its ticket prices

KODIAK, Alaska (AP) — A report by Alaska’s Southeast Conference calls for the state marine highway system to increase its ticket prices.

The recommendation is part of a 25-year plan that Gov. Bill Walker asked the conference’s stakeholders to put together for the struggling Alaska Marine Highway System, the Kodiak Daily Mirror reported Thursday.

The major part of the plan is to turn the marine highway into a public corporation. The system’s Reform Steering Committee is pursuing legislative changes to make that happen.

Stakeholders estimate that through a variety of recommendations, including a rate increase and some automation, they could reduce the systems expenses by 21 percent while only dropping revenue by 14 percent.

There are no reasonable scenarios for the system to recover all expenses through revenue, according to the report.

Stakeholders said that if the system cut prices, it wouldn’t increase ridership — making a rate decrease not viable. This contradicts what the public has said at community meetings, though.

“A frequently cited suggestion was that a reduction in fares would produce sufficient additional ridership to more than compensate for the loss in revenue,” according to the report. “This belief is contradicted by the price elasticity data.”

Stakeholders’ recommendations to improve ridership include a comprehensive marketing plan to “recover travelers lost due to the recent scheduling and performance issues,” a new and modernized fleet of vessels, automated terminals and a multi-year contract between the state of Alaska and the impending marine highway public corporation.

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