Alaska Railroad reports $4.4 million loss in 2016

KSKA Metro News

The Alaska Railroad brings a load of tourists into Whittier in July 2008. (Creative Commons photo by Frank Kovalchek)

The Alaska Railroad Corporation had a rough year in 2016, where it saw a dramatic drop in revenue. The company finished 2016 $4.4 million in the red.

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Overall, the railroad’s revenues for everything from passenger travel to freight transportation totaled $169.8 million in 2016 – more than a $15 million drop from the previous year.

Tim Sullivan, the manager of external affairs for the Alaska Railroad, said the corporation’s drop in revenue is indicative of the state’s overall economy, and much of the railroad’s losses can be attributed to a big drop in freight revenue.

“What we do see is that as construction projects go down around the state, we’re moving less product, in terms of gravel for roads products or for building projects,” Sullivan said. “So as the economy changes around here, we’re a bit of a canary in the coal mine and show how that can affect things downstream.”

Sullivan said the railroad only moved about 70,000 tons of coal last year, down from 1.2 million tons in 2011. The drop forced the closure of the corporation’s coal loading facility in July 2016.

Sullivan also said the shuttering, and subsequent dismantling of the Flint Hills refinery in North Pole has had a significant impact on the railroad’s bottom line over the last few years.

Overall, the railroad’s freight revenue dropped by 16 percent last year, and is down more than 44 percent since 2008.

Moving forward, Sullivan said the railroad is hoping to do more business with the military as it increases its presence in Fairbanks. He said increased oil production could also help the railroad directly.

“Some increased production and drilling up on the North Slope, we’ll be moving more product through our barge service and keep looking for other lines of business as we go through that,” Sullivan said.

Sullivan said another challenge last year was an impasse between the Alaska Railroad and the Municipality of Anchorage over a pool of federal funds that’s typically split between the two parties. That led to a loss of more than $7 million in budgeted funds. He said discussions between the municipality and railroad about the funds are ongoing.

But, Sullivan said there is one one bright spot from 2016 – an increase in ridership of passenger trains.

“Including the coastal classic that goes down to Seward from Anchorage, and a lot more travelers that are heading up to Denali on the Denali Star that heads up north,” Sullivan said. “So, a lot of increase in traffic, not just in the summertime also, but in the winter.”

Sullivan said more Alaskans are taking the train than in past years, but he attributes much of the growth to tourism.

“Because people look at Alaska as exotic, but safe,” he said. “And with the things that are going on around the world, they have the opportunities to come up here as independent travelers or get on cruise ships with packaged travel and getting on the railroad seems to be a big part of those trips for a lot of the people who make their way up here.”

Sullivan said the railroad anticipates this year’s revenues to remain fairly flat.

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