Full Throttle The Alaska Railroad resumes a growth trajectory after pandemic disruptions.

• Author: Kvapil, Rachael
• Position: TRANSPORTATION

Concluding its first century of existence, the Alaska Railroad Corporation (ARRC) has a lot to celebrate. After the pandemic disrupted an upward trajectory in 2019, the state-owned railroad is rebounding from a brutal downturn in 2020 and preparing for growth in the coming years. With increased revenue from freight, passenger, and real estate. ARRC is ready to undertake a significant tourism and cargo project in Seward that will have economic ripple effects to the end of its tracks.

The State of the Railroad

ARRC's 2019 financiais marked a great year for the corporation. The railroad's biggest revenue sources saw profitability that year: $85.3 million (net of fuel surcharge revenue of $79.5 million) in freight operations, $39.6 million in passenger service, and $22.4 million in real estate leases and permits. Nothing in the financial forecast hinted at any reason why their upward trajectory should alter course. And then 2020 brought the pandemic and everything changed.

"In terms of operations and terms of business, 2020 was a terrible year," says Clark Hopp, ARRC Chief Operating Officer. "Not unlike many industries, the pandemic had a negative impact financially and culturally on businesses and employees."

The largest factor affecting this downturn in 2020 came from cruise ship cancellations during the pandemic and in 2021 the extension of the "conditional sail order" by the Centers for Disease Control and Prevention. Pre-pandemic, 47 percent of cruise ship passengers traveled aboard cruise company-owned railcars pulled by ARRC. That dropped to 17 percent in 2021 with the limited reopening of cruise ship travel. Bill O'Leary, ARRC president and CEO, says passenger travel is once again on the rise now that cruise ship travel is closer to pre-pandemic numbers.

"In 2022, we're back to 2019 levels in terms of running a full complement of trains on the passenger side," says O'Leary. "We're on track to record ridership on Alaska Railroad coaches."

Year-to-date passenger revenues (through June 2022) are $16.9 million, and they are forecast to reach $41.1 million by the end of the year. That would be nearly double the amount in 2021 and an estimated $1.5 million more than in 2019.

Though freight operations didn't take as big a hit during the pandemic, the amount hauled during 2020 and 2021 did drop slightly, affecting overall revenues. As O'Leary explains, freight generates more than half of operating revenues (excluding capital grants). In a...