ITEM TITLE:
2028 Cruise Ship Head Fee Increase
SUBMITTED BY: Andrew Doherty - Port Operations MGR
FISCAL NOTES:
Expenditure Required: No direct expenditure is anticipated. Administrative costs associated with implementing and collecting the revised fee would be absorbed within the existing Ports and Harbors operating budget.
Unencumbered Balance: N/A
Funding Source: No expenditure funding is required. Revenue generated by the fee would be deposited into the applicable Ports and Harbors revenue account
RECOMMENDATION:
Approve an increase in the City of Valdez cruise ship head fee from $3.00 to $6.00 - $10.00 per passenger, effective January 1, 2028, and direct staff to prepare the necessary amendment to the port tariff 100-26.
SUMMARY STATEMENT:
The City of Valdez currently assesses a cruise ship head fee of $3.00 for each cruise ship passenger visiting Valdez. During the 2026 cruise season, the City collected head fees on 36,184 passengers, generating approximately $108,552 in revenue.
Based on an anticipated annual passenger count of approximately 35,000 to 40,000 passengers, the current $3.00 fee generates between $105,000 and $120,000 annually. Increasing the fee would generate the following estimated revenue.
|
Head Fee |
Revenue at 35,000 Passengers |
Revenue at 40,000 Passengers |
Annual Increase Over Current Fee |
|
Current - $3.00 |
$105,000 |
$120,000 |
- |
|
$6.00 |
$210,000 |
$240,000 |
$105,000-$120,000 |
|
$7.00 |
$245,000 |
$280,000 |
$140,000-$160,000 |
|
$8.00 |
$280,000 |
$320,000 |
$175,000-$200,000 |
|
$9.00 |
$315,000 |
$360,000 |
$210,000-$240,000 |
|
$10.00 |
$350,000 |
$400,000 |
$245,000-$280,000 |
Using the actual 2026 passenger count of 36,184, the estimated revenue under each option would be:
|
Head Fee |
Estimated Revenue |
Increase Over Current Revenue |
|
Current - $3.00 |
$108,552 |
- |
|
$6.00 |
$217,104 |
$108,552 |
|
$7.00 |
$253,288 |
$144,736 |
|
$8.00 |
$289,472 |
$180,920 |
|
$9.00 |
$325,656 |
$217,104 |
|
$10.00 |
$361,840 |
$253,288 |
Alaska Cruise Passenger Fee Comparison
Combined Southeast and Southcentral ranking for Valdez 2028 rate planning
Combined 2028 Passenger Fee Ranking
|
Rank |
Port |
Region |
2028 fee |
|
1 |
Seward |
Southcentral |
$75.25 |
|
2 |
Whittier |
Southcentral |
$12.99 |
|
3 |
Haines |
Southeast |
$12.00 |
|
4 |
Ketchikan city docks |
Southeast |
$9.00 |
|
4 |
Wrangell docked |
Southeast |
$9.00 |
|
6 |
Valdez proposed |
Southcentral |
$8.00 |
|
6 |
Juneau local fees |
Southeast |
$8.00 |
|
6 |
Petersburg |
Southeast |
$8.00 |
|
9 |
Wrangell tendered |
Southeast |
$7.00 |
|
10 |
Homer |
Southcentral |
$6.00 |
|
11 |
Cordova |
Southcentral |
$5.00 |
|
12 |
Port of Alaska |
Southcentral |
$3.86 |
|
13 |
Port MacKenzie estimate |
Southcentral |
$1.03 |
Homer's effective passenger cost is higher than the listed $6.00 rate because of its additional fixed charges. For a vessel carrying 1,000 passengers, Homer's listed passenger and fixed charges would equal approximately $8.52 per passenger.
The full average of Seward's $75.25 charge and Whittier's $12.99 charge is $44.12 per passenger. However, that average is significantly affected by Seward's $59.86 improvement fee. Excluding Seward's improvement fee, the average of Seward's service and facility charges and Whittier's service and facility charges is approximately $14.19 per passenger.
An $8.00 Valdez head fee would remain approximately $4.99 below Whittier's combined charge and $6.19 below the adjusted Seward-Whittier average of $14.19. It would also remain significantly below Seward's total passenger charge.
At an annual passenger volume of 35,000 to 40,000, a $6.00 to $10.00 head fee would generate approximately $210,000 to $400,000 annually, an increase of approximately $105,000 to $280,000 over the current fee.
The additional revenue could help offset the City's costs associated with cruise ship operations, including facility maintenance, passenger infrastructure, security coordination, transportation staging, staffing and other services necessary to accommodate cruise ship calls. Periodic adjustment of the fee would also reduce the extent to which these costs are supported by other port revenues or City funds.
Southeast Alaska passenger-fee comparison
Cruise passenger fees relevant to Valdez rate planning for 2028
Purpose Compare publicly disclosed local cruise passenger fees at major and emerging Southeast Alaska ports with Valdez’s current $3.00 fee and proposed $8.00 fee for 2028.
Conclusion A Valdez fee of $8.00 per passenger would remain competitive. It would match Juneau’s local charge and Petersburg’s adopted 2027 rate, while remaining below the scheduled Haines rate and the published Ketchikan and Wrangell dock rates.
Passenger Fee Comparison
|
Port or destination |
2026 local fee |
Expected 2028 fee |
Basis and qualification |
|
Haines |
$9.00 |
$12.00 |
Adopted schedule increases the fee to $12 in 2027 and $13 in 2029. |
|
Ketchikan city docks |
$9.00 |
$9.00* |
Passenger wharfage at city-owned facilities. Private Ward Cove charges are separate and not publicly disclosed. |
|
Wrangell |
See note |
$9 docked $7 tendered |
Assembly-approved rates take effect in 2027. The exact 2026 tariff amount was not confirmed in the reviewed public notice. |
|
Juneau |
$8.00 local |
$8.00* |
$5 Marine Passenger Fee plus $3 Port Development Fee. The separate $5 state distribution can bring municipal passenger-linked receipts to $13. |
|
Petersburg |
$5.00 |
$8.00 |
Ordinance 2026-07 increases the Marine Passenger Fee to $8 on January 1, 2027. |
|
Valdez |
$3.00 |
$8.00 proposed |
Proposed local head fee for 2028; not yet adopted. |
|
Skagway |
No broad local fee confirmed |
Not adopted |
Draft materials have referenced a $3.50 passenger wharfage fee. Current port costs also include dock, terminal-use, vessel, and lease charges. |
|
Sitka |
No municipal fee confirmed |
Private rate unavailable |
Most large vessels use the privately operated Sitka Sound Cruise Terminal. Contractual terminal charges are not publicly posted. |
|
Icy Strait Point and Hoonah |
No published municipal fee |
Private rate unavailable |
Icy Strait Point is privately owned by Huna Totem Corporation. Commercial terminal charges are not published as a municipal tariff. |
|
Klawock |
No published municipal fee |
Private rate unavailable |
The developing cruise facility uses private or tribal arrangements; a directly comparable public passenger tariff was not identified. |
|
Port / destination |
Current local passenger fee |
Adopted or known future rate |
Expected 2028 rate |
Notes |
|
Haines |
$9.00 |
$12 in 2027; $13 in 2029 |
$12.00 |
Applies per cruise passenger. |
|
Ketchikan-city docks |
$9.00 |
No adopted increase identified |
$9.00 |
Passenger wharfage at city-owned facilities. Private Ward Cove charges may be separate and are not publicly disclosed. |
|
Wrangell |
Approximately $5.00 |
$9 docked / $7 tendered beginning in 2027 |
$9.00 docked; $7.00 tendered |
The Assembly approved the new differential rates. |
|
Juneau |
$8.00 locally |
No adopted increase identified |
$8.00 |
$5 Marine Passenger Fee plus $3 Port Development Fee. Juneau commonly reports $13 because it also receives a $5 share of the state tax. |
|
Petersburg |
$5.00 |
$8 beginning January 1, 2027 |
$8.00 |
Adopted through Ordinance 2026-07. Petersburg Marine Passenger Fee |
|
Valdez-proposed |
$3.00 |
Proposed $8 in 2028 |
$8.00 |
Would match Juneau’s local rate and Petersburg’s adopted 2027 rate. |
|
Skagway |
No broad municipal cruise head fee confirmed |
A $3.50 passenger-wharfage provision has appeared in draft materials, but I did not find it in the currently published municipal code |
Not adopted/undetermined |
Skagway also collects vessel, dock, terminal-use, and lease-related charges. Its port is split between municipal facilities and the privately operated Railroad Dock. |
|
Sitka |
No municipal cruise head fee confirmed |
No adopted increase identified |
$0 publicly disclosed municipal fee |
Most large ships use the privately operated Sitka Sound Cruise Terminal. Its contractual passenger or terminal charges are not publicly posted. |
|
Icy Strait Point / Hoonah |
No publicly disclosed municipal head fee |
No adopted increase identified |
Private rate unavailable |
Icy Strait Point is a privately owned Huna Totem cruise destination. Terminal charges are negotiated commercially and are not published as a municipal tariff. |
|
Klawock |
No publicly disclosed municipal head fee |
None identified |
Private rate unavailable |
The emerging cruise facility is privately/tribally developed, so publicly comparable tariff information is limited. |