ARRC Major Land Reserves

between Anchorage and Fairbanks and another 50 per week out of Whittier. Minimizing the number of trucks on the road reduces wear and tear on Alaska’s highways, reduces greenhouse gas emissions, and eliminates the challenges of transporting freight during the winter.

Combined with passenger services, which reduces the number of motorcoaches transporting tourists across the state each summer, railroad service translates to fewer headaches for motorists traveling by car.

“Anybody who has ever been stuck behind a convoy of buses heading down to Seward or up to Denali knows that rail is a tremendously efficient way of moving passengers,” O’Leary says. “It’s a tremendously efficient and costeffective way of transporting heavy bulk cargo.”

The Last Flag and Whistle Stop Service

The railroad’s passenger service is its most visible and second most profitable; in 2022, the half million passengers it served brought in $45 million, or 18 percent of its annual revenue.

The railroad serves independent travelers who want a leisurely, scenic way to travel anywhere from Seward to Fairbanks. It also partners with the cruise ship industry to transport passengers from the cruise ship docks in Seward to its train depots, including those in Anchorage, Talkeetna, and Denali National Park and Preserve.

But not all the railroad’s passengers are tourists. Special holiday and event trains during the off-season cater to locals, and the train’s flag and whistle stop service, the last of its kind in the country, provides Alaskans access to remote locations.

“Flagstop and whistle stop service refer to operating a train on a loose schedule without really standard scheduled stops,” explains Meghan Clemens, AKRR marketing communications manager. “We will bring the train to a stop when a passenger asks the conductor to let them off at a given post, and we’ll bring the train to a stop if we see someone standing along the tracks, flagging them down. It allows homesteaders with properties off the road system to access their cabins and get to properties they couldn’t get to otherwise.”

Railroad partnerships also provide unique opportunities to access some of Alaska’s more remote locations, such as its partnership with Chugach National Forest to provide whistle stop service to Spencer Glacier, Clemens says. Passengers from Anchorage disembark at the Spencer Glacier stop, where a mile-long trail, built and maintained by the US Forest Service, leads directly from the train station to the edge of Spencer Lake.

“That’s a pretty unique opportunity that we’re able to offer locals and visitors,” she says.

Real Estate Development

If freight is the railroad’s bread and passengers are the butter, its real estate holdings are the mid-afternoon snack that help tide it over. In 2022, the railroad’s real estate development accounted for 10 percent of its operating revenue.

“That land base is something that’s been really critically important to the railroad,” O’Leary says. “The passenger and the freight business, like any business, has its ups and downs. It really buffers the vagaries of those cycles. It’s been a steady, consistent performer for us.”

The state’s purchase of the railroad included 36,000 acres, which includes property in Ship Creek, Chena Landings in Fairbanks, the Seward cruise and freight docks, and land adjacent to the Seward airport, Kubitz says. Of that real estate, 41 percent is devoted to railroad operations, including track beds, rights-of-way, and rail yards. The remaining 59 percent is available for development and long-term leases and permits, which are leaseholds with a term of less than five years.

Twenty-five years ago, the railroad earned $5 million a year from its leases; today, it’s approaching $26 million annually. Several factors account for the increase, Kubitz says.

“Part of that is the railroad got organized with its leases,” he says. “When the railroad was part of the [US] Department of the Interior, the leases were not necessarily done at fair market value. It was a hodgepodge.

When the state took over, there was a pretty big effort to organize and enforce the leases and charge fair market value.”

The railroad also benefited from increased land values and interest in development, particularly in its Ship Creek holdings, “the high-value money in our land,” Kubitz says.

One of those recent developments was with The Petersen Group, which entered a 99-year lease to develop twenty-two townhome-style condominiums on railroad land in Ship Creek, on the edge of Downtown Anchorage. Called Downtown Edge, the development is part of a larger mixed-use project in the Ship Creek Redevelopment zone that will include retail and restaurant space, parks, and trails connecting to the Tony Knowles Coastal Trail.

The railroad’s real estate also “provides an unknown communications amenity to the State of Alaska that people don’t think about,” Kubitz says, by granting utility companies permits to lay fiber optic cables, pipes, and other conduits along the corridor’s 200-foot right-of-way.

There are no restrictions placed on the railroad’s land development, but O’Leary says decisions are guided by its overarching goal of supporting and growing economic development opportunities for the state.

“It’s not something we do from a ‘build it and they will come’ approach,” O’Leary says. “We want to be there for our customers, and we want to be there for the state of Alaska. Almost everything we do falls into that category.”