On most routes, the Alaska ferries cannot begin to compete with airlines on price, convenience, or travel time. The transatlantic passenger liners ceased to exist for the same reason: they were much more expensive and required several days of travel time instead of several hours.
Most of Alaska has little or no ferry service anyway. Passengers travel by air (in some cases on cheap FAA subsidized tickets). The privately owned tug and barge operators (and air freight) provides the freight service. As much as I like the Alaska ferries, most of them are simply not necessary.
The IBU just made the ferry system decision for the Legislature. Most of the ferry routes were just permanently ELIMINATED by the IBU.