CruiseMates newsletter

12.20.2007
Antiquated Cruise Laws
by Paul Motter

In 1886, the United States government enacted a law called the Passenger Vessel Services Act (PVSA) to protect the U.S. maritime industry from foreign competition
by penalizing foreign vessels that transport passengers solely between U.S. ports. The penalty is $300 per passenger transported.

Since the original law was enacted, aspects of it have been modified to help the U.S.-based cruise industry to grow. Yes, I say U.S.-based cruise industry even though Carnival, Royal Caribbean, NCL, Princess, Cunard, Holland America, Celebrity, etc... are all cruise lines that are operate"foreign-flagged vessels. They were built and are registered in foreign countries and have mostly non-U.S. citizens working as crew members.

But the other side of the coin, these cruise lines have home offices in the United States, they are are registered and traded on the New York Stock Exchange, they carry about 90% U.S. citizens as passengers and they contribute some $30 billions to the U.S. economy every year.

This is the U.S. cruise industry. This is what America has spawned. It is too expensive to build ships in the U.S. (companies have tried it, it is not cost effective) and certifying and hiring U.S. people to work on U.S.-flagged cruise vessels is expensive and it has been proven that foreign citizens who work for less do a far better job.

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Is this really so surprising? Where was your car made? What about your child's toys and the clothes you are wearing? Who does your yardwork and housekeeping? Who works most of the service jobs in your local small stores and fast food restaurants? Does the U.S. government really need to be so pre-occupied with foreign competition in the cruise industry when there is virtually no true U.S. cruise industry?

One exception is a subsidiary of Norwegian Cruise Lines called NCL-America. This company, owned by NCL, operates three vessels sailing one-week itineraries solely in Hawaii waters. After five years of operating in Hawaii, NCLA has received several "variances" in the form of specially designed exceptions to the PVSA that have helped it overcome the challenges of operating a U.S.-flagged cruise line. For example, NCLA was allowed to register ships built in foreign countries as U.S.-flagged vessels. It is also allowed to hire a certain percentage of non U.S.-citizens as crewmembers in order to reduce the cost and raise the competency level of the crewmembers serving the passengers onboard.

Even with these special favors, NCLA has so far found it impossible to create a profitable situation in Hawaii, so the company is taking one of its three ships out of service and returning it to the NCL foreign flagged fleet to operate in Europe next year. NCLA will soon be down to two ships operating in Hawaii.

It appears the future prospects are good. Reports are that NCLA passenger satisfaction levels have improved since our government allowed NCLA to hire more foreign crewmembers. It is also believed that by reducing the capacity of NCLA to two ships they will be able to raise cruise fares and make each of those two ships profitiable, which is far better than sailing three ships that are not profitable.

But as is often typical with the U.S. government, they don't seem to know when enough is enough. Worried that other cruise lines have started offering cruises to Hawaii from the mainland (a trip that requires four days at sea), the U.S. Customs and Border Patrol is now considering new legislation to require all cruise ships to stop at a foreign port for 48 hours. It would also require all cruise ship itineraries to restrict at least half of their cruise ports to foreign ports. Here is what the new regulations propose:


  • Have at least one foreign port call of 48-hours
  • Provide time at foreign ports that is more than 50 percent of the total amount of time        at the U.S. ports of call
  • The passengers are permitted to go ashore temporarily at the foreign port

    This would affect Alaska cruises very negatively. Do you really want to spend half of your Alaska cruise in Canada? Of course not, you want to see Alaska. This law would virtually end the Alaska cruise business, which is largely what made Holland America and Princess Cruises the successful cruise lines they are today.

    Personally, I am tired of the government interferring with our cruise business. They are "gerrymandering" legislation in order to benefit a few people, but in so doing are making things far worse for the vast majority of people who work in the cruise industry and the 12 million Americans who take cruises every year.

    If you would like to read about this legislation, and leave a comment before the deadline runs out, please visit www.regulations.gov. Go to "Search Documents" and select "Customs and Border Protection Bureau" from the pull down menu. Choose the document "Hawaiian Coastwise Cruises" and select "Add Comments" on the far right column. Include "Docket Number USCBP-2007-0098" and "Customs and Border Protection" in the text of your comments in order for it to be considered.

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