Cruise Ship Blues: The Underside of the Cruise Ship Industry (9 page)

A year earlier Panama had introduced an innovative scheme to attract cruise ship business. It offered a bounty for each cruise passenger landed at a Panamanian port. The per-person payment ranged from $2.50 to $12.00, the amount increasing with the number of landed passengers. The bounty had the desired effect of attracting cruise ships to Panama’s ports. For some ships, traditional seven-day itineraries weren’t long enough to travel the necessary distance; Carnival Cruise Line introduced an eight-day itinerary in order to take advantage of the bounty offer.

The beauty of Panama’s scheme, from the cruise line’s perspective, is that the amount of port charges assessed to passengers is not reduced. And, at the same time, the cruise line receives a direct payment from the port of call. The scenario is something like this: each passenger pays the cruise line $10 to cover port charges (which in turn covers expenses) and the cruise line is then paid the $12 bounty for bringing in the passenger (pure profit). Not a bad arrangement for the company.

No other ports have yet followed Panama’s example, but the scheme just began in 2001. It is initially scheduled to run for five years. Whether Panama’s success encourages other ports to initiate similar incentives remains to be seen.

Port Facilities as a Profit Source

Another mechanism for generating income is a trend toward cruise lines trying to take a portion of income generated at a particular port by building new or improving existing port facilities, and at the same time being given economic incentives for the construction or improvements. The first arrangement of this sort was announced in August 2001 following two years of negotiation between the Florida-Caribbean Cruise Association and the US Virgin Islands. The negotiations followed a March 1999 announcement by Virgin Islands officials that they planned to immediately hike the head tax by 33 percent to $9.50 per passenger. In response to opposition from St. Thomas merchants and from cruise lines, the hike was canceled and alternatives explored.

The agreement reached in August 2001 provided for increases in the number of cruise line passengers brought to the US Virgin Islands during the off-season between May and September — over five years, a 15-percent annual increase on St. Croix and a

10-percent annual increase on St. Thomas. It also provided for Carnival Corporation and Royal Caribbean Cruise Ltd to jointly develop port facilities at St. Thomas’s Crown Bay.
³¹

under the agreement, the two companies agreed to invest $31 million to enlarge the two-berth pier so it could accommodate each cruise line’s newest mega-ships. They also agreed to improve 7.5 acres of adjacent land into an area offering taxis and tour dispatch, and to include 90,000 square feet of retail, restaurant, and amphitheater space. Five thousand square feet would be reserved for local vendors and would include a theme attraction based on the islands’ sugar cane heritage, a rum distillery, and a terminal to accommodate homeporting of smaller ships.
³²

In return for their investment, Carnival and Royal Caribbean would enjoy priority berthing for a 30-year period and retain 75 percent of the head tax charged passengers.
³³
In addition, the terms of the lease of the land provided for the cruise lines to receive a percentage of revenue from retail operations. Passengers, through port charges, would provide the investment needed for the project; the cruise lines would enjoy the profits.

Six months after the project was announced, the governor of the uS Virgin Islands canceled the letter of intent, saying he believed that “it is important that the V.I. maintain full control of its harbor and harbor development.”
³⁴
The governor’s announcement followed considerable public discussion about the positive value of local investment and local control over Crown Bay. There were also indications that the deal would not be approved by the Virgin Island’s Senate. Less than two month’s after the letter of intent was canceled, Carnival Cruise Line stopped all port calls at St. Croix. Carnival’s stated reason for the decision had to do with the value of the island to passengers and with concerns for passenger safety, given a number of recent muggings on the island.

Also in August 2001 Carnival Corporation announced that it would invest $8.5 million to upgrade Pier Four at San Juan, Puerto Rico. This would make it practical for the huge 3,400-pas-senger, 102,000-ton Destiny-class vessels to be homeported at San Juan. In return for the investment, Carnival Corporation enjoys preferential berthing at the pier for a period of 20 years. It will recoup its investment by retaining a portion of the port charges paid by passengers.

In November 2001 Carnival Corporation announced an agreement with the Port of Cancun, Mexico, to invest more than $40 million in a homeport/transit port facility at Xcaret. The project, built on 21 acres of land, is a joint venture with Parque Xcaret, a local Mexican company. What benefits or incentives were provided to Carnival Corporation is unclear, but it was indicated that the facility is a private port under a government concession and not obligated to accommodate other cruise lines. For Carnival, perhaps the greatest value of the new port is that it makes practical a range of new itineraries, including mini-cruise alternatives to the traditional Bahamas-Key West routes from ports in Florida.
³⁵

THE NON-ALL-INCLUSIVE VACATION

As you see, a cruise is anything but all-inclusive. How much more your vacation costs varies widely from person to person, but it is difficult to get by with no additional expenses. Some cruise lines have begun automatically charging passenger shipboard accounts for gratuities (in amounts set by the cruise line); this practice is discussed further in Chapter 5. While the initial price of a cruise may be reasonable, the extras can quickly add up.

BEYOND THE MUSTER DRILL

I
have
taken
30
cruises
since 1992. I have been in Belize City with temperatures well over 100 degrees and returned to a ship with no air conditioning. I have spent two days on a ship “dead in the water” at the mouth of the Rio de Plata during a spring storm that closed the harbor at Buenos Aires, before finally being given permission to dock at Montevideo because of a “humanitarian emergency” — the ship had no running water for almost two days. I have been on a ship that encountered 50-foot seas and gale-force-nine winds, forcing it to abandon efforts to reach the Beagle Channel at the southern tip of South America. And I have twice been adrift on ships that had no propulsion and limited electrical power. Each of these experiences was an adventure. I have, fortunately, been spared anything more serious.

Most people go on a cruise expecting to be pampered and to have a carefree, trouble-free vacation. Advertising and pre-cruise information provided by the cruise line support these expectations. Passengers may be warned about risks when going ashore, but nothing is said about the risks aboard the ship. And there are risks — although, granted, relatively small — that passengers should know about.

A common problem over the past couple of years has been canceled cruises due to late delivery of new ships: for example, Holland America Line’s
Rotterdam, Volendam,
and
Zaandam
; Radisson Seven Seas Cruises’
Paul Gauguin
; Disney Cruise Line’s
Disney Magic
; Princess Cruises’
Grand Princess
and
Sea Princess
; Carnival Cruise Lines’
Triumph
; Celebrity Cruises’
Millennium
; and Royal Olympic Cruises’
Olympic Explorer.
In fact, late deliveries became so customary that people were booking maiden voyages with hopes that the cruise would be canceled and they would receive a free cruise as compensation for the inconvenience!

By 2001, however, cruise lines learned and allowed additional time to cover any event of late delivery, thereby avoiding the need to cancel cruises. In the case of Holland America Line’s
Zuiderdam,
the company went so far as to announce an entire year in advance that the ship’s delivery in late 2002 would be delayed by 45 days.

Ships pulled from service because of mechanical problems present a similar inconvenience. This often occurs with newer ships that use recent technology and have defects in materials or machinery. There have been a number of problems with azimuthing podded propulsion systems. Carnival Cruise Line’s
Paradise
and
Elation
both underwent unscheduled maintenance in 2000 because of problems with their Azipod propulsion systems. Celebrity Cruises’
Millennium
and
Infinity
similarly had multiple cruises canceled — the Millennium in 2000 and again in 2001, the
Infinity
in 2001 — because of problems with their Mermaid propulsion systems. In May 2002 Celebrity Cruises’
Constellation
had its first sailing canceled after problems with one of its podded propulsion units were discovered during sea trials.

SHIP SAFETY

More serious than cancellations and delays are mishaps at sea. Although uncommon, mishaps are still frequent enough that passengers should be aware of the chance that things can and at times will go wrong. Unsurprisingly, the cruise industry prefers that passengers not have this knowledge. They see their product as competing with land-based resorts (hotels and the like), which, unlike cruise ships, don’t run aground, don’t collide with anything, and much less frequently have disabling fires.

Fender Benders, Failures, and Fires, Oh My!

Like other modes of transportation, traveling by sea has risks. There have been numerous incidents involving mechanical failure, fires,
²
ships running aground,
³
and collisions, as well as the odd occasion of sinking ships that are abandoned at sea. In most cases, the mishaps are relatively minor and attributed to human error.

Between January 2000 and December 2001, more than 70 cruise ship mishaps were reported in the media, including engine failures with the ship adrift for as long as 27 hours (often without functioning plumbing or air conditioning), disabling fires resulting in loss of electricity and propulsion, and several ships running aground (see Appendix 1). The
Costa Tropicale
actually ran aground twice within two weeks: the first time, in

Venice, it was freed by tugboats; the second time it required the assistance of its sister ship, the
Costa Atlantica,
after several unsuccessful rescue efforts by tugboats.

Who’s Watching Where We’re Going?

Cruise ship mishaps can be more serious than engine failures and being left adrift. You may recall the early morning collision in the English Channel in 1999 when Norwegian Cruise Line’s
Norwegian Dream
collided with the freighter
Ever Decent.
Pictures appeared in most newspapers showing cargo containers on the front deck of the
Norwegian Dream's
mauled bow. Miraculously, there were no serious injuries, particularly given the dangerous cargo, including toxic chemicals, carried by the
Ever Decent
.

Other major collisions involving cruise ships include:

the 1989 collision of Carnival Cruise Line’s
Celebration
with a Cuban cement freighter, resulting in three deaths on the freighter
⁴

a 1991 collision involving the
Island Princess
and the
Regent Sea
, causing major damage to both ships, while they were in port at Skagway, Alaska

•    the 1992 collision between the
Europa
and a freighter 180 miles off the Hong Kong coast