| Date Published: February 12, 2008 |
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|Could a New Federal Rule Impact Your Next Cruise?|
|In an effort to protect NCL America's struggling U.S-flagged product -- the line just yesterday announced that a second ship, Pride of Aloha, will leave Hawaii in May 2008 -- U.S. Customs and Border Protection (CBP) has proposed a new interpretation of the 122-year-old Passenger Vessel Services Act that could impact foreign-flagged ships sailing roundtrip from U.S. ports.|
The PVSA (often mixed up with the Jones Act) currently states that foreign-flagged vessels transporting passengers between U.S. ports must call on at least one international port, and is a particular hot button for cruise lines that sail from the West Coast to Hawaii. Because most cruise ships do fly foreign flags, they must sail out of the way to call at ports such as Fanning Island or Mexico's Ensenada in order to fulfill the requirement, sometimes tacking several extra days onto an itinerary.
Under the new proposal, foreign-flagged ships would need to spend at least 48 hours in a foreign port (for comparison, we checked currently published itineraries for 2008 and found Ensenada calls on Hawaii cruises averaging four or five hours). In addition, the amount of time spent at the foreign port must be more than 50 percent of the total amount of time at the U.S. ports of call. Such regulations would cause many cruise lines to have to restructure or do away with itineraries in U.S.-port heavy regions such as Hawaii, Alaska and Canada/New England.
First and foremost, how did this come about? NCL President & CEO Colin Veitch tells us that the Maritime Administration approached the line to find out exactly what was going wrong in Hawaii after the announcement was made last year that Pride of Hawaii would be redeployed. The Maritime Administration, a branch of the U.S. government, has an entrenched interest in NCL America's development -- after all, the line had to work very closely with the U.S. government to reach an agreement to get American flags on its ships in the first place. "We explained to them the various factors challenging our business," Veitch says, including "steep growth in foreign-flagged competition from the West Coast on a different cost structure" and lack of moderation over what is and isn't legitimate as an international voyage in line with the PVSA.
Indeed, in a 10-page document supporting the CBP, NCL America referenced in particular its issue with ships that stopped in a foreign port like Ensenada en route to Hawaii just long enough to get a proverbial passport stamp -- "as little as an hour, late at night, under circumstances where passengers are not permitted to get off the ship" -- for all intents and purposes, providing cruisers with an all-U.S. itinerary, putting NCL America's ships at a disadvantage because they are subject to U.S. taxes and labor laws.
These brief visits, termed "technical stops," have happened. Cruise Critic member Keith1010 posted on the message boards (in 2006): "We were on a recent cruise RT from Los Angeles to Hawaii. The cruise stopped the night before in Mexico for one hour (passengers could not get off the ship) to ensure that the ship visited a foreign port...." A quick Google search also turned up several listings for past cruises with the call at Ensenada identified -- in black and white -- as a technical stop. This Cunard sailing posted on 7blueseas.com, is one such example. (This itinerary sailed February 25, 2006 roundtrip from Los Angeles.)
"We invested in Hawaii knowing that [PVSA] laws would be enforced," Veitch says.
According to Cruise Lines International Association, which represents 24 lines, cruise lines operating Hawaii itineraries from the West Coast have since lengthened calls in Ensenada in response to an August 2007 letter from the CBP concerning port call duration and compliance with the PSVA.
However, as we mentioned earlier, the issue goes beyond Hawaii. The extremely aggressive proposal from the CBP is worded in such a way that it actually applies to all domestic cruise markets. If the change passes, for example, cruise ships might be forced to skip calls at Key West or Portland, Maine, while ships departing from Seattle on Alaska cruises could be forced to spend more time in British Columbia and less time in Alaska itself -- or simply homeport outside of the United States in, say, Vancouver.
U.S. port officials are against the measure because it would eliminate jobs and decrease tourist revenue at cruise terminals -- and disappoint cruisers who either lose the option to sail from their drive-to port or cannot afford the extra time that would be padded onto voyages under the new stipulations. "The Mayor of San Francisco announced this week that it would bankrupt his city's port facilities," San Francisco-based BruceMuzz posts on the Ask a Cruise Question forum. "He claimed that San Francisco earns a total of $1 million every time a cruise ship calls there."
CLIA submitted to the CBP a seven-page document rebuking the proposal in December. And even NCL America, in its December 2007 comments to CBP in support of the proposal, suggests that the scope of the proposed interpretation should be limited only to vessels operating in the Hawaii market.
"We are supportive on the one hand of clarifying what foreign ships can do and what U.S. ships can do in Hawaiian waters," Veitch says, but on the other hand "we have some concerns about the proposed rule as written. It is problematic if there are changes elsewhere in the country where there's no U.S. flag to protect or promote. We'd be equally adversely affected. We've submitted our comments and said some kind of clarification [to the existing PSVA] would be helpful to our business, but not if comes at a cost or harm to us ... I hope it doesn't go through as written."
Officials are in the process of assessing hundreds of public comments before issuing final rule-making; a timeframe for a decision is not known.
Stay tuned for more information as we receive it.
--by Melissa Baldwin, Managing Editor
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