| Date Published: January 23, 2012 |
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|After Concordia: What's Next for the Cruise Industry?|
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(10:35 a.m. EST) -- It's been more than a week since the worst cruise disaster in decades, when Costa Concordia ran into rocks off the coast of Tuscany, took on water and eventually sank. The tragic story, rife with mystery women, "idiot" captains and utter shock that such an accident could still occur, continues to unfold. But involved parties and curious onlookers are debating what's next for the half-submerged vessel, the victims lost at sea, consumer attitudes on cruise travel and the industry's safety regulations, which are undoubtedly due for an overhaul.
Cruise Ship Safety Changes
Human Toll: What Happens to the Victims of the Disaster?
The death toll stands at 30, with two people still unaccounted for.
Passengers onboard during the accident will be compensated about $14,500 apiece by the cruise line, according to media reports. The amount will cover lost baggage and psychological trauma, said the Associated Press, which added that the line "will also reimburse passengers the full costs of their cruise, travel expenses and any medical expenses sustained after the grounding." The deal does not cover those who lost loved ones in the disaster or who were injured, said the BBC. According to a statement from the line, Costa will also make every effort to return belongings left in in-cabin safes. The line will keep passengers informed about the return of any personal belongings salvaged. Some media outlets have reported that passengers evacuated from the ship have been offered a 30 percent discount on a future cruise, but Costa spokesman Buck Banks tells Cruise Critic that the cruise credit is only for travelers scheduled to board the ship January 14 or after.
For more information on compensation, click here.
An Italian consumer protection agency, Codacons, said Tuesday (January 17) that 70 passengers have already joined a class-action lawsuit against Costa. In a statement, Codacons head Carlo Rienzi said the "objective is to get each passenger at least 10,000 euros (~$12,900) compensation for material damage and also for ... the fear suffered, the holidays ruined and the serious risks endured." Maritime attorney Jack Hickey told Cruise Critic it's likely additional suits will be filed. "Civil lawsuits are based on negligence," said Hickey, "and there's no doubt that the negligence is due to the captain -- and of course [Costa] is responsible for the actions of its employee."
"There was a failure of leadership and perhaps of selecting, training and monitoring the right personality to lead," said Hickey. He added that victims have to file suit in Genoa, Italy, per Costa's contract of carriage.
Update, January 24: More than 100 passengers have joined a class action suit, a joint effort between Codacons and two U.S. law firms, reported the Telegrah. Mitchell Proner, a lawyer with Proner & Proner, one of the U.S. firms involved in the suit, said papers would be filed on January 25. The minimum claim would be £105,000 (about $160,000) but some would be seeking up to £1 million (about $1.55 million), he said.
Consumer Toll: How Is the Cruiser Reacting?
"'Uncertainty' is the word you hear right now in terms of business trends," said Mike Driscoll, editor of Cruise Week, an agent and industry focused publication. "One day, an agent says the disaster is going to turn the industry on its side. You talk to the same [agent] the next day, and then they've completely changed their stance."
But there has been clarity on three points from agents, said Driscoll. "No one is saying their business is being desecrated. There aren't massive cancellations. And what [agents] are fairly confident about is that their repeat customers are conducting business as usual."
"Our booking pattern is pretty well on par with what we expect. My initial thought would have been, yes, things are going to be crazy, but as tragic as it was, people are keeping a pretty real perspective," said Vicky Garcia, executive vice president of sales and marketing for Cruise Planners/American Express.
Cruise Critic's readers, many of them seasoned cruisers, have echoed Driscoll's comments. More than 6,000 responded to a recent poll that asked "Will you continue to cruise in light of the Concordia disaster?" About 65 percent said they are not concerned, as the accident was an anomaly. Less than 4 percent responded that cruising is too risky and that they won't take to the seas again. Thousands of readers have weighed in on the message boards and Facebook page, too, and the vast majority see the accident as tragic -- but isolated.
Cruise virgins may be a different story. "First-timers who have booked a cruise are asking agents questions," said Driscoll. "What about the ship we're on? What's its safety record? What are the current standards, the red flags?"
Fellow agent Amber Blecker of CruiseOne agreed. "During the time this is a top story and the pictures on the news are non-stop, questions fresh and answers unresolved, new bookings will likely be quieter," she told USA Today.
"It's a complicated situation in some ways," said Driscoll. "You're putting the travel agent into the position of safety expert, and some of the regulations are really complicated. Still, an agent who's been in the business for 25 years can put [just how unprecedented this is] in perspective. This whole thing defies logic. Anyone in our business has been told for years that this stuff doesn't happen."
As to changes in prices, Driscoll argued that it's still way too early to tell. "Some agents are saying, 'We don't know if rates are going to drop because we just took a 3,500 person ship off the market.' It sounds incredible to say it, but some are suggesting the pricing in the Mediterranean might actually rise. A lot depends on the European market."
Stewart Chiron, industry expert and founder of CruiseGuy.com, told Claims Journal that the only real way to judge demand is to see if cruise lines slash prices. "In a week or two if we are seeing $299 Caribbean cruises, then we've got a problem," he said.
Safety Toll: What Happens to Industry Regulations?
Post accident, a flotilla of cruise organizations have emerged to defend the industry's safety record. Millions sail on floating cities each year without incident, they say, and the method of transportation is consistently referred to as the world's safest. But that doesn't mean things won't change.
On Thursday, Carnival Corp. announced that it would be reviewing safety and emergency response procedures across all of its 11 cruise lines, including Costa. The cruise giant owns Carnival Cruise Lines, Princess Cruises, Holland America and Cunard Line, among others, which operate more than 100 ships. The audit is being led by Captain James Hunn, the company's senior vice president of maritime policy and compliance. In addition, Carnival Corp.'s Health, Environment, Safety and Security Committee is engaging outside experts in the fields of emergency response organization, training and implementation to conduct an audit of the company's emergency response and safety procedures and to conduct a thorough review of the Costa Concordia accident.
Other parties involved in maritime safety -- including the International Maritime Organization (IMO), the U.N. agency responsible for maritime safety; the U.S. Coast Guard; and individual cruise ship classification societies, which certify that IMO regulations are being met, have also said they would reexamine safety regulations for cruises, pending the outcome of the Concordia investigation.
Nautilus International, the union for maritime professionals, has already taken aim at specifics. "Attention needs to be paid to existing evacuation systems and more innovative systems for abandonment," said union general secretary Mark Dickinson in a statement. Dickinson said the magnitude of modern cruise ships may be the problem. "The sheer size and scale of such ships presents massive challenges for emergency services, evacuation, rescue, and salvage -- and we should not have to wait for a major disaster until these concerns are addressed," he argued.
Indeed, according to Reuters, some analysts suggest that the industry's lifeboat regulations need improvement. "The regulations rely on untrained and frightened passengers being able to deal with life rafts in the absence of trained crew members -- including having to board them from the water," said John Dalby, who now runs maritime security firm Marine Risk Management. After the Titanic disaster, maritime regulations made it mandatory for ships to have a lifeboat or raft seat for every passenger -- split evenly on each side of the vessel -- plus an additional 25 percent capacity. But the same issue persists. What happens when too many lifeboats become inaccessible?
IMO regulations state that life-saving crafts should be deployable even when the ship is listing by 20 degrees -- but some argue that new, innovative means of evacuation must be developed, especially as cruise ships continue to balloon in size.
Costa CEO Pier Luigi Foschi, has offered some ideas of his own. In an interview with Il Corriere Della Sera, a Milanese daily, Foschi said shoreside officials needed more control over captain and ship. "To replicate on land the system of sounds and signals when a ship deviates from its route: We have to know this earlier," he was quoted as saying. "And to work with the government so that captains no longer have absolute power -- a more collegiate form of management on the bridge would be better. The code of shipping places absolute power in the hands of the captain and owners can't intervene to change decisions."
Foschi and others have vigorously defended the crew's capabilities and the line's safety protocols. "Our own judgment is that the crew performed very well," said Foschi during a press conference several days after the disaster. "We were able to evacuate, in two hours time, 4,200 people under very severe circumstances, with the ship listing to a degree that did not enable us to use both sides." Foschi has asked rhetorically how you train for such a contingency. "Our training courses are the best there are," he added in the interview with Il Corriere Della Sera. Most survivors still paint a very different picture of what took place: a mass of confusion and hysteria exacerbated by the fact that, as they saw it, crew didn't know how to handle the situation.
Related: In Their Own Words: Survivors of Concordia Disaster Describe the Scene
Instead, cruise company and CEO have laid blame squarely on Captain Francesco Schettino, saying the master caused the accident by taking Concordia on an unauthorized detour known as a "salute," a practice that brings a ship close to shore for a dramatic sail-by. In the wake of the incident, criminalizing sail-bys is being discussed. According to The Guardian, Italian environment minister Corrado Clini told the parliament in Rome that the government was considering legislation to ban the practice of saluting. There are reports circulating that the maritime practice is more common than thought, but Foschi told Il Corriere Della Sera that while he couldn't "exclude that ships have been sailed closer to land on the initiative of some captains without informing us, [he has] never been aware of this taking place in an unsafe manner."
The IMO regulations have something to say, at least tangentially, about the salutes, said Brad Schoenwald, senior marine inspector for the U.S. Coast Guard's Cruise Ship National Center of Expertise. Paraphrasing from the IMO's Safety of Life at Sea (SOLAS) conventions: "Before getting underway, a voyage plan should be charted to make sure weather conditions are okay, that there's sufficient sea room, that maritime and environmental regulations are followed, and that charts are accurate and up to date."
Investigators have also wondered why it took so long -- 68 minutes from the time of the accident -- for the captain to decide to abandon ship. "The alarm was raised after an extremely serious delay," said Foschi to Il Corriere Della Sera. Again, Foschi pointed to land-based oversight as a means to mitigate such critical delays in the future.
The timing of the muster drill has also been called into question. Per IMO regulations, a muster drill must be conducted within 24 hours of a ship leaving an embarkation port. The accident occurred some three hours after Concordia departed from Civitavecchia, where roughly 700 new passengers boarded the ship. The next drill had been scheduled for Saturday, said Foschi, when the ship was set to pick up more passengers in Savona. Concordia runs on a triple homeport setup, with passengers able to begin their cruise in Civitavecchia, Savona and Barcelona.
Captain William Wright, senior vice president of marine operations for Royal Caribbean, spoke to the muster question at January 19's Passenger Shipping Safety Conference in London. "In the vast, vast majority of cases, the muster drill occurs prior to letting go the lines," he explained. "There have been examples of where the cruise line has elected to do the drill the following day [i.e. Costa or any cruise ship sailing on a ferry-like rotation]. This is undoubtedly a practice that will come under some scrutiny for weeks to come."
Wright's words have already rung true. According to Seatrade, Oceania Cruises and Regent Seven Seas Cruises have pledged that, effective immediately, all their ships will hold passenger muster drills on the day of departure. (All but a handful already did, explained the line.)
While cruise lines have more flexibility in terms of changing internal processes immediately, safety expert Tom Allan explained that IMO changes take time. "There are two processes," Allan said at Thursday's conference. "The Marine Safety Commission will meet in spring, when we presume the Italian maritime authorities will have submitted the results of its enquiry. Then it will be up to the IMO to debate. Any changes made by the IMO could take a few years. In the meantime, the ship operators themselves will look at their own procedures and hopefully implement changes in the interim."
Ultimately, "the industry is continually reviewing regulations, standards, outcomes to always work to improve safety," said Schoenwald, adding that there's one thing that's impossible to completely safeguard against: people. "There are ways that the human element can be mitigated, however the human factor remains that not 'always controllable' element in this," he said.
Toll on the Ship:
What Happens to Concordia and the Environment?
There are two options for Concordia: Salvage the immobilized ship with the intent to return it to service or proceed with a wreck-and-removal job. Given either course, the Italian authorities have insisted Concordia must be moved from its current position.
"Typically, a decision has to be made by the owners of the vessels in discussions with insurers and relevant authorities," said James Herbert, spokesman for the International Salvage Union. According to a Costa statement, all manner of technical experts -- sent from parent company Carnival Corp. and sourced independently -- are advising the line on how and when to secure and move the ship.
As reported by industry publication Seatrade Insider, two companies, SMIT and Titan, are among those bidding on the contract to seal and right the vessel before towing it to safety. Unnamed industry sources told Seatrade that the cost would run well in excess of $100 million. However, that contract will not be awarded until the investigators complete their work.
The question of how to salvage the ship, if possible, is more complicated. "Every contractor will try to remove it in one piece because that's the easiest," Kees van Lessen, operations manager at SMIT, told the Associated Press (via ABC News).
David DeVilbiss, a vice president of Seattle-based Global Diving and Salvage, told The New York Times that, generally, a salvage company would first work with naval architects and create a computer simulation of the flooded liner, "which is going to tell you if the ship is going to break in half when you try to right it."
Then "divers [would] patch the holes with some waterproof material [Concordia's gash is 50 meters long], which will involve underwater welding," Douglas Hamilton, a semiretired surveyor for the Halifax-based Salvage Association, explained to the Toronto Star. "Then they pump out as much water as possible and as fast as possible, working delicately with the macabre knowledge that bodies may still be inside."
"It's very dangerous work. [Salvage workers] have lost their lives," Hamilton added.
To refloat the stricken liner, salvage crews would likely use "pulling barges strongly anchored to the sea bed and cables secured to the ship," former SMIT executive Hans van Rooij told the AP. "You can sometimes use giant air bags underneath the vessel to get it upright, though there wouldn't be any large enough to move this vessel on its own," said Herbert. Costa Concordia is 114,500 gross tons (a measure of volume), some 950 feet long and nearly 120 feet across.
Salvage companies face other hurdles. "If it does become a salvage job, the driving principle is that if the salvor doesn't succeed, it doesn't get paid," said Herbert, referring to the standard legal document known as Lloyd's Open Form. The contract dictates that, if successful, the salvor would be due some percent of the net worth of the vessel and its cargo, as determined by an arbitrator. If the company fails, it gets nothing.
Costa Concordia, which debuted in 2006, was purchased for 450 million euros (~$570 million). Appraisers would have to determine the current worth of the ship and cargo.
But all this speculation on salvage might be a moot point.
"In my opinion, from my experience, vessels in this position are most probably most times a total loss," Van Rooij told the AP. Experts have agreed with Van Rooij -- Concordia is unlikely to ever sail again.
So what could happen if the ship is declared unsalvageable? A wreck removal project would proceed, the course of which would be governed by Italian and European Union rules. The ship would more than likely be "carved up where it lies into chunks small enough to be carried away on barges," Van Rooij told the AP.
"There are certainly precedents where wrecks can be taken to pre-agreed and pre-determined scuttling locations -- after being thoroughly cleaned and decontaminated," said Herbert. "This sinking has actually been encouraged by the U.S. government for environmental reasons. Some former naval ships have been turned into artificial reefs."
Getting paid for a "wreck removal" would also take out the gamble for salvage companies. The Lloyd's Open Form contract would no longer apply. "There would be a fixed price for doing this job or the fee would be based on daily rate, or 'phase' rate," explained Herbert.
Before an official salvage or wreck removal can begin in earnest, all pollutants, including fuel and toxic chemicals, must be extracted from Concordia. Booms have been placed around the debilitated vessel to contain escaping fuel, though no leakages have been discovered. An oil spill could cause an environmental disaster in the waters off Giglio, where the stricken ship lies in approximately 50 feet of water. The wreck abuts a maritime sanctuary for dolphins, porpoises and whales.
SMIT, the Dutch salvage company, is standing by to begin work stabilizing the ship and extracting the roughly 500,000 gallons of fuel oil still held in Concordia's tanks. SMIT operations manager Kees van Essen estimated it would take two to four weeks to extract the fuel, the AP reported. The dangerous extraction process involves "penetrating the ship's 17 heavy fuel tanks and warming the oil, which in the cold becomes thick and viscous," said the AP. "That warming process makes it easier to suck out the oil using valves and pumps," van Essen explained.
--by Dan Askin, News Editor
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