Foreign Cruise Line Capitalizes Upon Fall Of American Classic Voyages Co.

Foreign Cruise Line Capitalizes Upon Fall Of American Classic Voyages Co.

      A major U.S.-based foreign-flag cruise line is cashing in on a consequence of the recent terrorist attacks on the U.S. by providing weekly inter-island service in Hawaii.
      The service by Norwegian Cruise Line began Dec. 16, when the German-built Norwegian Star--the line's newest and largest ship--departed Honolulu for a seven-day cruise that included a 95-hour detour to Fanning Island in the Republic of Kiribati, 1,000 miles south of Hawaii.
      The foreign port call is required under the embattled 1886 Passenger Vessel Services Act, which holds purely domestic cruise, ferry, excursion and casino markets for vessels owned, built, flagged and manned in the U.S. For passengers, having Fanning Island on the itinerary means two additional days at sea and only three days in Hawaii.
      NCL's inter-island Hawaiian service was launched in response to the collapse of American Classic Voyages Co., the largest provider of overnight U.S.-flag cruise services.
      American Classic Voyages filed for debt reorganization in U.S. bankruptcy court in Delaware Oct. 19, citing canceled bookings and drastically declining sales in the wake of the Sept. 11 terrorist attacks on New York City and Washington. The company also ceased operation by all but one of seven U.S.-flag deep-sea and river cruise vessels operated under American Maritime Officers contract by four American Classic Voyages subsidiaries--American Hawaiian Cruises, United States Lines, Delta Queen Steamboat Co., and Delta Queen Coastal Cruises.
      American Hawaiian Cruises operated the legendary liner Independence, and United States Lines operated the newer Patriot until American Classic's voluntary bankruptcy petition. Both ships operated exclusively in Hawaii.
      Hawaii was also the intended market for two large ocean-going cruise ships ordered by American Classic Voyages for United States Lines from Northrup Grumman's Ingalls Shipbuilding yard in Pascagoula, Miss. The ships were to be delivered in 2004 and 2005, but the project was canceled by the yard Nov. 1, with the first vessel more than 40 percent complete.
      "Norwegian Cruise Line is exploiting a national tragedy and its staggering economic aftershocks," said AMO National President Michael R. McKay. "This drives aground all reasonable hope that new private sector investors will emerge to complete the newbuilding for Hawaiian service under the U.S. flag."
      McKay noted that, unlike a U.S.-flag cruise fleet operating in full compliance with the PVSA, Norwegian Cruise Line "does not employ U.S. citizen officers and crews and does not pay federal corporate income taxes." Moreover, NCL "orders its ships from subsidized or state-owned yards overseas and is not bound by many of the laws and regulations that govern U.S.-flag cruise services," McKay said.
      McKay added: "Norwegian Cruise Line and its passengers could soon tire of the required foreign port call and the limited Hawaiian destinations. NCL could soon insist on repeal of or amendment to the Passenger Vessel Services Act."

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