A proposal to require foreign-flagged cruise ships to dock abroad for at least 48 hours during U.S. voyages has stirred debate over the potential impact to Hawai‘i’s cruise industry. The change would strengthen the Passenger Vessel Services Act, which requires
A proposal to require foreign-flagged cruise ships to dock abroad for at least 48 hours during U.S. voyages has stirred debate over the potential impact to Hawai‘i’s cruise industry.
The change would strengthen the Passenger Vessel Services Act, which requires foreign vessels to make a stop abroad during U.S. routes. Foreign operations that leave from Southern California ports currently meet requirements by docking at Ensenada, Mexico, before heading to Hawai‘i. The stops often last little more than an hour or so, and passengers are not permitted to disembark.
If the U.S. Customs and Border Protection moves forward with its proposed change, those stops will be a minimum of two days. In addition, foreign-flagged cruise ships will have to spend more than 50 percent of voyages in foreign ports, and passengers must be allowed to go ashore at those locations.
The proposal has attracted attention — and opposition — on both the East and West coasts for what many say will be a negative impact on the industry as a whole to protect a minority of U.S.-flagged cruises.
In Hawai‘i, opponents of the change fear that it could strangle international cruise business by increasing costs and cutting into the travel and port time allotted for Hawai‘i voyages.
“There are very few itineraries — if any — that could, under these proposed rules, include a foreign port and complete a cruise of all Hawaiian islands within a period of time that is acceptable to the consumer,” Beth Tokioka, director of Kaua‘i’s Office of Economic Development, says in a letter to Customs.
Gov. Linda Lingle has estimated the direct loss of all international cruise ships to Hawai‘i at $200 million, which includes spending and labor. She joins the governors of California, Alaska and Maine in opposing the measure.
“We believe there should be no minimum port-of-call time at an international destination as part of the cruise itinerary and no mandated percentage of stops that restrict or affect the manner in which ships are scheduling calls to Hawai‘i,” Lingle writes, also in a letter to Customs.
Marsha Wienert, the state’s tourism liaison, said the 50 percent stipulation would make it “almost impossible” for foreign ships to spend six days of a 10-day cruise abroad if the itinerary also includes a Hawai‘i stay. It takes many ships upwards of five days for transpacific travel to the islands from the West Coast.
“Our concern is that those rules would probably result in foreign-flagged cruise ships not calling on Hawai‘i,” Wienert told The Garden Island Thursday.
The state Department of Business, Economic Development & Tourism estimates that the financial impact for such an outcome would reduce total sales by $155 million, reduce labor income of $44 million and cut 1,447 jobs for Hawai‘i.
Supporters, however, say the rule would even the playing field for U.S. cruise ships struggling to compete with foreign companies.
According to Norwegian Cruise Line Vice President of Hawai‘i Operations Alan Yamamoto, foreign-flagged NCL invested $1.3 billion into its U.S.-flagged NCL America fleet “in direct reliance on the protections of the Passenger Vessel Services Act.”
In his letter to Customs, Yamamoto argued that foreign ships should not be granted the same operating privileges as U.S.-based operations, which are subject to higher operational costs due to more stringent U.S. labor and income tax laws.
Yamamoto says foreign ships that market their voyages as Hawai‘i cruises have “unfairly hurt NCLA’s operations” — losses that prompted the company’s decision to withdraw its Pride of Hawai‘i vessel from the islands and deploy it to foreign service.
Currently, NCL America is the only U.S. cruise operation offering trips within Hawai‘i.
U.S. Sens. Daniel Akaka and Daniel Inouye as well as U.S. Reps. Mazie Hirono and Neil Abercrombie have sided with the rule. In their letter to Customs, the Hawai‘i Democrats said the act and proposed change are vital to keeping the domestic cruise industry buoyant.
“We cannot allow foreign cruise lines … to circumvent one of the cornerstones of the U.S. cabotage laws by offering a brief stop in Ensenada, Mexico,” states the letter.
But some opponents say that protecting U.S. companies will create a monopoly in Hawai‘i. And no competition for NCL America means there’s “little incentive for NCL to provide increasingly improved service,” Tokioka said.
U.S. Customs and Border Protection accepted comments on the proposal in November and December. However, the leaders of the state Senate and House as well as the chairs of both of the Hawai‘i Legislature’s tourism committees though some Hawai‘i legislators voiced concern about a lack of information on the possible outcomes.
“We request our objection be recorded … based simply on not having the necessary information to understand the effect on industry the rule change will have,” states their letter.
A decision is expected in less than a year, according to Associated Press reports.
• Blake Jones, business writer/assistant editor, can be reached at 245-3681 (ext. 251) or bjones@kauaipubco.com
