Company proposes Hawai'i cruise line
By Andrew Gomes
Advertiser Staff Writer
A former cruise industry executive is asking the federal government to back a $1.8 billion American cruise ship construction project that would allow his Washington, D.C.-based investment partnership to launch a new Hawai'i cruise line.
Voyager Holdings, a subsidiary of fledgling investment firm D'Arcinoff Group, is proposing to build and operate a 2,000-passenger ship for three-day and four-day Hawai'i cruises in return for an exemption to operate Island cruises with foreign-flagged ships until the new ship is completed.
The proposal, similar to one granted to the now-defunct American Hawaii Cruises, also is dependent on a U.S. Maritime Administration construction loan guarantee for $1.64 billion of the projected construction cost for the Hawai'i vessel and two smaller American-built cruise ships for use on the East Coast.
A federal law aimed at encouraging U.S. shipbuilding prohibits foreign-built, foreign-crewed passenger vessels from operating between U.S. ports unless a stop is made in a foreign port.
Exemptions to the law have been made for Hawai'i in the past, but reliance on the Maritime Administration and Congress still pose significant hurdles for the project.
Voyager Holdings said it has about $220 million in equity financing commitments, and signed a contract with Baltimore Marine Industries shipyard in Maryland to build the three $600 million ships. The company also is proposing to acquire two other vessels from the Maritime Administration for use in Alaska, and has arranged to buy one or more foreign cruise ships for interim use in Hawai'i.
Company president Al Wallack said demand exists for the service. Wallack said he could establish service six to nine months following approvals.
Yet Wallack concedes that whether the project moves forward ultimately will be up to federal officials.
"It is the will of the Congress," Wallack said. "If our friends from Hawai'i, Alaska and Maryland who support construction of American-flagged ships step up to the plate, I think we can move this forward fairly quickly."
Wallack said he has been in contact with representatives of Hawai'i Congressman Neil Abercrombie, and plans to initiate talks with Dan Inouye, Hawai'i's senior lawmaker in the Senate.
Abercrombie representatives in Hawai'i said they were not familiar with Wallack's proposal, and officials at the congressman's Washington office could not be reached yesterday afternoon. Abercrombie, however, in the past has been supportive of similar legislation.
Inouye also has been a proponent of granting legislative exemptions to enhance the state's cruise industry and U.S. shipbuilding.
Wallack said he has been trying to capitalize on various government incentives to support U.S. shipbuilding for about six years when he formed D'Arcinoff, which remains in a nonoperating, development stage.
A co-founder of Celebrity Cruises, past chairman of the Cruise Line International Association and most recently president of Royal Olympic Cruises USA, Wallack said he became interested in the Hawai'i market when American Hawaii shut down last October after its Miami-based parent company filed for Chapter 11 bankruptcy.
"When American Hawaii went out of business, we said, 'This is a place that needs replacement vessels,' " Wallack said.
American Hawaii had been granted a virtual monopoly on exclusive interisland cruising for more than two decades, and in December 2000 began sailing the foreign-built Patriot between Hawai'i ports while awaiting delivery of the first of what would have been two U.S.-built ships.
After the company filed for bankruptcy protection, however, it defaulted on millions of dollars in federal loan guarantees and one of the ships was left half built. Construction on the other never started.
Wallack said he is not interested in buying the half-built $600 million ship ordered for American Hawaii (which construction loan guarantor, the Maritime Administration, is trying to sell) because he said it would be more expensive and time-consuming to purchase and retrofit the vessel, though he said he might consider buying it as a second ship for Hawai'i cruises.
Wallack would not identify the one or more foreign-flagged cruise ships he has arranged to purchase for interim Hawai'i service, but said the planned acquisition could accommodate 3,400 passengers.
He said the proposed service, three-day to four-day cruises packaged with hotel stays, would create a significant boost to Hawai'i tourism, with potential to generate 400,000 room nights a year in Hawai'i.
"People tell us they want to cruise in Hawai'i," he said, "But they also tell us they don't want to spend all their time on the ship."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
