Cruise company purchases 2 ships
By Kelly Yamanouchi
Advertiser Staff Writer
Norwegian Cruise Line said yesterday it has purchased two cruise ships, including the SS Independence, which sailed in Hawai'i until its operator, American Classic Voyages, shut down in 2001.
Norwegian Chief Executive Colin Veitch said the company plans to use both ships for U.S. flag cruises among domestic ports on the Mainland and not in Hawai'i.
The cruise line purchased the Independence at a federal auction from the U.S. Maritime Administration, "saving her from almost certain scrapping," according to Norwegian. The company paid $4,005,000 for the ship.
Norwegian also purchased the SS United States, which was once the largest and fastest ocean liner built in the country. The ship was bought from the estate of its late owner for use in Mainland operations. Norwegian would not disclose the amount it paid.
According to a federal audit, American Classic Voyages cost taxpayers $330 million after it went bankrupt in October 2001. The cruise line received about $1.3 billion of federal loan guarantees that included backing for the construction of two ships under Project America, a program supported by Sen. Daniel Inouye, D-Hawai'i.
Intended to spur the construction of the first U.S.-built cruise ship in more than 40 years, Project America's failure and its cost to taxpayers has drawn intense criticism from Sen. John McCain, R-Ariz., among others.
Norwegian currently operates Hawai'i cruises that stop at Fanning Island to fulfill a federal requirement that foreign-built ships stop in a foreign port. But under recent legislation endorsed by Inouye, Norwegian plans to put U.S. flags on three foreign-built ships to sail interisland cruises in Hawai'i without having to make the foreign port visits.
Norwegian has already bought parts of the two Project America ships and is completing one of them in a German shipyard. It plans to finish construction of the other in a foreign shipyard and is permitted through the legislation to put a U.S. flag on one existing foreign-built ship for cruises in Hawai'i.
Neither the United States nor the Independence will be used in the Islands. "It's not our ambition that we wish to have more than three ships in Hawai'i," Veitch said. "It's a fairly ambitious growth plan already to have three ships coming in."
Robert Hudson Westover, foundation chairman and chief executive who lives in Hawai'i, said although Norwegian announced the ship will only sail Mainland routes, he hopes the ship will come to Hawai'i.
"She'd be perfect for traveling the Islands," Westover said. He said he planned to urge Norwegian to bring the ship to the state.
Norwegian intends to refurbish the vessel at U.S. shipyards and outfit it overseas, as permitted by law. Veitch said it is unclear how much Norwegian will invest in the United States and Independence or how large the two ships will be when completed.
Norwegian has said it plans to hire mostly Hawai'i residents for the 3,000 shipboard jobs aboard its three U.S.-flag cruise ships that will sail in the state. That may mean Hawai'i residents would also be among the labor pool for the two U.S. flag ships that will sail to Mainland ports, Veitch said.
While Inouye's legislation was intended to salvage Project America, the intent was not necessarily to allow two other U.S.-flag cruise ships, including the Independence, to operate on the Mainland.
"The purchase by auction and purchase outright of these two ships, that was not part of the original plan when the legislation was being crafted for Project America," said Mike Yuen, Inouye's press secretary.
"So in terms of Norwegian Cruise Line going ahead and doing this, this is something that they did on their own," he said.
Lawmakers from Florida and Alaska agreed to support Inouye's legislation as long as the three Norwegian ships did not operate in the Caribbean and the Gulf of Mexico or in Alaska markets.
If Norwegian operates cruise ships solely within domestic ports in those markets, it would have an advantage over other cruise lines that operate foreign-built ships and must stop in foreign ports.
Sailing dates for the United States and Independence will depend on the success of Norwegian's Hawai'i cruises, Veitch said. He said the two ships would begin operations after the introduction of the first two U.S.-flag ships in Hawai'i, likely after 2004.
