Posted on: Monday, February 17, 2003

EDITORIAL
Cruise deal must be in best interests of all

If one accepts, as we do, that the cruise industry holds great promise for Hawai'i, then it is good news that Congress has approved an exemption that would let foreign ships operate between Island ports.

Under existing law, the Passenger Vessel Services Act, foreign ships cannot operate from U.S. port to U.S. port. That's why Norwegian Cruise Lines has been operating a route that includes a stop at Fanning Island.

But the underlying purpose of the act, to protect domestic cruise lines, no longer makes sense since that business has ceased to exist. So why not let foreign lines, which after all dominate the global cruise industry, operate here?

Congress now has specifically exempted three Norwegian Cruise Line vessels from the act. The focus on Norwegian makes sense, since it is already active here.

But why limit it to Norwegian? Yes, there are capacity issues if the interisland cruise industry were opened to all, but as the business grows, tourists may want options or opportunities other than those offered by this one line.

In fact, the International Council of Cruise Lines, an industry-wide group, has already asked that the exemption be broadened to include any cruise line.

Norwegian may have been specified because two of the three ships it plans to operate in Island waters have some of the "genetics" of American vessels. That is, two new cruise liners, now being finished in Germany, were begun as part of an effort by Sens. Dan Inouye and Trent Lott to revitalize the American passenger vessel industry.

They convinced Congress to approve loan guarantees to American Classic Voyages, which used to operate interisland cruises here, so the firm could build two new cruise ships at Ingalls shipyard in Lott's home state of Mississippi. That deal went sour, and some $185 million in loan guarantees were lost when American Classic went bankrupt before the ships could be finished.

Norwegian stepped in and purchased one partially completed ship and parts for a second and moved the projects to Germany to be completed.

When they are finished, those two ships plus a third reflagged foreign ship would be allowed to operate port-to-port in Island waters under the exemption now moving forward.

It's understandable why Congress might want to reward Norwegian for its efforts to salvage this failed shipbuilding effort.

But the question Hawai'i must ask now is not what is best for Norwegian, or the domestic shipbuilding industry, but rather what is best for the long-term health of the Island tourism industry.

Is it a "captive" cruise operation in which all competition is locked out?