NCL America's decision to pull a second ship from Hawai'i adds to what has been a stunning decline for the state's cruise industry this year, with potential lost economic activity from the two ships totaling more than $964 million annually.

"It isn't good news," said Leroy Laney, a professor of economics and finance at Hawai'i Pacific University. "One is bad, two is twice as bad."

Thousands of jobs on land that support the cruise ships and their passengers will likely disappear.

The cruise business had been one of the bright spots in tourism. Though it served fewer than 5 percent of Hawai'i's tourists last year, the cruise business had been bringing more visitors here even as the overall number of tourists declined last year.

NCL America yesterday said its Pride of Aloha vessel will end its Hawai'i cruises in May, leaving the Pride of America as the only one of its vessels to regularly operate cruises here.

The company had started the year with three cruise ships doing interisland tours, but earlier this month the Miami-based company's Pride of Hawai'i was withdrawn from Hawaiian waters and reassigned to European cruises, in keeping with long-announced plans.

The impact of the ships' departure was expected to reverberate far beyond the 1,000 people who worked on each of the NCL ships, and comes in a year when the state's economic growth was already forecast to slow.

"This can't be good from the standpoint of the overall tourism market that isn't doing that well," Laney said.

Moreover, the cruise business may suffer another broadside this year if a proposed federal rule change on port calls by foreign cruise ships goes into effect.

State Economist Pearl Imada Iboshi estimated the direct economic impact of the Pride of Aloha leaving at a loss of 95,860 visitors if they decided not to visit Hawai'i at all.

That equates to losing direct visitor expenditures that total $287.4 million.

When the complete impact on the economy is estimated by using an economic multiplier, the total lost in sales is equivalent to $422.5 million, Iboshi said in an e-mail. The number of jobs lost would total 3,943.

When bundled with the losses estimated from redeployment of the ship Pride of Hawai'i, the combined economic loss may reach as high as $964 million.

EFFECT ON OTHER ISLES

The impact will be felt more on the Neighbor Islands. NCL America has used Honolulu as a place to pick up and drop off passengers arriving by aircraft, while calling on Hilo and Kona on the Big Island and spending a night in port at Kahului Harbor on Maui and Nawiliwili on Kaua'i.

Visitors aboard cruises have become a significant part of Neighbor Island tourism.

Hilo Harbormaster Ian Birnie said he tallied 241 visits there by cruise ships last year as the number of cruise ship passengers grew to more than 500,000 for the first time. In 1999, Hilo first hit the 100,000 passenger mark.

"That's for little old Hilo alone," said Birnie, who estimated the number of cruise ship visits to Hilo will drop to 129 this year, while the number of passengers will decline by about half, to 251,625.

"Half a million passengers here in Hilo was nothing to sneeze at."

Birnie calculated cruise ships calling on Hilo and Kona brought in $94.1 million in visitor expenditures and generated 1,223 jobs last year. This year, with the departure of the two NCL America vessels, he is projecting visitor spending will drop to $48.2 million, and the job count to 641.

He said there was talk in recent weeks that NCL America would pull a second ship out of Hawai'i because it had let go several ship captains.

"It's interesting because NCL has actually increased the number of passengers for all three ships," he said. "They had a higher average passenger count last year and the year before with all three ships."

But NCL America has reported losses from its Hawai'i operations and late last year said it would make a decision by the end of 2008 about keeping the Pride of Aloha and the Pride of America here.

INTERPRETATION OF LAW

More recently, NCL America has pushed for a change in the interpretation of a federal law that prevents ships flying under the flags of other countries from carrying passengers between U.S. ports. The change would require the foreign-flagged ships to spend more time at foreign ports in between calls at U.S. destinations.

Birnie said the new interpretation, if put into effect, could result in 53 fewer calls by Princess Cruise Lines and Holland America Line ships from the West Coast this year to Kona and Hilo. Visitor expenditures would drop to $38.7 million.

"It was already down one-third," Birnie said. With the rule interpretation "it will be down further."

On Kaua'i, there were similar worries about the loss of Pride of Aloha calls.

Robbie Kaholokula, County of Kaua'i tourism support specialist, said his island has benefited from what was three overnight calls by NCL America ships, with helicopter tours, ground tours to Waimea Canyon, shopping centers and others benefiting.

He said Hilo Hattie, Wal-Mart and Kmart operate shuttles from the harbor to their stores while the ships are docked and that NCL America operated a lu'au for ship guests while in port.

"The Pride of Aloha would translate into about 2,000 additional visitor bodies to the island of Kaua'i each week," he said. "That's going to be substantial."