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The Honolulu Advertiser
Posted on: Saturday, January 5, 2008

Cruises to Hawaii might have to sit longer in Mexico

By Mark Niesse
Associated Press

Cruises from California to Hawai'i would have to spend at least two days in Mexico if they want to continue the service, according to a proposed federal rule against foreign-flagged liners.

That could make Hawai'i cruises more costly for foreign-based cruise lines and allow Hawai'i-based, U.S.-flagged ships to compete for more of the island tourism market.

The action would help prevent NCL America's U.S.-flagged ships from permanently leaving the Islands, as its Pride of Hawaii is doing next month.

"It would allow fair competition," said Alan Yamamoto, vice president of Hawai'i operations for NCL America, which hosts cruises among the Hawaiian Islands on the Pride of Hawaii, Pride of Aloha and Pride of America. "This issue is a matter of trying to create a level playing field for everyone."

U.S.-flagged ships are at an inherent competitive disadvantage because they have higher labor costs, comply with environmental laws and pay federal taxes, Yamamoto said.

Cruises departing from Los Angeles and San Diego typically include short nighttime stops in Ensenada, Mexico, in their itineraries to meet federal laws requiring foreign-flagged ships to dock in another country as part of any voyage that takes them to other U.S. ports. These ships fly the flags of such countries as Bermuda, the Bahamas and the Netherlands.

The rule change proposed by U.S. Customs and Border Protection would force foreign ships to make more than just a token stop in Mexico. They would have to stay in a foreign port for at least 48 hours and allow passengers to go ashore.

If the rule takes effect, "the vast majority of U.S.-based cruises will have to be shut down or, alternatively, will have to move their base of operation to a foreign port," wrote Bradley Stein, vice president and general counsel for Royal Caribbean Cruises, in a letter opposing the change.

U.S. Rep. Bob Filner, D-Calif., who opposes the new rule, said it is intended to stop cruise lines from departing from the West Coast to Hawai'i.

"San Diego's cruise industry generates over $300 million a year in economic impact for our city. This proposed rule could change that and could drastically impact our city's tourism and economy. It is wholly unnecessary," Filner said in a statement.

Miami-based NCL's three Hawai'i ships are the only oceangoing U.S.-flagged cruise ships in the country, providing more than 4,000 seagoing jobs, Yamamoto said.

But the company has lost more than $250 million since 2004, and foreign competition contributed to the 2,500-passenger Pride of Hawaii's relocation to Europe, where it will be reflagged into the Bahamas registry and renamed Norwegian Jade, he said.

U.S. Rep. Neil Abercrombie, D-Hawai'i, said the rule is not meant to harm California-based cruises but to ensure that foreign ships don't benefit from paying low wages and dodging U.S. laws.

"I've got no sympathy for somebody that's trying to pull a fast one by avoiding taxes, health laws and environmental laws," Abercrombie said.

U.S. Customs and Border Protection has received hundreds of comments on its proposal, said Glen Vereb of the agency's Border Security Regulations Branch.

The government will consider the requests that foreign port call times be reduced to less than 48 hours before it makes its final recommendation for the rule change, he said. It's expected to become official in less than a year.

Royal Caribbean deferred comment to the Cruise Line International Association, which didn't immediately return calls seeking comment yesterday. Holland America and Princess Cruises also didn't return phone calls.

Foreign-flagged cruise ships that begin journeys in a U.S. port and end in a foreign port will not be affected.