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New article warns of vacuum after MS Pride of America leaves Hawaii

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Photo by Charley Myers

The following is a news release that was issued by the Grassroot Institute of Hawaii on May 11, 2021.
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If the 2,186-passenger cruise liner were redeployed or retired today, there would be no comparable ship to take its place under federal law

HONOLULU, May 11, 2021 >> The stately MS Pride of America cruise liner has long been a fixture in Hawaii. But that could easily change — and spell trouble for Hawaii’s already vulnerable cruise tourism industry — according to a new article from the Grassroot Institute of Hawaii.

The reason, says institute research associate Jonathan Helton, is the 1886 federal law known as the Passenger Vessel Services Act, which already limits Hawaii’s tourism potential by imposing onerous conditions on foreign-flagged cruiser liners that visit Hawaii waters.

In particular, such vessels are required to stop at a foreign port at some point during their itineraries, which in the case of Hawaii typically means Fanning Island, about 1,000 miles to the south.

The Pride of America gets to avoid that detour because it is U.S. flagged and owned and crewed mostly by Americans. Under the PVSA, it is also supposed to be U.S. built. But construction of the ironically named ship was actually completed in Germany, classifying it as foreign built. Thanks to heavy lobbying by U.S. Sen. Dan Inouye and others, it was granted an exemption with the proviso that it be limited to serving only the Hawaii market, unless transferred to an international home port.

These days, the 16-year-old Pride of America is the only large cruise liner in the world that can legally transport passengers between U.S. ports without making a stop at a foreign port. According to Helton, that has been beneficial to Norwegian Cruise Line, owner of the Pride, but not so much for the operators of foreign-flagged and built cruise liners.

The looming question for Hawaii in the short run is, what will happen if the Pride is redeployed to the more vibrant international cruising market? Beyond that, assuming the Pride stays in Hawaii, what will happen when the ship reaches the end of its useful life and is sold or scrapped?

As Helton notes, “Until the COVID-19 lockdowns came along in March 2020, the Pride of America had been cruising in Hawaii waters since 2005, helping fuel prosperity in the Hawaii ports where it stopped and providing reliable employment to more than 900 crew members. Since March 8, 2020, however, the cruise liner has been sitting idly in Honolulu Harbor as NCL loses money by the bucket loads and tries to convince the U.S. Centers for Disease Control and Prevention to lift its restrictions on the U.S. cruise industry.”

However long it takes, Helton says, the Pride of America very likely will sail again, “with its passengers enjoying the luxury of open waters, beautiful night skies, onboard entertainment, all-you-can-eat dining areas and wonderful visits at its various ports of call.” However, he adds, “those might not always be in Hawaii, if NCL decides to homeport the ship somewhere outside of the U.S.”

Norwegian Cruise Line did not respond to repeated requests for comment, but even if the Pride remains in Hawaii for a few more years, asks Helton, what will happen when it’s past its prime?

“The average cruise liner is usually 30- to 45-years-old before being retired from commercial use,” he writes. “Often, cruise lines operating in the North American market sell their vessels after 15 to 20 years to lines in other regions that care less about age. … Meanwhile, more than a dozen large cruise ships have been sold off or scrapped since the beginning of the pandemic. Many of those were built in the early and mid-1990s, making them only slightly older than the Pride.”

Helton speculates that, “Because the PVSA provides a barrier to competition, it is likely the Pride will remain in Hawaii for a few more years at least, profiting from its captive market. Eventually, though, Norwegian Cruise Line will need to consider replacing the ship or cutting the Hawaii itinerary altogether.”

Replacing the ship, however, would not be easy. Despite the fact that one of the goals of the PVSA is to protect U.S. shipbuilders, there has not been a single large cruise ship built in the United States since the 1950s. And even if such ships were still being built in the U.S., Helton writes, “they almost certainly would carry an eye-popping price tag, just as U.S.-built ocean cargo vessels intended to qualify under the Jones Act typically cost at least four to five times more than comparable ships on the international market.”

NCL also would need to go through the arduous process of obtaining another PVSA exemption, if it sought to qualify under the act with another foreign-built vessel.

Ultimately, says Helton, if federal officials want to ensure that the Pride of America is not America’s last large U.S.-flagged cruise liner, they need to reform or repeal the PVSA. The quickest fix would be to allow U.S. cruise companies to buy foreign-built ships, just as U.S. airlines can buy foreign-built aircraft.

But whether it’s reform or repeal, says Helton, the time to start the ball rolling is now.

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