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Cruise Ships

Following World War II, the nature of maritime travel changed significantly as both domestic and transoceanic flights became more common and affordable. Air travel provided new competition for passenger vessels. With dwindling passengers, some vessel operators started to package `cruising' more as a vacation at sea than a mode of travel. By the mid-1970's the last regularly scheduled transoceanic passenger service had ceased.

Companies sought to do something with now-empty ships. Cruises to a few tropical ports slowly became popular. The first passenger ship specifically built for warm-weather cruising was introduced in 1970 by Carnival Cruise Lines. In the early 1970s, the cruise business began to reinvent itself in the Caribbean as a vacation format rather than as primarily a form of transportation. As the market grew, cruise ship companies like the Carnival and Holland America lines began upgrading their fleets from the classic 600- to 800-passenger ship designs of the 1950s, to huge 1,500- to 2,000-passenger ships dedicated to recreation rather than transportation. From there, the industry grew rapidly and has boomed since the mid-1980s when the first megaships were introduced. These new ships were designed to be floating resorts with swimming pools, gyms, restaurants, and in most cases, full-service casinos. A typical cruise lasts a week or more and includes one- or two-day stops at various non-U.S. Caribbean and Gulf ports.

In an effort to improve efficiency in a competitive market, ship owners are commissioning increasingly larger vessels - up to 3,100 passengers. These mega-ships can be built for an average cost of $160,000 per passenger compared with an average cost of $245,000 per passenger for ships designed to carry fewer than 1,500 people. Of course improved profitability from the new larger ships depends on running these ships as close as possible to their 3,000-plus passenger capacity.

Whether it's The Love Boat or Titanic, Americans have a love affair with cruise ships. For millions of Americans, the prospect of a few days on a cruise ship conjures up a wealth of favorable images: A cruise ship sailing under a clear blue sky; high-energy music playing in the background; tourists frolicking in the sun; happy families exploring exotic ports of call; couples dancing in formal wear in front of an orchestra; a red-carpeted casino buzzing with activity; a Broadway-style musical performed before an eager audience; tables draped in fine linen with sumptuous dinners awaiting; and a contented traveler reclining on a sun deck, umbrella-festooned beverage in hand. Images such as these appear in countless advertisements, on television and in print, all of them encouraging the viewer to escape to what the cruise line industry likes to call "everyone's dream vacation."

The cruise ship industry is largely a North American phenomenon, and more than 80 percent of the approximately seven million passengers traveling are North Americans. The cruise ship market has expanded slightly in the Mediterranean and very slightly in the Far East. In Europe there are a large number of smaller passenger vessel services operating in the domestic or car ferry markets, but these vessels tend to provide transportation rather than entertainment and tourism.

Given their lucrative ties to the United States market, it is hardly surprising that the major cruise lines all maintain their principal offices in the United States. For example, Norwegian Cruise Line Ltd. has its corporate headquarters in Miami and employs approximately 1200 personnel throughout the United States. Carnival Corporation, the largest cruise line company in the world, has several offices in the US, as well as personnel and properties scattered throughout the country. Carnival owns twelve cruise brands, including Carnival Cruise Lines, Holland America Line, Princess Cruises, and Windstar Cruises, all of which operate in North America. Royal Caribbean has its principal executive office in Miami.

The cruise line industry will exhibit strong growth throughout the next two decades. The average annual growth of the industry has been almost eight percent since 1980, and with the world fleet of 230 cruise ships operating at 90 percent capacity, there are no signs of this growth slowing. North America is the largest market, and surveys indicate that 56 percent of Americans want to take cruises, while only 11 percent have done so. The number of cruise line passengers worldwide is projected to triple to 15 million by 2020, according to one industry expert.

The cruise line industry will respond to this increasing demand with new ships and new markets. The number of cruise ships will likely double before 2020; the industry already is building or has plans to build 44 ships. Many of these new ships will be larger as well, with behemoths such as the 142,000-ton VOYAGER OF THE SEAS coming on line. The president of Carnival Cruise Lines believes the overriding trend in the worldwide cruise industry will be the significant increase in global capacity as older ships are retired from the North American arena. New cruise markets will emerge as these older vessels reposition to other areas. The Caribbean will remain the top destination of cruise ships, with approximately 60 percent of such traffic, but more routes will open to remote areas such as South Pacific islands, the Amazon, and Antarctica.

The particular factors involving U.S. policy could have a profound impact on the cruise industry in the next 20 years. First, Cuba will become a very popular destination if the U.S. embargo is lifted. A 1992 study found that half a million cruise passengers would likely visit Cuba in the first two years after the lifting of the embargo, followed by 1.2 million in the subsequent few years. Second, if the Passenger Service Act-which requires U.S. crew members on cruise ships transiting from one U.S. port to another U.S. port-is amended, there could be more cruises to destinations like Hawaii since cruise lines will be able to increase profits by hiring foreign laborers at lower wages.

The provisions of the law known as the Passenger Vessel Services Act (PVSA) (section 8 of the Act of June 19, 1886) and section 12106 of title 46, United States Code, provide that only those vessels built in the United States and continuously owned by U.S. citizens and documented in the U.S. may transport passengers in the coastwise trade of the United States i.e., between U.S. ports. The law was enacted at a time when maritime transportation was a significant mode of both domestic and international transportation. The law was intended to prevent U.S.-based companies from facing strong competition in the domestic market from maritime nations such as Great Britain. The law did not address `vacation cruising' as no market for this existed at that time.

The Passenger Vessel Services Act has not been interpreted to restrict domestic port calls as long as the domestic port call is part of a trip that includes foreign destinations and the U.S. port calls are intermediary stops. This means that foreign-flagged vessels are currently entitled to make as many U.S. port calls as they choose, provided that these calls are part of an international route and that passengers who embark at a U.S. port do not permanently disembark at a different U.S. port. Additionally, the U.S. Customs Service has interpreted the Passenger Vessel Services Act to allow a foreign vessel to make as many intermediary U.S. port calls as it chooses, and disembark passengers at a different U.S. port, as long as the vessel makes a port call at a distant foreign port such as Aruba.

Under the U.S. Passenger Services Act (PSA) of 1886 and the Jones Act, only U.S.-built and -operated ships may embark and debark passengers between U.S. ports. Foreign passenger ships can stop at any number of U.S. ports but passengers must re-board the ship before it leaves port. This has required some rather creative logistics to enable foreign ships to cruise Hawaii economically.

Throughout the 1970s and 1980s, Hawaii received periodic cruise ship visits from overseas. While a strong tour boat industry had developed for day or evening excursions, the availability of overnight cruising was virtually non-existent. However, in 1985 American Hawaii Cruises (AHC) began operating two 800-passenger cruise ships in Hawaiian waters, the S.S. Constitution and the S.S. Independence. In 1997, AHC took the Constitution out of service due to the high cost of refurbishing the ship. In 1988 a competing ship, the S.S. Monterey, entered the interisland market. But financial problems forced the withdrawal from service of the Monterey only a year later. Since then, AHC has commissioned construction of two new U.S.-built cruise ships of 2,000 passengers each.

Norwegian Cruise Line America's Pride of America, christened in New York Harbor on June 17, 2005, is the largest cruise ship ever built to sail under the American flag. And it is the first brand-new U.S. flagged ocean-going passenger ship in nearly 50 years. The 3-ship Hawaiian fleet of Norwegian Cruise Line America sail under the U.S. flag.

An architectural marvel at sea, Oasis of the Seas will span 16 decks with a length of 360 meters [1,181 feet] overall, encompass 220,000 gross registered tons (GRT), carry 5,400 guests at double occupancy, and feature 2,700 staterooms. Starting in 2009, she will be the first ship to tout the cruise line's new neighborhood concept of seven distinct themed areas, which include Central Park, Boardwalk, the Royal Promenade, the Pool and Sports Zone, Vitality at Sea Spa and Fitness Center, Entertainment Place and Youth Zone.

On December 2, 2008 Royal Caribbean International, a cruise brand owned and operated by Royal Caribbean Cruises Ltd., and STX Europe laid the keel of Allure of the Seas, the second of the highly-anticipated Oasis-class cruise ships slated to redefine the industry. Today's keel laying ceremony at STX Europe's shipyard in Turku, Finland, marks the placement of the very first block of Allure of the Seas in the dry dock where the ship will begin to take shape. When she launches in 2010, Allure of the Seas will share the title of the world's largest and most revolutionary cruise ship with sister-ship Oasis of the Seas. An architectural marvel at sea, Allure of the Seas will span 16 decks, encompass 220,000 gross registered tons (GRT), carry 5,400 guests at double occupancy, and feature 2,700 staterooms. Allure of the Seas, and Oasis of the Seas, will be homeported at Port Everglades in Fort Lauderdale, Florida. Allure of the Seas will tout the cruise line's new neighborhood concept of seven distinct themed areas, which will offer guests of every age the widest array of onboard vacation experiences that cater to their personal styles, preferences or moods. Guests will enjoy lush and tropical grounds open to the sky in Central Park, located in the center of the ship and spanning more than the length of a football field. Central Park will be lined with boutiques and specialty restaurants, ranging from casual to fine dining, and introduce balcony staterooms rising five decks above the storefronts and overlooking the park - one of a few new categories of onboard accommodations made possible by the ship's revolutionary design.



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