Repealing law would attract ships


POSTED: Friday, July 31, 2009

American cruise lines made fewer trips last year for the first time in a decade, and Hawaii is left with only one interisland cruise ship. The slide follows a period of wrong-headed attempts in Hawaii to increase protection against foreign-flagged vessels. When the economy recovers, more appropriate changes are needed to attract cruise lines to the islands, beginning with repeal of the existing protectionist law.

The Cruise Lines International Association reports that fewer cruises ships set sail from U.S. ports last year than in 2007. Norwegian Cruise Line America introduced three U.S.-flagged vessels to Hawaii from 2004 to 2006 for week-long interisland trips but withdrew two of them last year, leaving only Pride of America to keep sailing through next year.

NCL initially included Fanning Island in the itinerary of its first two foreign-built ships but Sen. Daniel Inouye succeeded in obtaining legislation allowing those two and a third existing foreign-built ship to sail interisland under U.S. flags, subject to American labor and other laws. That allowed them to eliminate the Fanning Island stops, abiding by an 1886 law that requires foreign-flagged ships to stop at a foreign port between U.S. ports, and created a monopoly.

The company claimed early last year that it experienced difficulty competing with “;low-cost, foreign-flagged ships based on the West Coast operating domestic Hawaiian itineraries that the Customs Service had indicated are legally the preserve of U.S. flag ships.”; The ships from the West Coast adhered to the law by stopping briefly at Ensenada, Mexico.

Backed by Hawaii's congressional delegation, NCL asked for a change in federal rules to require that cruise ships operating from the mainland to Hawaii stop for at least 48 hours at a foreign port along the way between Hawaii and the West Coast. Gov. Linda Lingle and California Gov. Arnold Schwarzenegger objected, asserting in a joint letter that it would “;result in unintended, disastrous consequences and cause wide-ranging economic damage”; in the two states.

A study completed in January led by University of Hawaii economics professor James Mak maintained that such a change in the law “;would not be in the nation's best interest as it would harm consumers, the cruise industry and U.S. port economies.”; Rather than making the 1886 “;more protectionist, the law should be repealed,”; Mak asserted.

Mak also rejected NCL's claim that the 15-day round trips from the West Coast and its own seven-day Hawaii interisland cruises “;compete for the same market.”; He pointed out that when NCL reduced its cruise capacity last year, the West Coast-based cruise lines did not expand their Hawaii offerings “;to fill at least some of the void.”;