Another cruise ship to leave

Mainland competition drives Pride of Aloha off the islands

STORY SUMMARY »

The Pride of Aloha is bidding aloha to Hawaii, NCL Corp. announced yesterday, just a week after the departure to Europe of its sister cruise ship, Pride of Hawaii.

NCL blamed competition from foreign-flagged ships for driving down prices, making even a two-ship operation unprofitable here.

The Pride of Aloha leaves Hawaii May 11 to be re-flagged and deployed to Asia. NCL will cut staff at its Honolulu headquarters by 50.

State officials say the loss of both ships will reduce visitor spending by $656 million a year.

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In the latest setback for Hawaii's cruise ship industry, NCL Corp. said yesterday it is withdrawing the Pride of Aloha, its U.S.-flagged interisland cruise vessel, effective May 11.

Passenger capacities Pride of America: 2,138 Pride of Aloha: 2,002 Pride of Hawaii: 2,466 Source: NCL

The Pride of Aloha will be transferred to Star Cruises -- NCL's Hong Kong-based 50 percent owner -- to be re-flagged and deployed to Asia this summer.

In the wake of the Pride of Hawaii's recent departure for Europe, the move announced yesterday leaves NCL with only the Pride of America, which made its interisland debut in 2005.

Colin Veitch, NCL's president, blamed competition from West Coast-based foreign-flag ships for increasing capacity while driving down the overall price level in the market. Ticket prices were cut by half, he said.

"That kind of movement in ticket pricing simply cannot be sustained," Veitch told the Star-Bulletin.

Aside from pulling the Pride of Aloha, NCL is also reducing staff at the NCL America headquarters office in Honolulu by about 50 employees, who will be offered severance packages and retraining opportunities.

Pride of Aloha's crew will be given opportunities elsewhere with NCL, said Veitch, with reductions of its international crew, if necessary, to make room for the U.S. crew.

Marsha Weinert, state tourism liaison, said the loss in annual visitor spending due to Pride of Aloha's departure is estimated at $287 million, on top of about $369 million anticipated from the loss of the Pride of Hawaii.

"It's a smaller ship, so the impact is not as great," said Weinert. "However, it is just as great to those activities, attractions and retailers that depend on the cruise industry in our state."

Job losses are expected to occur in related industries as a result of the pullout, she said.

The unexpected announcement pours salt on wounds already left by the Pride of Hawaii's departure earlier this month amid waning overall visitor numbers.

Miami-based NCL Corp., meanwhile, is focusing on a new initiative, "Freestyle 2.0.," which offers upgraded staterooms and other amenities.

The Pride of America will offer a four-island cruise under the program starting May 11, from Nawiliwili on Kauai to Hilo, Kona and Kahului.

Veitch said the Pride of America is currently profitable and that NCL's Hawaii operation also is expected to become profitable immediately after the downsizing.

"We are very confident of that and hopeful that we will grow back to two when the time is right and the market is right," he said.

NCL also hopes to bring back the Pride of Hawaii, but Veitch said that would depend on how federal cabotage law is clarified and restored.

U.S. cabotage law bars foreign-flagged ships from transporting passengers between U.S. ports unless they stop in a foreign port. Foreign-flagged ships have gotten around that by making quick "touch-and-go" stops on their way to Hawaii. An NCL-backed proposal to ban the practice has been opposed by other U.S. ports, which want the business.

U.S. Sen. Daniel Inouye, in a statement, said the withdrawal of the Pride of Aloha "serves as an unfortunate reminder of the importance of meaningful enforcement of our nation's cabotage laws."

The Pride of Aloha was launched in 2004 as Hawaii's first home-ported interisland cruise liner since American Classic Voyages went out of business shortly after Sept. 11, 2001.

Its first year was fraught with complaints, high staff turnover and a lawsuit brought by a travel agency.

NCL pressed ahead with the 2005 launch of Pride of America. And in 2006 the company launched Pride of Hawaii, the largest of the three ships. It was the first to be pulled out.

"I think NCL grew very fast, with three ships in three years in the Hawaii market," said Weinert. "There was a lot of capacity here, and the question which has played out is, Was there overcapacity? The hope now is that the Pride of America will be successful and profitable so it can stay here in Hawaii."

For passengers Guests booked on the Pride of Aloha from May 11 and later can expect the following from NCL Corp.: » The same cruise fares and reservations on Pride of America » $100 per person on-board credit (up to $200 per stateroom) » Up to $100 per person for increases in air costs for guests who purchased their own air, and up to $75 per person in air change fees » Up to $25 per person for hotel change fees for guests who made independent hotel arrangements » Guests may cancel their cruise and receive a full refund if they notify NCL by March 7. Afterward, cancellation fees will apply. Source: NCL

Sailing away

The estimated economic impact of the departures of two of NCL America's Hawaii-ported cruise ships:

Pride of Hawaii	Pride of Aloha
Cruise visitors
139,770	95,680
Cruise spending*
$368.8	$287.4
Indirect impact*
$542.1	$422.5
Indirect jobs
5,059	3,943

Source: DBEDT / * in millions