Senate Approves Reflagging

The Senate Commerce Committee has approved legislation that will allow up to five foreign vessels to be reflagged, ending a three-year stalemate.

However, if approved by the Senate, the bill will not go into effect until September 1, 1988, and will not be enacted at all if work to build or refurbish two comparable vessels in the U.S. is “substantially” completed by then. The committee is still divided on what will constitute “substantially completed.”

Foreign vessels will qualify for reflagging if they are sold to U.S. interests; have at least a 600-passenger capacity; employ U.S. crews; have repairs and modifications done in U.S. shipyards; and can be converted for military use in emergencies.

According to the legislation, reflagged vessels will not be able to enter markets where there are already U.S. cruise ships in operation. In addition, any U.S. vessel that enters service within two years of a reflagged vessel will have the right to petition the Secretary of Commerce to remove the former from service. If this occurs, the reflagged ship will have one year to terminate operation in that market.

One industry spokesperson who asked not to be identified said that if passed, the legislation would “essentially kill any chance for a U.S. cruise fleet.”

“What investor or financial institution is going to take the risk of putting all that money into a cruise venture if there is always the possibility that a U.S. ship will be brought into the market and force the reflagged vessel out of service? And even if someone was willing to take that risk, where would he operate? All of the good markets – the eastern U.S. coast and the Hawaiian Islands – are sewn up by American lines,” he said.

From the time the reflagging issue first arose, the Cunard Princess and Cunard Countess have been considered the most likely candidates for reflagging (the original bill was referred to as “The Cunard Bill). Robert Lambert, president of Cruise America Line in Fort Lauderdale, had, at one time, an option to purchase the ships if and when they were granted domestic trade privileges.

According to Ralph Bahna, president of Cunard, however, “the line is no longer involved in any discussions on this matter.” Robert Lambert did not return CIN’s phone calls to comment.

There are four pending U.S. ventures that are still reporting they will be in operation by 1988: American Shipbuilding Company, Tampa; United States Cruises (S.S. United States), Floating Through America (Spirit of America) and Aloha Pacific Cruises (S.S. Monterey). To date, however, only Aloha Pacific Cruises has secured financing.

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