Page 18: of Maritime Reporter Magazine (May 1999)

MARITIME LAW

Cruise Industry Enjoys Unprecedented Growth

By

William N. Myhre and

Darrell L. Conner

The U.S. flag cruise industry is on the verge of the most significant expansion in decades. Not since the early 1950s has there been such interest in building and operating U.S.-flag passenger ves- sels. American Classic Voyages, the

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Circle 268 on Reader Service Card largest operator of U.S. flag passenger ships, has two new cruise projects well underway (Project America in Hawaii and the Delta Queen Coastal Cruise

Line) which will more than quadruple its capacity in the coming decade.

SeaAmerica Cruise Lines has announced its plans for three new mid- sized cruise ships to operate on the U.S. coasts. And America West Steamboat

Co., a riverboat cruise company in the

Pacific Northwest, is planning a new overnight cruise vessel for the Alaska and Hawaiian trades. At the same time, the U.S. continues to have a vibrant and growing fleet of dinner cruise, casino and gaming boats, and passenger fer- ries.

Virtually across the industry there are new opportunities available for further expansion, using existing programs or by taking advantage of recent changes in the law. But keep a weather eye on

Congress. Changes being debated there could impact the entire U.S.-flag cruise industry. Navigating the uncharted waters of the "new" U.S.-flag cruise industry will require an astute captain and crew.

Project America - A New Era in the

U.S.-Flag Cruise Industry

The most notable development in the

U.S.-flag cruise industry is American

Classic Voyages' Project America.

Enacted in 1997, the U.S. Flag Cruise

Ship Pilot Project statute sponsored by

Sen. Daniel K. Inouye of Hawaii has enabled American Classic, the parent of

American Hawaii Cruises and of The

Delta Queen Steamboat Company, to take the Defense Department's

MARITECH program to new levels.

Where earlier projects focused solely on proposed cruise ship designs, it will now result in actual construction, help- ing to jump start cruise ship construc- tion in the U.S. and to sustain the U.S. shipbuilding industrial base. Modeled after U.S.-flag cruise ship development bills from the early 1990s that never got out of Congress, the new law enables

American Hawaii, which following the removal of service of the SS Constitu- tion had only the venerable SS Indepen- dence to serve its Hawaii market, to again expand its operations in Hawaii.

Just last month American Classic signed an $880 million contract with Ingalls

Shipbuilding to construct at least two new 1,900-passenger cruise ships for the Hawaiian Islands trade (with options for four additional vessels).

In return for assuming the consider- 18 Maritime Reporter/Engineering News