Transport Cruises

Senator Rockefeller is taking on the cruise industry one ship at a time

Mar 25, 2013 11:51 am

Skift Take

Carnival and its peers will have a mess on their hands if Sen. Rockefeller manages to yell loudly enough about how little tax the companies pay and how much the companies take from of U.S. taxpayers.

— Jason Clampet

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Mike Segar  / Reuters

Rockefeller of West Virginia addresses the Democratic convention in Denver in 2008. Mike Segar / Reuters


U.S. Sen. Jay Rockefeller wants the cruise industry to clean up its act.

Appalled by the recent events aboard the Carnival Triumph cruise ship, which was crippled by an engine fire leaving 4,200 people stranded on board in the Gulf of Mexico for five days last month, Rockefeller, D-W.Va., believes the industry needs to do a better job regulating itself.

He also believes that Congress should act quickly to repeal tax provisions that allow cruise companies to keep ships registered in foreign ports, sheltering them from paying American corporate taxes.

“They’re living off the taxpayer, not paying their fair share and not properly monitoring themselves,” Rockefeller said during a phone interview last week.

“The tax they pay is 0.6 percent — that’s the total tax that they pay,” he said. “They make a lot of money, they don’t pay taxes, they don’t reimburse in any way all the agencies of the government — starting with the Coast Guard — that come to their rescue.”

It’s not the first time Rockefeller, chairman of the Senate’s Commerce, Science and Transportation industry, has put the industry under the microscope.

After Carnival’s Costa Concordia ran aground and capsized off the coast of Italy last January — which resulted in the death of 32 people — Rockefeller held an oversight hearing to examine deficiencies in the industry’s compliance with safety, security and environmental standards and determine if those regulations sufficiently protect passengers and the environment.

He said the recent incident on board the Triumph was just the latest in a long string of events that show the industry isn’t doing its job to safeguard its passengers

In the past five years, the U.S. Coast Guard has had to make 90 safety interventions involving Carnival ships. Three such incidents occurred within the last week.

Check out a list of marine casualty investigations conducted or being conducted by the U.S. Coast Guard.

The Coast Guard had to spend nearly $780,000 in responding just to incident on board the Triumph. And that financial cost pales in comparison to how that event affected the people on the ship.

“There was squalid feces and trash and junk and stuff sloshing all over,” he said. “It was disgusting — disgusting.”

Rockefeller said the Triumph incident serves as a cautionary tale for an industry that he believes doesn’t go far enough to protect the safety of its passengers.

“You get one of these disasters and it really makes news,” he said, “and I’m really glad about that because it gives people a sense of what they are getting into.

“It’s gotten a lot of bad publicity — people throwing up, one of the cameras had people lying on the deck configured to real ‘HELP’ so if a plane was flying by they could come help,” he said. “That’s pretty sad.”

Though he’s not personally traveled on a Carnival cruise ship, Rockefeller he has seen the ships up close as they’re out on the seas.

“I’ve been in the Bahamas and the Virgin Islands when one of these ships were in port,” he said. “It’s just a ludicrous sight.

“It’s like the island is just this little speck buried under this gigantic white Carnival ship,” he said. “There’s nothing wrong with that, but it puts in perspective that they are in charge here. We are in awe of them; we gawk at them.”

Rockefeller said that people also assume cruise companies take care of their ships, properly clean them, and perform necessary maintenance.

“I don’t think they are,” he said. “They certainly aren’t when they get in trouble.”

He said that while Carnival is not a monopoly, the company seems to have “monopoly power” once it gets passengers out to sea.

“They basically own the seas,” Rockefeller said.

He said the only time cruise ships come under U.S. safety, environmental and spillage regulations is when they’re sailing within three miles of the U.S. coastline.

“After that it becomes international waters and they’re under the, quote, ‘Discipline of the United Nations,’ which has a bunch of meaningless regulations that nobody enforces,” Rockefeller said.

“They don’t really have to worry about scrubbing up, or sexual predatory practices — you put four to six thousand people on a ship for God’s sake, you have a lot of crime, a lot of sexual raping and all kinds of stuff,” he said.

“It’s a bad environment.”

Rockefeller said cruise companies work in a “happy industry,” where as long as they keep passengers happy and entertained, they can gloss over some of their safety and sanitary shortcomings.

“When everything’s working fine — the sun’s out and the engines are working — it’s fine,” he said. “But in the business of safety and consumer protection, you always have to worry about the day something goes wrong. That’s what your responsibility is.”

In response to the incident aboard the Triumph, Rockefeller said he penned a “not-nasty-enough letter” to Carnival Corporation chief executive Mickey Arison expressing his concerns. (Letter is embedded, below)

He also asked Arison a series of questions regarding the ship’s maintenance and matters relating to the company’s passenger safety practices.

Rockefeller said he’ll be interested to see the response he gets back from the company. If Arison doesn’t answer the questions satisfactorily, Rockefeller said he’ll likely end up under oath before his committee.

“If he doesn’t answer them, I’ll subpoena him and make him answer them,” Rockefeller said.

Carnival maintains it has comprehensive maintenance programs in place that meet or exceed all regulatory standards and requirements.

“As always, the safety of our guests and crew is our foremost priority,” the company said in a press statement last week.

“We are committed to learning from any incident that may occur on one of our vessels to apply lessons learned and prevent future occurrences,” the company said. “We are presently conducting a comprehensive fleet-wide review that encompasses multiple operational areas, systems and training.”

The company is expected to make an announcement regarding its first steps as part of the review in the coming days.

“In the meantime, we are confident that we will continue to provide our guests with a safe, fun and memorable vacation experience and look forward to welcoming them on board,” the company said.

Meanwhile, Rockefeller said Congress should act soon to close the tax loophole that allows domestic companies to keep assets offshore free of taxation.

He said the average U.S. manufacturer pays 20 percent in taxes. He would like to see the cruise companies begin paying an amount similar to that as well, not the 0.6 percent Carnival currently pays.

He said it’s something leaders should have done sooner.

“Shame on us, we will do that,” he said. “Then they’ll have to start paying 20 percent. Then they will have earned the right for the Coast Guard to help them, or for the Navy to help them.”

He hopes paying their fair share in taxes will hold the cruise industry more accountable and make up for the costs to assist damaged ships.

“Now they’re getting all that for free and reimbursing nothing to anybody,” Rockefeller said. “It’s just an American wrong, and they don’t seem to be bothered by it.”

Sen. Rockefeller’s letter:

Download (PDF, 992KB)

(c)2013 the Charleston Daily Mail (Charleston, W.Va.). Distributed by MCT Information Services. 

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