Charging Carnival for Services

Frequent contributor Bill Wells has some thoughts on the recent exchange between U.S. Senator Jay Rockefeller and Carnival Cruise Lines, in which the senator suggested that Carnival should pay the cost of assistance provided by the Navy and Coast Guard to Carnival’s “Triumph” and “Splendor” cruise ships. Bill looks back on the history of asking for renumeration, and suggest there is precedence for this. “Adapted to Their Condition and Necessities,” Paying for Rescues

There is also another post, representing alternate view, by a former Coastie, Mario Vittone,  “The Cost of Rescue: Why Carnival Shouldn’t Pay and the U.S. Shouldn’t Accept”

gCaptain is reporting that Carnival Corp. is bowing to pressure from U.S. Senator Jay Rockefeller, said it will reimburse the U.S. for costs related to the breakdowns at sea of its Triumph and Splendor cruise ships. There is some additional background here.


Thoughts of my own:

  • Somewhere in between charging nothing and charging the fully prorated lifecycle cost of the asset there is also the possibility of asking for reimbursement of the marginal cost attributed solely to the rescue.
  • Did Carnival ask for our help or did we volunteer it?
  • Obviously the Navy did not figure costs the same way the CG did, otherwise the hourly cost of an aircraft carrier would have dwarfed the hourly cost of a 378.
  • Some of us remember when the Coast Guard was your friendly free towing service for boats that frequently ran out of gas. That doesn’t happen as much anymore.
  • Maybe we just need to collect more in the way of fees from the foreign flag ships that make up the cruise industry.

12 thoughts on “Charging Carnival for Services

  1. The cutter goes where TACON tells so I’ll take my orders whatever they may be. This is my simple view, passengers board in Florida and a week later they disembark at the same pier. The passengers are mostly American citizens. The companies maintain large domestic corporate offices. Why are the allowed to sail under a flag of convenience? Seems simple, if we can have a Jones Act then lets add the Carnival Act:
    Commercial passenger vessels shall maintain domestic registry–U.S. flagged–if the following criteria apply: 1) 51% percent or more of annual passengers are United States Citizens, 2) 51% percent or more of annual passenger embarkation/disembarkation occurs in U.S. ports, or 3) 51% percent or more of total fare purchasing transactions originate in the U.S.
    In short, if the passengers board in the U.S., the ship carries Americans, and the tickets are bought in the U.S. then it must be U.S. registered and held to domestic safety requirements. We require the same with planes, trains, and automobiles.

    • I agree. It is our taxes that keep the ports deep, save them when they are in need, and we keep our bridges high so we can handle these ships.

      • Chuck, My concern is we will this force them next time to delay calling the Coast Guard. Or is it better the Coast Guard is on-scene quickly.

      • I don’t have a dog in this fight. But if we do ask for reimbursement, the Coast Guard and the Navy should not be using different rationales for arriving at their costs. And if we did come to assist without a request for assistance, you cannot then send them a bill.

    • this is just out of a snipes curiosity, but does anyone know if civilian vessels use the same color coding for piping and systems as the usn and uscg?

  2. This is an interesting and relavent topic. For my take on this, I’ll give you an example from the world of firefighting:

    Some time after health/safety regulations went into effect for commercial buildings which required sprinkler and automatic fire alarm systems, technological “glitches” and poor installation and/or maintenance in/at certain buildings led to high incidences of false alarms. The risks associated with high-speed lights-and-siren responses, plus wear, tear, maintanence, and fuel costs, not to mention annoyed firefighters, chiefs, and citizens (esp. if the false alarm was at night and the siren woke the citizenry from their slumber), resulted in the passage of regulations for billing building owners for false alarms.

    The fire departments debated many of the issues raised here, and generally, the rule which seemed to make the most sense was: 1-2 false alarms = no big deal & no billing. 3-4 false alarms, and Mr. Building Owner is not taking the problem serious enough, so, here is a bill for what it actually costs to respond (fuel, wages, pro-rated maintenance and depreciation of equipment, etc.). Every false alarm run beyond that, and you get the billable costs, plus an increasing “fee” (really a punitive fine) to make it clear that soon, the cost of neglect is higher than the cost of maintaining a properly-operating system.

    To keep the building owner from disconnecting or not installing a proper system, there are codes and inspections, and the building is closed down if it doesn’t meet code or pass inspection.

    This model is totally workable in the CG setting. I’m surprised Carnival’s cost-benefit analysis hasn’t found the bad publicity to be economically counter-productive to any savings from poor maintenance, but the hits keep coming, so maybe not….

  3. The issue is not whether or not some mom and pop recreational boater will delay asking for help. We have all seen this but I have seen more in the commercial industry, fishing and cargo.
    The issue is today is the same as it was in 1831 when this all began. It was fully understood that there is an understanding the vessels in distress are expected to receive assistance. However, is lack of toilet facilities and air conditioning really an emergency situation?

    There was no mention of the cutter’s operation in the figuring of reimbursable items in 1831. As Mario noted, the vessels and aircraft are already there. But what about all the other items and materials used and provided? This is what the Treasury Department noted in the 1831 order that the “Owners and consignees” would be responsible for reimbursement and the Treasury Department had plenty of power to see these bills were paid. Simply withholding a port clearance is leverage enough.

    Mario also repeated the comment of the Carnival Lines that should it charge the Coast Guard for assisting in cases. The answer under the 1831 provisions would be no because the U. S. Coast Guard is neither the owner or the consignees of the vessel being assisted. Carnival could charge the Cuban Government for rescuing the immigrants it picked up. Then again Carnival could remove itself from AMVER participation but there again would be another public relations nightmare.

    I have been involved in cases where fishermen enjoyed such a great fishing trip they ran themselves out of fuel and then called the Coast Guard for an emergency tow. I recall on federal judge in Galveston who took a dim view of this practice and fined the vessel’s owners their entire catch, plus the operation and pay of a 180′ WLB crew for two days.

    The Coast Guard has a long history of reimbursement for costs involved in rescues. The problem is the current Coast Guard has developed a culture where all rescue efforts are free. The Coast Guard does not remember its history. Alexander Hamilton would have never approved of the free ride so many are given today. His letters are full of remarks about the revenue cutters being mindful of costs.

    Has anyone seen how the Brits are charging now they are going to civilian SAR aircraft? Could this be the U. S. Model?

    • Bill, as usual great connectivity between history and present-day!

      I would add one opinion about the question left hanging in your brief about the potential of Carnival threatening (or actually) pulling out of AMVER: Let them. This is no different than the town’s wealthiest guy thinking he can speed and get away with it because he sponsors the policeman’s ball every year. Accountability. No one is above the law. If the police dept. let him get away with it, who would look bad years later when he runs down a child on a bicycle? (Both, obviously…)

      The problem seems to be crazily out of control at Carnival, and since business loss isn’t a concern, I doubt reimbursements or even punitive fines for “excessive rescues” will change that, but at least the CG would look like it is trying, and it would be on the side of right…

  4. Basically all boaters should have insurance just like people have them for automobiles just in case they need a tow, to cover the costs. And there is a difference between needing a rescue due to a oh Sh*t moment like sudden breakdown or weather that is out of your control or medical VS needing one due to you not taking proper precautions/safety or maintenance. if it is the latter you should be billed. And remember if carnival did the latter and failed to notify the coast guard they would then be criminally liable if anything happened to their guests. same thing could be applied to a charter boat captain etc. Hope I’m making sense here.

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