Cruise passenger growth is set for another surge as new ships are being deployed out of new homeports all along the coasts, according to Norwegian Cruise Line (NCL) President and CEO Colin Veitch.

"It used to be fringe lines only that homeported away from the major ports and sometimes depended entirely on local markets," he said. "Now we are seeing brand new ships in these ports that will drive a new surge in cruise demand," Veitch predicted.

The other recent surge came with the deregulation of airlines in the 80s, according to Veitch, who said the resulting cheaper travel drove cruise growth. But as air travel is becoming more difficult and as new ships are positioned away from Miami, the combination will change the pattern of travel, he said. While some will continue to fly to Florida, especially passengers originating in the Midwest who have to fly anyway, others will find it more convenient and less expensive to cruise from ports closer to home.

Veitch was speaking on the occasion of introducing the Norwegian Dawn, which will be sailing seven-day Caribbean cruises from New York to the Bahamas next summer. He said that travel agents had "pressed us into starting Bahamas cruises" with the Norwegian Sea last year. "We tried a few cruises in May," he said, "and they sold like hot-cakes." So this year, the Norwegian Sea alternated between cruises to New England/Canada and the Bahamas every other week. With the Norwegian Sea, that meant five days at sea, but the Norwegian Dawn is faster and will be able to offer four ports, including Nassau, Great Stirrup Cay (NCL's private out-island) Miami and Port Canaveral (Orlando). "The industry is developing a drive-up and walk-up market which will draw away from Florida," Veitch added.

New Landscape

"In our overall deployment we are trying to be highly relevant to travel agents by concentrating our fleet in certain markets," Veitch explained. "In the future landscape of the industry, our concern is to stay relevant to travel agents and to be part of the distribution chain. The environment we are looking ahead to will have three companies - two very large ones and ourselves with a 10 to 12 percent market share. We do not want to scatter our deployment so we may have 10 percent everywhere; instead we want to be large in some markets. For example, in 2003, we will have 65 percent of the market in Hawaii, 30 percent in Bermuda, 30 percent of all the passengers out of the major ports in the Northeast, 20 percent of the capacity in Inside Passage cruises, and we will be the biggest of out Seattle and the only cruise line sailing out of Boston. We will focus our capacity in certain trades (which will make NCL more relevant to agents).

"This is how we will carve out a position for NCL in the new landscape," Veitch continued.

He also said that the newbuilding pace was slowing down and may have been slowing down regardless of the consolidation. And, if as a result of slower capacity growth, prices go up, that will benefit not only the cruise companies, but also travel agents.

"Homeland cruising has been very good to us," Veitch continued. "In 2002, NCL has had 90 percent of its capacity cruising out of the United States or Canada; in 2003, that will increase to 93 percent."

It is only the Norwegian Dream that will sail outside of North America this year, with summer cruises in the Baltic and winter cruises in South America.

Meanwhile, Veitch has no plans to add capacity to Orient Lines ( original plans called for trading a ship with parent company Star Cruises last year). "The pattern of overseas travel is such that we are glad Orient Lines does not have three ships," he said. "Who knows what is next," he said, referring to the Middle East and Bali.

Norwegian Dawn

Among the many unique features of the Norwegian Dawn will be four original works of art by Renoir, Matisse, Van Gogh and Monet in the ship's signature Le Bistro restaurant. The art, which is on Joan from Star Cruises Chairman Tan Sri Lim Kok Thay's personal collection, is valued at more than the entire art collection of most other ships, according to Veitch. Elsewhere will be a collection of original and signed works by the likes of Andy Warhol.

On the overnight stretch from Miami to Port Canaveral, the Norwegian Dawn will feature an all-night South Beach party with "imported DJs and exotic dancers," Veitch said. "For those who have the energy, this party will go on from 10 p.m. until the last man is standing," he added.