President Reagan recently vetoed legislation that would have authorized funding by the federal Maritime Administration (MARAD) for construction of U.S. cruise ships, virtually killing any chance for Title XI financing, reported Patrick Morris, vice president/general counsel for the Shipbuilder's Council of America. MARAD still has Congressional authorization to approve loans for "no risk" ventures, but "it is doubtful that any will be approved because the Department of Transportation is tied to the executive branch," he said.
The Administration's policies have effectively dampened the prospects for 11 pending U.S. vessels.
According to Morris, the only U.S. ventures with bright futures appear to be Aloha Pacific Cruises - the company that is refurbishing the Monterey, and the Tampa-based American Ship Building Company, owned by George Steinbrenner.
Eighty-five percent of the $30-million Monterey project is being backed by Wartsila, and the remaining $16.8 million is being raised by private investors, according to John Broughan, director of marketing for the line. He said that 102 out of 140 units are sold, and the rest are expected to be sold by the end of January. Construction of the ship will begin shortly after that. Delivery is scheduled for December, 1988.
For Floating Through America, the company that was to build six 46-passenger ships, the veto has caused an indefinite delay, according to Jarrett Kroll, president of the line. It also has killed any chances for the $150 million refurbishment of the S/S United States, according to industry sources.
Another pending venture, Gold Key Cruises of Miami, "is very much alive," according to Fred Metcalf, president of the line.
Metcalf said that the first of least three 57-all suite luxury vessels for cruising the Eastern Seaboard is under construction at the Moss Point Marine Shipyard in Louisiana.
The total cost of the first ship is $11.6 million - 75 percent of which is pending MARAD funding. If that falls through, however, "there is plenty of supplementary funding available from the brokerage house that already has committed the remaining 25 percent," Metcalf claimed.
The Gold Key venture is being operated by the same principals of the now defunct Florida Gulf Coast Corporation Ponce de Leon project. Metcalf said that Gold Key is the same project - only the name has been changed, because the former was "too limiting."
Reflagging Issue Will Resurface in 1987
The last glimmer of hope for revitalization of the U.S. cruise industry remains in the amended version of the reflagging legislation, which if passed, would enable ships to be reflaged if "there is no substantial progress on any American-built venture in the next two years."