Excerpt: Troubled waters for the cruise industry

The chairman of Carnival cruise lines might think his industry doesn’t have a safety problem, but this long-form article from Chris Sorensen at Maclean’s shows how shaky that belief is. This excerpt is relevant to the marketing industry on two fronts:

The full version of this story originally appeared in Maclean’s

The cruise ship Carnival Triumph set sail out of Galveston, Texas, amid an unusually high level of fanfare a little over a month ago. Comedian George Lopez performed two matinee shows, DJ Irie spun records by the pool and visitors to the newly added EA Sports Bar were greeted by Houston Texans cheerleaders. The “all-out bash” was an attempt to wash away lingering memories of the Triumph’s infamous “poop cruise” back in February. That’s when a fire knocked out the Triumph’s engines, leaving the ship and its 3,143 passengers adrift in the Gulf of Mexico—without air conditioning or working toilets—for four long days.

It was the second black eye in just over a year for Carnival Corp., the world’s largest cruise ship company. On Jan. 13, 2012, the Carnival-owned Costa Concordia struck a rock off the coast of Italy, tearing a 50-m-long gash in its hull. Thirty-two people died when the ship sank off the island of Giglio, marking one of the worst cruise ship disasters in recent memory. Capt. Francesco Schettino was dubbed “Captain Coward” by the tabloids because he abandoned ship before all the 4,229 passengers and crew had been evacuated. He is being tried for manslaughter this month in an Italian court. On July 20, five crew members on the ship were convicted of manslaughter in a separate trial.

Yet, for every headline-making cruise ship accident or mishap, dozens more go relatively unnoticed. Six weeks after the Costa Concordia sank, its sister ship, the Costa Allegra, suffered an engine room fire that left it and its passengers adrift in the Indian Ocean. A similar engine room fire three years ago disabled the Carnival Splendor, stranding its 4,500 passengers and crew off the coast of Mexico. In March of this year, the Carnival Dream suffered an emergency generator failure while docked in port in St. Martin. In May, Royal Caribbean’s Grandeur of the Seas caught fire in mid-cruise with all 2,224 passengers aboard. And, recently, Spanish cruise line Pullmantur said the Zenith, carrying 1,672 passengers, lost power after a fire broke out in the engine room, forcing it to drop anchor off the coast of Venice.

If a similar list of failures struck, say, the commercial airline industry, a regulatory crackdown would be well under way. Yet, despite carrying some 21 million passengers annually, there’s no single authority to enforce rules and regulations for cruise ships. Instead, the industry operates amid a patchwork of jurisdictions that critics say effectively makes it a Wild West on the water, insulating it not only from strict oversight when it comes to safety, but also scrutiny of how it handles everything from sexual assaults to viral outbreaks, which critics say are far more common than most people realize.

With its headquarters in Miami and shares trading in New York City, Carnival appears to many passengers as an all-American company. But its parent is actually incorporated in Panama and many of its ships, including the Triumph, are registered in the Bahamas, putting the tiny string of islands in control of much of what happens beyond U.S. or Canadian territorial waters. “The cruise industry is almost wholly self-regulating,” argues Ross Klein, a professor at Memorial University in St. John’s. “They’re only accountable to the country where the ships are registered in. And very often where the ship is registered is thousands of miles away.” The flip side of the complex arrangement is it makes for a highly profitable business. Carnival, which operates 102 ships spread across 10 brands, including Princess Cruises, Holland America Line, Costa and Cunard, earned $1.9 billion on nearly $16 billion in sales in 2011, paying almost no U.S. federal taxes. Nor is it forced to abide by U.S. rules about employee wages or working conditions. And when things go wrong at sea, any resulting investigation is likely to be headed by a foreign body like the Bahamas Maritime Authority, which isn’t obligated to share its findings.

Still, the cruise ship industry denies it has a safety problem. Carnival chairman and Miami Heat basketball team owner Micky Arison emphasized during a June conference call with analysts that “your risk [of getting killed] driving to the port is probably a lot higher than getting on a cruise.” Though not exactly comforting language, it is true that deaths at sea are rare (although the industry is careful not to count deaths as a result of crimes or passengers falling overboard, which happens at least once a month on average, according to some estimates). Yet critics argue that being trapped on a disabled ship hundreds of kilometres from shore, as is far more likely, remains a potential recipe for disaster, and that it only takes one cruise ship catastrophe—an out-of-control fire or a powerless ship in the path of a major storm—to result in a substantial loss of life. That’s particularly the case with new “mega-ships” that can carry upward of 7,500 passengers and crew. “The cruise passenger gets a really cheap vacation because they’re on a ship that’s registered offshore, and they’re able to pay the labour next to nothing,” Klein says. “But people never bother to think about why it’s so cheap.”

The global cruise ship industry suffered a total of 97 mishaps in 2012. That includes 14 collisions, 20 fires, five ships that ran aground and four that sunk (although only one of those, the Costa Concordia, belonged to a major cruise line). During the first five months of this year, the industry racked up another 31 incidents—mostly fires and problems with propulsion systems. Those numbers don’t come from any government agency, however. They come from Klein’s personal website, Cruise Junkie. “The data that I have on accidents—there is no other data,” Klein says. “The industry doesn’t keep track of it.” Or if they do, they’re not required to make it public or share it with government agencies.

What the industry does share, however, is “operational fatalities,” which refers to deaths that result from marine accidents, including collisions and sinkings. David Peikin, a spokesperson for the Cruise Lines International Association (CLIA), the industry’s trade association, points to a study by G.P. Wild, a maritime consulting group. It found the cruise industry carried 223 million people between 2002 and 2011, but suffered only 28 deaths—six passengers and 22 crew members.

But does the industry truly have a stellar safety record, or has it merely been lucky? The industry’s number of fatalities doubled overnight with the sinking of the Costa Concordia, which was far from a worst-case scenario: it happened close to shore, in calm weather and in shallow water. And the way the accident unfolded hardly demonstrated a laser-like focus on safe operations. An investigation by Italian authorities found that Capt. Schettino steered the boat too close to shore (media reports suggested he was attempting to give the island of Giglio a “salute”), striking a rock at around 9:45 p.m. But it wasn’t until 10:43 p.m. that the abandon-ship order was given. By that point, an evacuation led by shore-based search and rescue teams, alerted by passengers’ 911 calls, had already begun.

Passengers who made it off the ship told tales of mass confusion. Martha Manuel, an American, told CBC that passengers were initially instructed to go to their rooms, but that she disobeyed and headed to a lifeboat station instead—a decision she credits with saving her life. “Our only goal was to get off the ship,” Manuel said. Among those who died was a five-year-old girl named Dayana Arlotti. She and her father were turned away from a lifeboat and “fell into an abyss which was created as the starboard side of the ship overturned,” reported the Daily Telegraph.

The cruise industry moved quickly to bolster its reputation in the wake of the disaster. CLIA launched a safety review that resulted in 10 recommendations that have since been adopted by member cruise lines, as well as the International Maritime Organization (IMO), the UN agency charged with overseeing maritime safety. They include changes to how emergency drills and lifeboat training is conducted, and requirements to store additional life jackets “far in excess” of the number of passengers and crew.

There’s more! To read the full story, visit Macleans.ca.