Carnival Cruise Appears to Change Course Regarding Reimbursement of Costs

Carnival Corp. said “the company has made the decision to voluntarily provide reimbursement to the federal government,” following harsh criticism over its use of federal resources for costs related to the high-profile fires aboard the Carnival Triumph in February and Carnival Splendor in 2010. The exact amount of payment is still being determined, though a U.S. senator has said the U.S. Coast Guard and U.S. Navy had estimated costs of about $4.2 million for the two incidents combined. In both cases, fire knocked out power to the ships, which were slowly towed to land. The U.S. Coast Guard escorted the Triumph and Splendor; the U.S. Navy delivered tons of food and supplies to the Splendor.

In letters released earlier, it sounded as if Carnival Corp. was refusing to reimburse federal agencies if they sought remuneration. Carnival explained that at no point did they refuse to make a payment and added that no agency had asked them for money. A newspaper article states Carnival has said they will in fact pay the expenses incurred by the United States, including the Navy costs and Coast Guard costs.

Had they refused to pay, U.S. federal taxpayers would have had to foot nearly $780,000 for costs associated with the rescue of the crippled Carnival Triumph cruise ship. Carnival Corp. in the released letters had stated that its policy is to “honor maritime tradition that holds that the duty to render assistance at sea to those in need is a universal obligation of the entire maritime community,” a duty that would not include reimbursing the U.S. government for Coast Guard costs.

The letters were in reply to an inquiry by U.S. Sen. Jay Rockefeller, a West Virginia Democrat who chairs the Senate Commerce Committee, about the Triumph stranding and the cruise line’s overall safety record. In his letter Rockefeller, adding that Carnival appears to pay little or no federal income taxes and that “these costs must ultimately be borne by federal taxpayers.”

Rockefeller called the response “shameful” and said that he is considering “all options to hold the industry to higher passenger safety standards” which could include a congressional hearing and legislation, perhaps even a closer look at taxation.

In its defense, the cruise line noted that its ships frequently participate in rescues at the Coast Guard’s request, including 11 times in the past year in Florida and Caribbean waters. It also mentioned port taxes and fees and other payments and said it paid $16.5 billion in wages to U.S. workers in 2011.

“Every state where our ships call or home port benefits from the dollars spent by cruise lines to buy products and retain services from local businesses,” Carnival added.
Carnival has had about 90 incidents aboard its ships that were filed with the Coast Guard in the past five years. Carnival responded that 83 were not considered serious under federal regulations. Three were the Triumph and Splendor mishaps and the capsizing of the Costa Concordia off Italy’s coast, which killed 32 people in January 2012. The others were more minor ship collisions, an illness and one passenger who jumped off a ship.

The cruise line said it takes each incident “very seriously” and undergoes reviews and corrective measures when needed, such as a review of safety and emergency response practices across all of Carnival’s brands following the Concordia accident. In a separate letter, Carnival Chairman and CEO Micky Arison said the company takes the issues raised by Rockefeller very seriously and “remain committed to the safety and comfort of our guests and we are proud of our ability to provide millions of people with safe, fun and memorable vacation experiences.”

But what corrective measures are in place for those guests and cruise ship workers who aren’t provided with a safe and fun experience?

It is good of Carnival to step up to address this issue, even if it is only in response to the criticisms. It would be great to see them, as the world’s largest cruise ship company, take the lead in the industry toward higher passenger safety standards. The cost of preventing these problems would be priceless in comparison to the very expensive cures they face.

Our firm continues to act as safety advocates for those harmed at sea.