The Emerging Domestic Cruise Industry

Abstract

The U.S. market, with its high per-capita income, generous leisure time availability, and open market entry, has become the world's most lucrative market for ocen cruising. Cruise ships sailing from the United States serve six distinct markets: the Bahamas, Bermuda, the Caribbean, Alaska, Mexico, and inland/coastal. With the exception of the Alaska and inland/coastal markets, the trade is served almost exclusively by foreign-flag vessels. The Jones Act, which restricts passenger service between consecutive U.S. ports to U.S.-flag vessels, together with the increased popularity for ocean cruising, has created a demand for U.S.-built/U.S.-manned cruise vessels that can operate in the inland/coastal market. Also, legislation allowing tax deductions for business conventions held aboard U.S.-flag vessels, coupled with a soft market for U.S. new construction and U.S. seagoing labor, has culminated in the potential for an internationally competitive U.S.-flag cruise industry. This paper reviews the current status of the U.S.-flag cruise industry, its operating environment, the rules and regulations that govern its operation, and its probable future.