Alaska cruising crisis shows need for flexibility in U.S. maritime law

by Jonathan Helton, Grassroot Institute, Mar 6, 2021

Like Hawaii, Alaska relies heavily on tourism.

Before the coronavirus pandemic and government lockdowns manifested in early 2020, the tourism industry had employed one in 10 Alaskans and annually served almost 1.2 million visitors, generating about $2.2 billion.1

Also like Hawaii, Alaska counted on cruise ships to boost its annual visitor numbers, but far more so than Hawaii. In the Aloha State, cruise ships accounted for about 1% of all visitor arrivals in 2018; in Alaska during the same year, it was more than half.2

Naturally, Alaska is reeling in the wake of its cruising industry being sidelined. Just as in Hawaii, which has been harmed severely by the enormous cutback in air arrivals, many businesses have closed, unemployment is rampant, and state and local governments are seeing tax revenues evaporate as the need for public assistance increases.

As the coronavirus crisis has eased, Alaskans have been eager to welcome cruise ships once again, but that’s not as simple as it sounds. 

Two barriers, in particular, stand in the way: Canada and the 1886 U.S. Passenger Vessel Services Act.

Canada is tied to the issue because of the PVSA. The 135-year-old federal maritime law requires foreign-flagged, foreign-built cruise ships leaving U.S. ports such as Seattle to stop at a foreign port — which in this case would be Canadian ports such as Vancouver or Prince Rupert — before proceeding to Juneau, Sitka or any other U.S. port in Alaska. 

But Canada right now isn’t allowing any cruise vessels that can carry more than 100 passenger to enter its ports because of COVID-19, and on Feb. 5, 2021, it announced it was extending the ban until at least February 2022.

“Canada’s announcement … is not only unexpected, it is unacceptable, and was certainly not a decision made with any consideration for Alaskans or our economy,” Alaska’s congressional delegation lamented in a joint statement.3

Craig Dahl, executive director of the Greater Juneau Chamber of Commerce, said cruise tourism makes up about 32% of the city’s economy, and the loss of another cruise season would cause the “most dire economic situation we’ve ever faced in our area.” 

Should nothing be done to save the cruise season, he said, it would be “almost mathematically impossible for most small businesses” to survive what would amount to two years without normal cruise tourism revenue.4

But what about U.S.-flagged and built cruise vessels? Why can’t visitors to Alaska get there and cruise the state’s beautiful coastlines and ports on American ships?

Well, because there are so few. There is only one large PVSA-qualified ocean cruise liner left in the entire U.S., the 2,500-passenger, mostly foreign-built MS Pride of America, and it is restricted to serving only Hawaii under the exemption that allowed it to operate in U.S. waters at all.5

Smaller PVSA-qualified U.S. ships are planning to continue their cruise season, but collectively they would bring about only 17,000 visitors to Juneau all season, which is about the number of visitors Juneau used to receive each day before the COVID-19 lockdowns.6

So where does that leave Alaska? 

A growing number of voices in the state are urging that the PVSA be reformed, if not scrapped altogether. The calls for reform began last year, even before Canada extended its ban through 2022. 

As a practical matter, the simplest option would be for the federal government to issue Alaska a PVSA waiver, thus allowing non-U.S. cruise ships to skip the stop in Canada. Indeed, in June 2020, the Greater Juneau Chamber of Commerce asked the Alaska congressional delegation for a PVSA waiver for the state.

“This single action would be the highest priority federal assistance for tourism businesses and mitigate job and revenue loss,” the group wrote.7

Organizations such as the Resource Development Council for Alaska and the Alaska Travel Industry Association also have supported a waiver.8

As the pandemic continued and the U.S. Centers for Disease Control kept its “No Sail Order” in place, these pleas fell on deaf ears.9 But when the CDC issued in October 2020 its “Framework for Conditional Sailing Order,” which provided a path for resumption of the cruises, the pleas for a PVSA exemption became louder.10

Alaska Travel Industry Association CEO Sarah Leonard stated that a PVSA waiver “remains a high-priority federal assistance for tourism businesses in Alaska as a way to mitigate continued job and revenue loss due to COVID-19.”11

“The cruise industry may consider asking for temporary relief from the PSVA,” the Cruise Lines International Association said in January, just before Canada extended its ban for an additional year.12

Canada, however, remained a significant hurdle. And now that it has extended its cruise ban through the end of February 2022, Alaska’s tourism industry is really feeling the pain. 

“If there was any time in the history of the PVSA that an exception should be granted, it is now,” cruise industry insider Rod McLeod told Travel Weekly.13

Perhaps most important, Federal Maritime Commissioner Louis Sola urged the Biden administration to grant Alaska cruises “limited exception to the PVSA,” noting that “another lost [cruise] season represents a potentially devastating blow to the livelihoods of thousands of Alaskans.”14

Absent diplomatic resolution of the ban, which seems unlikely,15 it will fall to the president through an executive order, or to Congress through legislation, to exempt Alaska from the PVSA. 

Is there a chance that could happen? Perhaps. Compared to a year ago, the sentiment for change has skyrocketed. At the state level, Alaska’s legislature is considering a joint resolution, SJR 9, asking Congress for a PVSA exemption until Canada lifts its ban.16 The Grassroot Institute of Hawaii and the Alaska Policy Forum submitted joint testimony on March 5 in support of the resolution

At the federal level, U.S. Sens. Lisa Murkowski and Dan Sullivan have introduced the “Alaska Tourism Recovery Act” in the Senate, and U.S. Rep. Don Young has introduced companion legislation in the House. 

“All Alaskans are asking for is the opportunity to open their doors and make an honest living this summer, and we must give them a fighting chance,” Young stated.17

Of course, repealing the relic would be even better, but a waiver would certainly be welcome.18

PVSA supporters have taken to writing commentaries on behalf of the 135-year-old protectionist law,19 but they’re not having an easy time. Like the 1920 Jones Act, a maritime law similar to the PVSA that applies to cargo ships, the PVSA often is defended as supporting U.S. shipyards, mariner jobs or national defense. But the PVSA supports none of these objectives. There is only one large U.S.-flagged cruise ship remaining, and not one large oceangoing cruise ship has been built in the United States since the 1950s.20

Considering the paucity of U.S. stakeholders who benefit, it is odd that the PVSA has any supporters at all. 

Meanwhile, Alaskans are caught between a rock and a hard place — or rather, Canada and the PVSA.

“It’s really scary looking at another summer,” said Holly Johnson, president of Wings Airways and the Taku Glacier Lodge in Juneau, whose company relies heavily on tourism. “And not just another summer but getting through until April ’22. … We’re on a shoestring now to hold it together.”21

PVSA reform or repeal would help Hawaii as well, though the state has different issues to deal with in trying to get back on its feet. Being such a small part of Hawaii’s tourism market, ocean cruising is not a high priority for most Hawaii politicians  though in the long run it should be. 

Maybe Alaska’s more immediate crisis will prove to be the window of opportunity for those in Hawaii and elsewhere who wish to remove legal impediments to vibrant ocean cruising in U.S. waters.

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Link: Footnotes