WASHINGTON -- A Federal Maritime Commission plan to boost bonding requirements for cruise lines would create a paperwork burden and slow the growth of the cruise business, according to written comments filed at the FMC by operators and agents.

Some industry members also will get a chance to make their case in person at a public hearing Wednesday.

At issue is an FMC plan to eliminate the $15 million ceiling on cruise line bond requirements and make other changes in the financial responsibility rules.

Under existing regulations, cruise lines with ships embarking from U.S. ports are required to post a bond or other surety to protect passengers against nonperformance.

The $15 million cap came under review after several high-profile cruise line bankruptcies, including those of American Classic Voyages, which was self-insured, and Premier Cruises.

Under the new proposal, cruise lines would be responsible for coverage equal to the total amount of passenger funds on hand for future cruises (unearned passenger revenue), except for revenue received from credit card charges made within 60 days of sailing.

But in comments submitted to the FMC, agents and cruise lines said the risk of large operators ceasing operations is slim and doesn't justify lifting the ceiling entirely.

In its comments, Carnival Corp. said the FMC's proposed formula for calculating the unearned passenger revenue was overly complicated.

Carnival suggested raising the bond ceiling to $50 million for single-brand operators and $100 million for multibrand operators, which could file a single bond instead of, in Carnival's case, six different bonds.

Carnival also suggested changing the law to extend surety requirements to cruises booked in the U.S. but embarked from foreign ports.

The National Association of Cruise Oriented Agencies said major cruise lines, most of which are publicly owned and subject to financial disclosure, likely would continue to operate throughout a bankruptcy reorganization.

ASTA submitted a terse note that suggested the FMC's future bonding requirements be calculated on a company's number of berths instead of the current blanket ceiling or as a percentage of revenue.

Visa, meanwhile, said the proposal to exempt credit card purchases made within 60 days from the required coverage would unfairly shift the financial responsibility from cruise operations to card issuers.

Cruise lines cool to FMC dispute resolution

WASHINGTON -- Cruise line comments to the Federal Maritime Commission included a variety of opinions about the bond ceiling, but the lines were uniformly opposed to a related plan that could get the FMC involved in resolving disputes between passengers and cruise lines.

Under the plan, cruise lines operating from U.S. ports would be required to agree to the FMC's alternative dispute-resolution process, where passengers could submit claims against the cruise lines for nonperformance.

The dispute-resolution process could include binding arbitration on claims not resolved between the operator and the passenger within six months. Currently, relationships between the lines and their customers are governed by the terms in the passenger ticket contracts, and the FMC said it has "limited jurisdiction" over passenger complaints.

Attorneys for Norwegian Cruise Line said the proposed rule would "give passengers the right to bring the cruise company to Washington to resolve anything the passenger views as nonperformance, from cold soup to surly waiters to missed ports."

Carnival Corp. added that the program, if adopted, should be limited to refunds sought for canceled cruises resulting from bankruptcy or a cessation of business. -- R.T.


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