In the Hot Seat
With the relaunch of the American Empress, the American Queen Steamboat Co. became a two-ship operation. Travel Weekly’s Michelle Baran caught up with CEO John Waggoner onboard the American Empress to talk about the company’s financial stability and where U.S. river cruising is headed. Read More
As the European river cruise industry continues to boom, seemingly with no end in sight, the growth potential for river cruising in the U.S. is clouded, in large part as a result of cabotage laws with roots in the late 1800s.
Earlier this month, American Queen Steamboat Co. (AQSC) launched its second revived paddlewheeler, the 223-passenger American Empress, making the company a two-vessel U.S. river cruise operation. Its other vessel is the 436-passenger American Queen, launched in 2012.
Meanwhile, American Cruise Lines (ACL), which already operates two U.S. river cruise vessels — the 120-passenger Queen of the West and the 150-passenger Queen of the Mississippi — has announced plans to build four more ships for the U.S. market between 2015 and 2017, suggesting that demand for domestic cruising is on the rise.
But it remains unclear how or whether the U.S. river cruising market can expand beyond AQSC’s strategy of buying up old ships and refurbishing them and ACL’s building its own vessels at the Chesapeake Shipbuilding yard in Salisbury, Md.
Last year, Viking Cruises teased plans to bring a version of its European river cruise vessels, the Viking Longships, to the U.S. in 2015. But by the end of the year, Viking had already changed its tune and was saying it was exploring options on the Mississippi for the 2016 season.
Industry insiders say the apparent delay in Viking’s plans, and a major stumbling block for anyone else aspiring to enter the U.S. river cruise market, is the Passenger Vessel Services Act of 1886, a cabotage law that was updated in the Merchant Marine Act of 1920 (aka the Jones Act).
The law states that no foreign vessel may transport passengers directly between ports or places in the U.S. unless the vessel was built in the U.S. and is wholly owned and crewed by U.S. citizens.
The bottom line is that to operate a river cruise vessel here, it has to be U.S.-built, U.S.-staffed and U.S.-owned.
While being required to have an all-U.S. crew can prohibitively inflate operational costs, Bruce Nierenberg, who served as president of the former Delta Queen Steamboat Co., said the real challenge is building the vessels stateside.
The crew, he said, “is not the limitation. It’s building the ships. It’s a big issue for a couple reasons. There is really no American passenger shipbuilding left. … It’s an industry that we have lost touch with here.”
AQSC Chairman and CEO John Waggoner, in an interview onboard the American Empress during a pre-christening cruise earlier this month, said he would welcome the competition — if the competition could figure out a way into the market.
Waggoner said, “I think it’s more difficult than most foreign operators think to, No. 1, get by the Jones Act, which we all know … if you hire the best law firm in Washington, D.C., they can figure out a way to do that. But you still have to use an American crew. We’ve seen other companies that have really tried to come in and do that, and it’s a bigger challenge.”
Now that AQSC has revived two former Majestic America Line paddlewheelers, the company has no immediate plans to add any more inventory on the Columbia and Snake rivers, where the American Empress (formerly the Empress of the North) is now sailing, or on the Mississippi, where the American Queen sails.
Instead, AQSC is looking at the Great Lakes and Eastern Seaboard for its next expansion, which will likely be another purchase of an older vessel that the company rehabs.
“Right now, it’s just us and American Cruise Lines out there,” Waggoner said. “It’s really four boats.”
Even the four newbuilds proposed by ACL would only bring the count of U.S. river vessels to a tiny fraction of the capacity currently navigating Europe’s inland waterways.
And according to Nierenberg, that’s a missed opportunity not just for U.S. river cruising but for the people who could be employed to build and staff the ships, as well as for the local economies in the river port towns.
“There’s a lot of good economic benefit,” he said, adding that river lines interested in building overnight passenger vessels in the U.S. might look to the port authorities of riverside municipalities for help in lobbying through or past some of the prohibitions of the Jones Act in order to be able to carry out plans to develop river cruise product here.
“It seems like it’s been a missed opportunity,” Nierenberg said. “So maybe this could be a rebirth.”
Follow Michelle Baran on Twitter @mbtravelweekly.
CORRECTION: An earlier version of this report incorrectly explained one of the parameters of the Passenger Vessel Services Act: Foreign-flagged ships may transport passengers between two U.S. ports if a distant foreign port is included on the itinerary.