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Largest Cruise Lines May Be Shut Out of Coronavirus Stimulus Bill

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By The Maritime Executive 03-26-2020 09:57:00

The largest cruise operators may be shut out of the business assistance provisions in the $2 trillion coronavirus relief package passed by the U.S. Senate on Wednesday, based upon the final language in the bill. 

The relief bill is by far the largest stimulus package ever passed in the U.S., and it includes about $500 billion in loan assistance for large American businesses. After complex three-way negotiations between the Republican and Democratic leadership in Congress and the Trump administration, the bill contains language restricting assistance to only those companies which are organized in the United States and have the majority of their workforce based in the U.S. The three largest cruise operators are headquartered in the U.S., but they are incorporated in foreign countries, have large foreign workforces aboard their vessels and are substantially exempt from paying U.S. taxes.

Opponents of federal support for the cruise industry warned Friday that the final language in the bill could potentially give cruise lines access to the funding, despite appearances to the contrary. “The final text of the stimulus bill unfortunately makes no reference to where businesses are incorporated, only that they must be ‘created or organized’ in the U.S. or under U.S. laws to qualify for loans or loan guarantees. With the headquarters for cruise majors Carnival Corporation, Royal Caribbean, and Norwegian all in Miami, Florida, these corporations could certainly try to argue they are ‘organized’ within the U.S.,” said Kendra Ulrich, shipping campaigns director at environmental NGO Stand.earth.

In addition, Ulrich cautioned that the workforce nationality restriction might not be a real barrier, depending upon the U.S. Treasury's interpretation. "It is plausible that these [foreign-incorporated] cruise corporations could attempt to characterize their ship-based employees as contractors in order to qualify for a loan or loan guarantee," she said. "In that case, since the three cruise majors are all headquartered in the U.S., it is likely they could argue the vast majority of their ‘employees' are in the U.S. and the rest are foreign contractors."

In comments to the Wall Street Journal, the Cruise Lines International Association noted that the stimulus package will help small- and medium-sized businesses - like the travel agents who are essential to the industry's functioning - with a separate $367 billion loan and grant program. 

In addition, state and local government agencies may draw upon a separate $150 billion tranche of funding. Florida - the cruise industry's geographic home - will likely receive about $8 billion, according to an analysis by the National Council of State Legislatures. Depending upon how it is allocated at the state level, some portion of that funding could potentially boost Florida's port authorities, many of which are invested in the cruise industry.