Galveston-Texas Pilots Suddenly Withdraw Application for Rate Increase

Industry stunned after months of back-and-forth battling; cruise operators left in the lurch on “second pilot” issue.

In a move that shocked local maritime industry stakeholders and left cruise operators scratching their heads as to the fate of the “second pilot” rule in this south Texas waterway, the Galveston-Texas pilots on Monday withdrew their application for a rate increase in its entirety. In a short but surprising meeting before the Board of Pilot Commissioners for the Ports of Galveston County, the pilots also reserved the right to apply for a new rate increase at any time. For the time being, the pilots will be paid according to rates set in 2007.

The withdrawal, negating weeks of negotiations and hearings on setting a new 2009 tariff, also left in doubt an agreement to stop requiring a second pilot on cruise ships of less than 1025 feet LOA. In the wake of the meeting, cruise industry representatives were clearly disappointed. Local industry representative Niels Aalund of the West Gulf Maritime Association (WGMA) said that industry was indeed “very surprised” by the withdrawal, and Pilot Commissioners themselves were reportedly given only a few minutes notice of the pilot’s intentions.

In addition to a number of formal protests to the pilot’s initial appeal for a rate increase, a large swath of local maritime industry stakeholders, primarily represented by the WGMA, had been gearing up for a possible round of appeals following the commission’s decision earlier this month to grant the pilots a 7 percent increase. The 7 percent figure followed a July ruling which had incidated a 5 percent increase, a change which disgruntled many in the area. Previously, WGMA had filed a 2nd objection to the order proposed by the Board of Commissioners of Pilots Ports of Galveston County, Texas filed with the Galveston County Clerk on August 13, 2009 (except for the agreed tariff provision regarding a second pilot on cruise ships).

Monday’s surprise announcement brings industry and the pilots back to square one in their quest to agree on an equitable rate for pilotage services at Texas City and Galveston. An industry insider who did not want to be identified for the purposes of this article told MarEx on Wednesday that the pilot’s surprise withdrawal may have stemmed from fear of litigation with regard to the new pilotage rates. Separately, Niels Aalund, vice president of WGMA, said the decision could be seen as a victory for industry. He further asserted that the pilots had faced criticism for seeking a rate increase despite current economic conditions.