Pierfrancesco Vago, Executive Chairman, MSC Cruises
***From Jan-Feb 2015 Edition of The Maritime Executive magazine***
Under Vago’s leadership MSC Cruises has become #1 in the Mediterranean and the fastest growing cruise company in the world – in just ten years. Here’s his story.
MSC is one of the biggest container shipping companies in the world. How did it end up in the cruise business?
Not only is Mediterranean Shipping Company (MSC) the second largest container line in the world, but it is the largest privately held, family-owned ship operating company in the world. The company was founded in 1970 by Gianluigi Aponte. Today, it operates around 500 ships and has more than 350 offices and about 65,000 people worldwide.
As to how we got into the cruise industry, Mr. Aponte is originally from the south of Italy, and another shipowner from the region named Achille Lauro owned a cruise line called Lauro Lines. You might remember him. His ship, the Achille Lauro, was hijacked by the Palestine Liberation Front in 1985. After this infamous ordeal, Mr. Lauro began having financial difficulties and Mr. Aponte helped by taking over and renaming the company Star Lauro. It basically was a friend helping a friend in need. Mr. Aponte never envisioned being in the cruise industry.
When was the decision made to stay in the cruise industry?
MSC Cruises grew out of Star Lauro, in 1995. Mr. Aponte continued to operate the MS Achille Lauro and bought a ship named the Atlantic (one of the “Big Red Boats”), which he renamed the MSC Melody. In 1994 the Achille Lauro caught fire and sank off the coast of Africa. Fortunately, no one was injured. Mr. Aponte bought two smaller ships and renamed them MSC Rhapsody and MSC Monterey.
During the late 1990s and early 2000s the cruise industry was evolving quickly, and Mr. Aponte was approached about selling the cruise company. Shipping and seafaring were in his blood, and the offer to buy his company was an opportunity to really reflect on his position in the cruise industry. But he has a real and special bond with seafarers and didn’t want to sell their jobs out from under them. In 2004 I was working in the cargo division of MSC, and he told me his vision for the cruise line and asked me to be CEO. We had three old vessels and about 80,000 passengers per year.
So Mr. Aponte saw something of value for people wanting to vacation on ships?
Yes, but he also understood that there was no future in the industry unless the ships had balconies and quality entertainment. So we began a newbuilding program.
What was the first vessel built?
The first newbuild was MSC Lirica at 56,000 gross tons. It had 780 cabins and could handle 1,500 passengers and a crew of over 700. It was built by Chantiers de l’Atlantique in Saint-Nazaire, France. In 2004 the MSC Opera, the second ship in the Lirica Class, was delivered by the French yard. We added balconies to the new ship because it was paramount for passengers to not only enjoy the sea but also have privacy in their cabins. Thereafter, all of our ships would have a really high percentage of cabins with balconies.
How long had you been with the company at that point?
My father owned a freight forwarding business, which was a good client of MSC. He sent me to the UK to learn English. Then he sent me to work for MSC in Geneva for about eighteen months to learn business. Some years later my family, with the Aponte family, ran the ferry company SNAV in a joint venture with Hoverspeed in the Adriatic with a route between Italy and Croatia. The Balkan wars had ended by then, and the region was becoming a tourist destination. Eventually I moved back to Geneva to work in the cargo division of MSC, and in 2004 I took over the cruise division as CEO.
The MSC Cruises’ logo is different from the MSC logo. How did that come about?
I remember many years ago I was landing at Miami Airport, and MSC Lirica was berthed at the cruise terminal at the Port of Miami. There were also a couple of other ships at the terminal, and I could distinctly see the logos on their funnels. But the MSC logo, which was gold on white, was almost invisible in the bright sunlight. So we changed it to dark blue on white to make it stand out more. And while we kept the Mediterranean Shipping Company “MSC” with the “M” atop the wave over the “S” and “C,” we added a wind rose design around it to distinguish it from the cargo division.
The ships all have musical names. Tell us about that.
It’s simple, really: Running a cruise ship is a complex operation involving the concerted efforts of many people, just like an orchestra. From the guys in the engine room to the housekeepers and the entertainers, the whole team has to pull together, taking their lead from the captain, who’s their “conductor.” But actually only half of our ships have musical names. The others – Splendida, Poesia, Divina, Fantasia, Magnifica, Preziosa – have names chosen to reflect the company’s aspirations of perfection.
What distinguishes MSC Cruises from other cruise lines?
For a start, the principles of the Aponte family, which grew out of what we call the “masters of the sea” tradition. This tradition is clearly evident in both the cargo and cruise operations. It’s about the passion and knowledge and expertise it takes to run a ship correctly. It’s a quality that other operators don’t seem to have because it is rooted in centuries of Italian seafaring heritage.
The desire to provide extraordinary luxury on contemporary cruise ships is what drives our company, and we go the extra mile because we are not driven by quarterly earnings. The exquisite design and fine materials seen on the ships come straight from the Aponte family’s sense of elegance and warmth and sophistication.
How do you combine business acumen with MSC’s distinctive “Mediterranean Way of Life” experience?
We are a private company based in Geneva, Switzerland, so our business operates like a Swiss watch. Yet we run it with Italian flare and hospitality and the welcoming warmth of the sun and food of the Mediterranean. In 2003 MSC Cruises carried 70,000 passengers, but we’ve grown more than twenty-fold since then. Last year we had 130 different nationalities onboard the ships and handled more than 1.6 million passengers. One reason for this extraordinary growth is that MSC is family-owned. Decision-making can happen quickly. It’s not hampered by the processes and concerns that affect publicly listed companies.
So we’ve adapted to the marketplace and control the product in-house, adapting and fine-tuning it according to our own canvas. There are no subcontractors anywhere on the ship. From the shops to the spa and from the entertainment to the crew, including the deck and engine room, everything is designed in-house and operated by MSC personnel.
Are you looking at the Asian markets for expansion?
We are a global company and brand, running genuinely global operations. We believe in organic growth, and we have a strong sales and marketing presence in Japan and China. We have four new ships on order with options for three more, and we plan to continue to grow the company organically.
These new ships are two radically different prototypes, although both are revolutionary. One prototype is being built in Italy and the other in France. The new ships have been designed for dissimilar canvases with different interiors, and these ships will open the horizon to everywhere, including Asia.
Will you choose from the different prototypes or develop both of them?
We are going to develop both prototypes, which are called the Vista Class and the Seaside Class. These ships are unprecedented and will in a sense reinvent the cruise experience. They’re full of state-of-the-art technology, innovative onboard features, hardware and software, all designed with the modern cruiser in mind. They’re more ecologically sympathetic. They’re big yet nimble, able to dock pretty much anywhere, and they’ll provide an incredible experience. They’ll be delivered about six months apart with the first in the spring of 2017 and the second in the autumn.
The MSC Yacht Club is like a ship within a ship. Tell us about its features.
The concept is based on the way the hotel industry has exclusive floors with special amenities for high-end guests. Luxury cruise ships are typically small, which means lower crew-to-guest ratios, but it also means they don’t have the restaurants, bars, spas, casinos, entertainment and other features of the larger ships. MSC Yacht Club combines six-star exclusivity with the excitement and variety of a big ship.
The Yacht Club offers a dedicated spa, pool and elevators, which are isolated from the rest of the ship, so often the other passengers won’t even know the Yacht Club is there. Picture a luxury setting where a butler unpacks and repacks your luggage, then delivers you whatever newspaper you want. And if Yacht Club passengers want to enjoy the main casino and bars or entertainment, they can do so.
The Italian shipbuilder Fincantieri is stretching four of the Lirica Class vessels. Why is stretching older vessels more beneficial than building new ships?
The MSC Renaissance Program will modernize MSC Lirica, MSC Opera, MSC Armonia and MSC Sinfonia, which are four of the earliest members of our fleet. We are adding more balconies to each of the vessels and renovating all the common areas, creating more open public spaces, more areas with sun access so people can relax and take things at their own pace.
How long will it take to stretch each vessel?
It takes about ten weeks once the ship moves into drydock. The midship sections are prebuilt and moved into place by trolleys and then welded into place, which is not unlike welding on a newbuild ship. Meanwhile, subcontractors are ready to move onto the ship with furnishings and interior construction. It is all about coordination and planning. This operation has never been done before in drydock, but if anyone can do this safely and successfully it’s Fincantieri, which is home to some of the best marine engineers anywhere.
Why are most cruise ships built in Europe?
The European yards have years of engineering experience building luxury ships for the cruise industry, experience that is unsurpassed anywhere else in the world. While bulker and container ships are all about assembling steel and designs to maximize payloads, cruise ships are about elegance and memorable passenger experiences. Another factor that gives European yards an edge is the infrastructure of subcontractors that can meet the demanding schedules and requirements of cruise ship owners. Whether it is engines, navigational equipment, lighting or furniture, the European yards have a competitive edge that does not exist in North America or Asia at this time.
What is the biggest challenge in growing so fast?
The biggest test has been controlling the corporate infrastructure during a period of double-digit growth. For a couple of years there were no new vessels coming online, so we had the opportunity to streamline operations and customer relations procedures in order to meet the huge demand for our cruise vacations. The growth also inspired the revolutionary ship designs of the new prototypes under construction.
Do you have any final thoughts to our readers?
At MSC it is about hundreds of years of history and tradition and family. Unlike our competitors, we were seafarers first, and we learned about the business of hospitality, relaxation and entertainment afterwards. We are not afraid to spend extra to ensure that our passengers are enriched by the cruise experience. – MarEx
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The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.