NCL plans to reflag Pride of Hawaii and reposition it in Europe

Pride of Hawaii gets the finishing touches in March 2006 at the Meyer Werft shipyard in Papenburg, Germany. The ship, which will be renamed Norwegian Jade, will enter a Honolulu shipyard in February 2008 for modifications for service in Europe, including the addition of a casino. (Christian Eckardt)

Norwegian Cruise Line’s U.S.-flagged Pride of Hawaii, built in 2006 to expand the line’s presence in the Hawaiian Islands, will be repositioned to European waters for the summer of 2008.

The ship will be renamed Norwegian Jade and registered in the Bahamas.

The 93,000-grt Pride of Hawaii has a passenger capacity of 2,800. In addition to Pride of Hawaii, NCL’s Hawaii fleet comprises the 70,000-grt, 2,000-passenger Pride of America and the 77,000-grt, 2,000-passenger Pride of Aloha.

The ship’s reassignment is “a temporary retrenchment” taken to ensure that Pride of Aloha and Pride of America are able to achieve acceptable profitability in the face of surging competition, said Colin Veitch, president and chief executive of NCL Corp.

According to an NCL spokeswoman, “The Pride of Hawaii will enter a wet docking in Honolulu on Feb. 6, 2008, where it will receive modifications including the addition of a new casino and new hull artwork.”

Since 2006, operators in the Hawaii cruise market have been experiencing downward pressure on fares because of excess capacity. For NCL, that resulted in substantial operating losses. Veitch noted the addition of Pride of Hawaii to its Hawaii fleet last summer was one major factor in the losses. Another factor, he said, was the steep expansion of “foreign-flag competition entering the Hawaii market from the West Coast.”

The flagging issue has been an important part of NCL’s Hawaii market strategy. The company launched its NCL America (NCLA) Program in 2004 based on a special Congressional exemption enacted in 2003 to existing Jones Act rules. That exemption allowed NCL to build three cruise ships in foreign shipyards and flag them as U.S. vessels with U.S. crews. Unlike foreign-flagged vessels, these ships could sail between U.S. ports in the Hawaiian Islands without making a stop in a foreign port.

That exemption gave NCL a strong marketing advantage in Hawaii. However, these ships had the disadvantage of using more expensive U.S. crews.

NCL said the crewmembers of Pride of Hawaii would be able to find work on other NCL vessels. “The crew aboard the Pride of Hawaii will be offered positions on other NCL or NCLA ships, including the Pride of America, Pride of Aloha, the reflagged ship and the balance of the NCL foreign-flag fleet,” a company spokeswoman said.

The decision to downsize NCL America even temporarily has raised new concerns about the fate of the historic ocean liner SS United States. “When NCL bought the United States in 2003, they announced that after building three new ships for NCL America, the United States was going to be the fourth ship,” said Daniel Trachtenberg, president of the S.S. United States Foundation. He remains cautiously hopeful that NCL will return the ship to service, “but we are taking a wait-and-see attitude.”

NCL said it still intends to go ahead with the project to resurrect the ship. “The United States is indeed the next project we have in mind for the NCL America brand,” said the NCL spokeswoman. “The nature and timing of the rebuilding — it is more than a refurbishment — has yet to be determined. We are still at an early stage with an engineering feasibility study almost completed that will then lead to a more detailed design project.”

In an article about the ship in the Philadelphia Inquirer, the paper quoted Veitch as saying that engineering studies confirmed the vessel can be modified to meet modern safety and stability standards.

Looking at the Hawaiian market, Veitch said, “We demonstrated that Hawaii is a highly attractive cruise destination and now has four times as much capacity serving it in 2007 as it did in 2004 when we started NCL America. Clearly we are victims of our own success.” However, he added, “We remain committed to building a strong U.S.-flag cruise business home-ported in Hawaii.”

Categories: Maritime News