Costa Concordia cruise ship capsized off Tuscany, at the hands of the captain's navigational error has left 11 dead, and 21 people are still missing as of January 18.
The captain, Francesco Schettino, was arrested on charges of manslaughter, causing a shipwreck and abandoning ship, Italian police said. Some 64 people were injured in the accident. Abandonning ship before the passengers were safe, violates the maritime navigation code. According to the Italian navigation code, a captain who abandons a ship in danger can face up to 12 years in prison.
The $450 million, Costa Concordia, ran into a reef Friday night and capsized into the port area of Giglio, sparking a frantic evacuation of the 4,200 people onboard.
From what is being reported the crew was terribly unorganized because of the way the ship started to list on its side making lifeboat evacuations impossible. Most crew had only been trained to evacuate the boat by using the lifeboats, so when that was no longer an option the crew didn't know what to do. Some crew told the passengers to go upstairs, others said to go downstairs; others had no directions to give at all, which let to hysteria among the passengers.
The rescue operation was called off mid-afternoon Monday after the Costa Concordia shifted a few inches in rough seas. The fear is that if the ship shifts significantly, some 500,000 gallons of fuel may begin to leak into the pristine waters around the island of Giglio.
The cruise ship industry faces an uphill task to restore confidence among customers spooked by spectacular images of the stricken Costa Concordia flipped on its side and could suffer a major hit to sales during a key booking period. The news media and social media outlets have been flooded with images of the ship tipped up on its side in the water, along with horrifying accounts from the passengers, and these images will stick with potentially customers when these customers go to book their next upcoming vacation.
Carnival, the owner of the cruise ship that capsized off Italy's west coast, said it alone expected to take a hit of around $90 million from Friday's accident just as a result of the boat being out of use for the rest of the year.
Each year between 60% to 70% off the year's cruises are booked between January and March. This is due to the cruise lines releasing their new itineraries and schedules in early January. Right now you can book cruises with most of the major cruise lines through 2014.
Only 7% of Americans have ever taken a cruise. The cruise industry has many loyal returning customers who book and pay for their cruise years in advance. These customers will still be there despite this tragic accident. These customers take more than one cruise a year and book booth short and long cruises and will travel out of different ports and try out different ships around the world, and this incident will not affect their booking and spending potential.
Cruise lines also have customer who will not cancel their already booked cruises. These customers will fall under honeymooners, passengers that have already planned to get married onboard, passengers who have already put in for time off work or passengers who have organized a family reunion onboard and have already booked flights, hotel accommodations, wedding invitations, etc.
Most of the advertising dollars that are spent are spent on enticing brand-new cruisers, not the seasoned veteran cruises. The cruise lines can upsell these new cruisers and book them in a higher category stateroom, sell them expensive land excursions, and will hopefully entice them to gamble, drink, and indulge at the day-spa. The TV commercials paint pictures of luxury accommodations, 5-star dining, sun and fun all for a reasonable price and reduced deposits, that make cruising affordable for every family.
We saw one statistic on the news stating that out of 1,000 people 26% of those people stated that this accident has changed their opinion about cruising. What the poll didn't ask is whether or not these 26% were ever potential cruise customers. These people may have never wanted to cruise, or thought about buying a cruise, so they were never potential customer that the cruise lines were possibly marketing to anyway. Surprisingly 91 people 0of the 26% were over the age of 65, and stated they would be less likely to cruise because they would have a lesser chance of survival in such an accident.
When you take a look at fatal automobile accidents based on the numbers of miles traveled, and fatal airline crashes based on the number of miles traveled, and fatal cruise accidents, the cruise industry has far less fatalities per miles traveled. Almost every major airline has had some sort of fatal accident, yet each these same major airlines fly millions of passengers coast to coast each day. Airline customers didn't "jump ship" so to speak to a different airline after an accident since they still wanted to, needed to or had miles to use with that particular airline, and we think the same will happen with this cruise accident.
Immediately after the Carnival Splendor caught fire, Carnival pulled most of their ads, as they wanted to keep their name out of the media and protect their image to brand new cruisers that they could lure in with juicy TV commercial advertisements. If you remember the Carnival Splendor's engine room caught fire, and the ship was left without power and running water. The ship was stuck at sea for several days and eventually the US Navy airlifted food and water to the passengers. This incident happened in November 2010, and yet this year Carnival reported a banner year in bookings, and are still currently running commercials and discounted sale prices, despite their name being in the middle of this current accident.
The worldwide cruise market is estimated at $34.1 billion for 2012. Cruise passengers carried worldwide in 2012 is estimated at 20.3 million, a 5.6% increase over 2011. While cruise lines have grown, annual passengers traveled at a compound annual growth rate of 7.4% since 1990 - all the cruise ships in the entire world filled at capacity all year long still only amount to less than ½ of the total number of annual visitors to Las Vegas.
In 2010 alone, twelve new ships debuted from AMA Waterways, Avalon Waterways, American Cruise Lines, Celebrity, Costa, Disney Cruise Lines, MSC Cruises, Royal Caribbean International, Seabourn, Cunard Line, Holland America Line and Norwegian Cruise Line with guest capacities ranging from 101 to 5,400 passengers sailed the world’s waters for the first time.
On the heels of the several new ships to be added to the market in 2012 (including the 3,690 passenger Carnival Breeze, the 3,013 passenger MSC Divina, 3,012-guest Costa Fascinosca and 2,500 on Disney Fantasy) eight more new cruise ships will launch by 2015. These ships will generate another $2.3 billion in annual revenue for the cruise industry. By 2015, 22.3 million cruise passengers are expected to be carried worldwide.
Today’s ships offer a new generation of onboard features and a world of innovation, including surf pools, planetariums, on-deck LED movie screens, golf simulators, water parks, demonstration kitchens, self-leveling billiard tables, multi-room villas with private pools and in-suite Jacuzzis, ice-skating rinks, rock-climbing walls, bungee-trampolines and much more. Today’s ships feature 24-hour a day itineraries filled with activities to accommodate family members of all generations traveling together.
The cruise industry won't go out of business over this tragic accident, that could have been avoided, but it may lose some potential new business. In the coming months if the cruise lines see drops in booking like they did after 9/11, we think we will see some significantly discounted cruises going on sale during spring and summer.
The cruise lines will discount the staterooms if need be to fill the ships, knowing full well that you will continue to spend your money with them buying drinks, gambling, paying for a la carte meals, shopping at the boutiques, paying for internet usage, buying land excursions, and paying for over-priced photographs of you and your family having fun onboard their ships.
We have a feeling that this accident will lead to some changes across the cruise industry, such as additional training for crew members on evacuation procedures, and will probably lead to a secondary means of evacuation plans and routes when Plan A fails, the cruise industry will have a Plan B.
Billions and billions of dollars are spent every year improving ports, building new cruise ports in the Caribbean, building new restaurants, streets, and shops near the ports. Hundreds of cities count on the cruise passengers to buy their products and they employee millions of their local people to work at these facilities. So at the end of the day there is far too much money at stake for the cruise industry to be done-in by one highly publicized tragic accident.
