Tourism & Cruises

Cruises didn’t get taxpayer funds in coronavirus bill, but help could be coming

Cruise lines were left out of a $2 trillion bill to fight the economic and health effects of coronavirus, but the industry’s advocates in Washington say they will pursue taxpayer help in future legislation.

Miami Democratic Rep. Frederica Wilson, who leads a congressional caucus dedicated to Florida’s ports, said in an interview with the Miami Herald that she pushed for the cruise line industry to get loans and loan guarantees as part of a $500 billion fund administered by the Treasury Department for large corporations who are negatively affected by the coronavirus.

Wilson also said she plans to get the cruise industry “some relief” in future coronavirus-related legislation.

“We’re looking for the next package that perhaps we will be able to get some sort of relief in there for the cruise industry,” Wilson said. “There are a group of people, mainly from I think California who are anti-cruise ship, but being anti-cruise ship is different than being anti-people who work on the cruise ship and who are part of the community where the cruise ship is a robust engine for our community.”

According to the Cruise Lines Industry Association, the industry contributes $53 billion annually to the U.S. economy. About $9 billion of that is in Florida, primarily South Florida, where the industry employs about 10,000.

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While the cruise industry did not explicitly lobby for a cash bailout, one cruise line executive said the idea of access to potential loans would have been welcome news.

Representatives from Carnival, Royal Caribbean, Norwegian and MSC Cruises did not respond to requests for comment about their industry’s exclusion from the aid package.

The industry will not get access to $500 billion set aside by Congress for large corporations to recover from a government-inducted recession because the largest cruise companies are registered overseas.

While the three largest cruise companies are all headquartered in Miami, they are registered in other countries: Carnival Corporation in Panama, Royal Caribbean Cruises Ltd. in Liberia and Norwegian Cruise Line in Bermuda.

The fourth largest company, privately held MSC Cruises, has a U.S. headquarters in Broward County, but is based in Switzerland. Their ships are registered abroad too, including in the Bahamas, Panama, Bermuda, Italy, Malta and the Netherlands.

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President Donald Trump said at the beginning of the coronavirus outbreak that the U.S. government wants “to protect our shipping industry, our cruise industry, cruise ships,” though he did not offer details.

But during a White House briefing on Thursday, Trump appeared to echo the concerns of lawmakers from both parties who oppose a cruise industry bailout because the largest companies are headquartered overseas and claim exemption from U.S. income taxes.

“I do like the concept of, perhaps, coming in and registering here. Coming into the United States,” Trump said at Thursday’s White House briefing. “It’s very tough to make a loan to a company when they’re based in a different country.”

White House officials, including the president and his top economic advisers, have been unable to articulate what an acceptable form of aid to the cruise industry would look like.

Miami Democratic Rep. Donna Shalala, who represents PortMiami in Congress, said she’s unsure if cruise companies should get direct government assistance like airlines in response to coronavirus.

I’d have to think about that,” Shalala said.

Shalala also said industry representatives who spoke to her in recent days were mostly concerned about Congress helping small businesses like travel agents who could see business dry up in the coming months.

“We made significant investments that will protect [the cruise industry’s] current workers who they are furloughing or laying off,” Shalala said. “When they came to talk to me they talked about travel agents.”

But prominent liberals like New York Democratic Rep. Alexandria Ocasio-Cortez expressed opposition to taxpayer help for cruise lines after CNBC reported that a group of U.S. senators were also discussing the possibility of future help for the industry.

“The cruise industry registers as foreign companies to avoid paying U.S. taxes,” Ocasio-Cortez tweeted Thursday evening. “Now they want U.S. bailout money. Now the same Republicans who say immigrants who pay U.S. taxes shouldn’t get help are bending over backwards to give to foreign companies who DON’T pay taxes. Insane.”

And environmental groups on Friday called on the Treasury Department to explicitly state that cruise companies are not eligible to apply for coronavirus-related loans and loan guarantees.

“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,” said Kendra Ulrich, Shipping Campaigns Director at Stand.earth. “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.”

The advocacy groups also were concerned that the cruise companies could try to claim that their on-board workers, the vast majority of their workforce, are contractors and that workers in U.S.-based offices are employees, which could make the companies eligible for federal coronavirus funds.

“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,” Ulrich said. “We are calling on the Treasury Department to issue a ruling enforcing the exclusion of cruise companies from the stimulus package.”

The cruise industry is a political player in South Florida, where most of their offices are based. Wilson and Miami Democratic Rep. Debbie Mucarsel-Powell are among the top 20 members of Congress to receive money from the industry during the 2020 election cycle, according to the Center for Responsive Politics.

Wilson said even though the coronavirus relief bill that became law on Friday doesn’t include explicit assistance for cruises, it does help cruise industry employees or contractors who were laid off or otherwise negatively affected by a steep drop-off in cruises.

“We’re concerned about the workers who work for the cruise industry,” Wilson said. “There are thousands of them who live in Miami, who live in Florida. We have enough cruise ports to impact the economy not only of the cruise industry but the ports because cruise ships have to pay fees and tariffs to ports and to the different unions who work at the ports.”

According to PortMiami’s last annual report, cruise lines paid about $77 million in wharf fees in 2018.

She said the bill’s expansion of unemployment insurance and direct cash payments will help laid-off employees, and money for small businesses to continue paying their employees will help contractors who work with the industry stay in business.

But she also said loans will help the cruise lines.

”The cruise industry outlined to us what they were looking for and it was loans,” Wilson said. “They wanted to be able to borrow from the federal government to brace themselves from bankruptcy and to include enough access to cash to bolster the workers who work on the cruise ships and the ports that work on the cruises.”

McClatchy DC White House correspondent Michael Wilner contributed to this report.

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