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Cruise Lines Shocked By Government’s Proposed Rate Hikes

Industry association says government had committed to freezing costs through June 2004


August 28, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Michele Paige, president of the Florida-Caribbean Cruise Association (FCCA), says association members are flabbergasted by the Puerto Rico Ports Authority’s plan to increase fees for cruise passengers coming to the island. "We’re shocked by what’s on the table," she said.

The FCCA represents 13 cruise lines operating some 100 vessels in Florida, Caribbean, and Mexican waters.

"We [the FCCA] worked diligently over a two-year period with Milton Segarra, former executive director of the Puerto Rico Tourism Co., to be able to have Puerto Rico reach its goals for cruise traffic, number of calls, passenger spending, and cruise-line spending, and to market the island to our guests and travel agents better by having the sales staff from Puerto Rico work with the sales staff of the cruise lines," Paige said. "We have worked on all of these aspects and had a firm commitment for the operational costs to remain [fixed] through June 2004."

The FCCA has letters signed by Segarra extending the island’s incentives to cruise lines until June 2004 and suggesting that the incentives would be extended until 2008.

The Ports Authority proposes raising the head tax on every passenger arriving or departing the island from $10.50 to $15, a 43% hike. The government actually charges an average $7.50 head tax (after deducting a rebate given by the Puerto Rico Tourism Co. to cruise lines as an incentive for passenger volume).

The new rates are expected to take effect in January, but the agency must first submit the proposed rates to an examiner who will hold hearings on the matter. The Ports Authority collects about $12 million a year in fees on cruise passengers; the new rate would generate an additional $5 million.

"Most destinations we deal with have signed long-term agreements with us," Paige said. "We just signed a 16-year agreement with the Cayman Islands and a five-year agreement with the U.S. Virgin Islands. We had spoken to Milton Segarra about extending the agreement that’s in place because we need a firm commitment, and he assured us that if we had the growth, they [the government] wouldn’t need to increase the fees."

This Caribbean Business article appears courtesy of Casiano Communications.
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