Some people might be wondering why the Cruise Line Industry did not receive any government aid in the COVID-19 Relief package. That is because they are not American companies. While they do employ Americans, all the major ocean-going cruise lines like Norwegian, Carnival, Royal Caribbean, Princess, etc., are foreign companies. They are registered in places like Panama, Liberia, and Bermuda. Their ships (except for one Norwegian ship) are not American flagged ships. In other words, they are not registered in the United States.
Why is it like this you might be asking? Because by domiciling their corporations in countries like Panama, Liberia, and Bermuda, the cruise lines avoid paying U.S. corporate taxes. It is a profit-driven decision. Likewise, the ships are registered overseas because were they registered in the United States, they would have to be crewed by Americans. Americans demand or require higher pay than the foreigners who do crew the ships, which would cut into the cruise lines profit margins. So again, it is a profit-driven decision. These foreign-owned companies with foreign-flagged ships do benefit the passengers who sail with the cruise lines. Since the cruise lines tax burden and labor costs are lower, they can offer cruise packages at a much lower price to the customer and remain profitable. As long as the cruise lines continue to be foreign companies with foreign-registered ships with international crews, the United States Congress will not be willing to give the cruise lines financial aid.
As the COVID-19 emergency drags on, the situation for the cruise lines could become quite desperate. I have no idea how long the cruise lines can continue to sit idle paying crews and making payments on shiny new ships before they go bankrupt. How long they can sit idle depends on how much cash they have on hand or what commercial loans they can secure from the big banks. So, what will happen?
Eventually, the stress on the cruise lines will begin to show up in their stock prices. As their stock prices approach zero, they will become relatively cheap to purchase. A billionaire like Warren Buffet could come in and buy out the line and inject the necessary cash. That's option 1. Option 2 is the cruise lines go bankrupt, and the banks take possession of the ships and sell them to the highest bidders.
My proposal, which I will call Option 3, is that the cruise lines "Americanize." That they become American companies with American flagged ships, the cruise lines would then be subject to United States taxes. The cruise lines would then have to hire American crews. After the cruise lines redomicile and reflag, then I imagine Congress would be willing to help. Such a deal could probably be struck with Congress, where aid would flow pending the redomiciling and reflagging of the cruise line(s).
Since I doubt the CDC will recommend anyone go on a cruise ship anytime soon. In addition to the CDC issue, the ports that the cruise ships wish to call on much be willing to receive the ships and their thousands of passengers. Therefore, I believe it will be a while before the cruise ships go anywhere. How this plays out only time will tell; however, it will be exciting to watch.
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