Cruise Crisis Management FAIL - How Carnival is Ruining its Reputation Following the Costa Concordia Disaster
A cruise line's reputation in a time of crisis is often formed not by the circumstances which caused the crisis but by the company's attitude, appearance, and action afterwords.
I call this the "three A's" of cruise line crisis management: attitude, appearance & action.
When disaster strikes and passengers are injured or killed during a vacation cruise, the U.S. public has a remarkable capacity to forgive the individuals and companies involved. Part of this tendency to forgive, rather than judge, is tied to the Judeo-Christian heritage of our country - where we sacrifice resentment and seek redemption in the process.
In practical terms, Americans understand that accidents are inevitable. "Sh*t happens," the saying goes. Bad things happen to good people. An individual or company should be forgiven if they demonstrate a humble and respectful attitude; they appear on the scene to take stock of the problems they caused; and they take prompt action to help others injured by their conduct.
So how have the principal actors in this drama performed so far?
Captain Francesco Schettino failed miserably. His attitude has been defiant. His appearance? None. He abandoned ship in dereliction of the traditional maritime duty to stay with the vessel dating back to the Medieval Sea codes. He fled the scene of a crime. His actions? Self preservation. Disregarding orders by the Italian Coast Guard to return to the cruise ship and assist in the evacuation. Lying. I slipped-and-fell-into-a-life-boat defies reason and belief.
Costa's chief executive, Pier Luigi Foschi, and parent company Carnival's CEO, Micky Arison, are close behind the disgraced captain in trying to ruin their reputations.
Arison admittedly expressed his condolences from the comfort of his 200 foot luxury yacht in the Miami area. But carefully crafted corporate PR statements go only so far. He failed to appear at the scene. How hard is it to hop in a Gulfstream jet and fly to Rome and then head over to the island of Giglio?
In Miami, we hear snickering that as the Costa Concordia sits on its side with dead passengers still trapped inside, some of the the Carnival executives have been seen gallivanting around town at black-tie gala parties and even Miami Heat professional basketball games. (CEO Arison owns the Miami Heat.) But it was only this weekend, one week after the crisis started, that Arison sent senior executive Howard Frank to Italy. Even then, Howard appears to be in Genoa where Costa's headquarters are located. He apparently has no intention of making an appearance at the scene of death and destruction.
Although the physical presence of corporate executives at the scene of a mass disaster may be largely symbolic, such visual images are important to demonstrate the corporation's attitude of concern and compassion.
President George Bush was perceived as demonstrating the right attitude when he appeared at the remains of the Twin Towers following 9/11. He was photographed (left) standing on a pile of smoking rubble, with his arm around a fire chief, encouraging other fire fighters through a bullhorn. But when Hurricane Katrina struck New Orleans and images of panicked residents waving to helicopters on the roof of flooded house were broadcast on the cable news stations, the president was no where to be seen. Photographs of President Bush (below right), later published of him looking from a window on Airforce One 35,000 feet over the disaster below, made him appear aloof and disconnected and did his reputation more harm than good.
Carnival has managed prior cruise disasters effectively in the past. When an engine room fire disabled the Splendor cruise ship in 2010, Carnival sent a team of executives from Miami to San Diego where they conducted a highly publicized press conference at the port. Carnival offered reimbursement of all cruise fares, waived all onboard purchases and promised a free cruise in the future.
Carnival followed the "three A's" of crisis management perfectly. Its attitude was humble. It appeared on the scene. And it took immediate action to solve the problem.
I was so impressed that I wrote an article praising Carnival and providing my opinion why it should not be sued for the accident.
But Carnival does not seem to know how to act following the Concordia disaster.
We hear Carnival's CEO Arison finally saying the rights things. Five days after the crisis unfolded later, he finally tweeted "I gave my personal assurance that we will take care of each & every one of our guests, crew and their families" He included a link to a press release issued by Carnival promising to take care of everyone. But this weekend, there are news reports that the cruise survivors were stunned and insulted when Costa CEO Foschi offered a 30% discount on future cruises as part of proposed compensation to stave off lawsuits.
A 30% discount? Talk about pouring salt into the wound. The cruise industry collects over $35,000,000,000 (billion) a year mostly from tax paying Americans yet it pays no U.S. federal taxes because it registers it vessels overseas and incorporated itself in Panama to avoid U.S. tax, wage and labor laws, and health and safety laws. Arison himself is the richest person in Florida with a net worth of over $4,000,000,000.
Carnival will not hesitate to make a claim against its underwriters for payment of $500,000,000 for its wrecked cruise ship as well as seeking hundreds of millions of dollars for the lost revenue caused by not being able to collect money from passengers sailing on the cruise ship in the future. It is now rightfully facing public ridicule by offering a discount worth a few hundred dollars to avoid litigation. I hate to think what the families of the dead loved ones think about taking a discounted Costa cruise in the future.
Carnival and CEO Arison have a mixed reputation in Miami over the years. Lots of travel agents love Arison. But Arison has faced more than his fair share of critics for Carnival's avoidance of taxes, exploitation of foreign crewmembers and indifference to the problem of women and children being sexually assaulted on Carnival's cruise ships. Consider these articles: "Is Mickey A Greedy Corporate Pig?" or "The Deep Blue Greed - The Arison Clan Built Carnival into a Money Machine by Cleverly Avoiding Tax Laws" or Carnival? Try Criminal.
Carnival has enormous financial resources and insurance proceeds to respond to the disaster and compensate the families who are suffering because of its reckless captain. It can take care of the mess and salvage its reputation. But does it have the corporate ethics to do so? We know that CEO Arison loves the limelight when his businesses are successful. But if Arison and Carnival's executives don't care enough to appear in Giglio to speak with the survivors directly and assess the situation personally, they risk earning reputations no better than that of their arrogant and cowardly Captain Schettino.
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