FEMA Pays Exorbitant Price for Charter of Carnival Fascination After Hurricane Maria

According to WRLN in Miami, FEMA grossly overpaid Carnival Cruise Line to charter the Carnival Fascination to provide housing for FEMA workers following Hurricane Maria. 

According to documents obtained through the Freedom of Information Act (FOIA) by Daniel Rivero, WLRN states that FEMA agreed to pay Carnival $74,700,000 to provide accommodations aboard the Carnival Fascination to house federal aid workers and first responders in St. Croix.  

As WLRN explains, the FEMA-Carnival contract provides that the cruise line agreed to house 2,056 FEMA workers for the length of the four month contract. The average number of nightly passengers for the contract period was around 800 which, given the contract price, turns out to be $834 per person Carnival Fascinationper night, paid by U.S. taxpayers. That's a staggering rate or well over over $5,000 per week per passenger. 

WLRN calculated the market rate for a cruise on the Carnival Fascination between $370 and $1,200 per person per week, which is a fraction of the rate paid by FEMA. 

I also obtained a copy of the FEMA-Carnival charter agreement pursuant to a FOIA request earlier this year. It revealed that FEMA agreed to pay what turns out to be $18,675,000 a month for the Fascination

This exorbitant amount of taxpayer money is even higher than what FEMA paid Carnival in 2005, to charter three Carnival cruise ships following Hurricane Katrina. FEMA agreed to pay Carnival an average of only $13,111,111 a month (for a total of $192,000,000) to charter the Carnival Sensation, Carnival Ecstasy and Carnival's Holiday for 6 months (plus $44,000,000 for fuel and other expenses) following hurricane Katrina.

Plus, as I pointed out in the article FEMA Agreed to Pay Carnival $74,700,000 for Charter of Carnival Fascination, Carnival didn't pay any federal taxes on this income. 

In the WLRN article, cruise expert Professor Ross Klein pointed out that Carnival is registered in Panama and pays almost no U.S. income taxes which he believes is a larger concern for how the contract was handled.

“The US Government hired a foreign registered corporation that uses foreign registered vessels with foreign workers (working in the US but not paying US income tax). And because the corporation is offshore, and the ship is offshore, the company pays virtually no income tax on the contract. Now that is a sweet deal,” Professor Klein told WLRN.

What is even more disturbing is that, as WRLN points out, FEMA first (over) paid Carnival even before it disbursed funds to the survivors in the U.S. Virgin Islands hit by the hurricane. Numerous media sources are also now reporting that the death toll in Puerto Rico due to Hurricane Maria was drastically underestimated. The consensus is that that the actual number of deaths was around 5,000 citizens, compared to official estimates of less than 100.   

Have a thought? Please leave a comment below or join the discussion on our Facebook page. 

Photo credit: Chrismschurz - CC BY-SA 3.0, commons / wikimedia. 

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Comments (6) Read through and enter the discussion with the form at the end
JJ - June 1, 2018 9:00 AM

This is revolting.

Charles Marc - June 1, 2018 9:14 AM

Supplier ask for going rate or what they can get. So I assume that the purchaser should make some logic what they pay even in times of need. One person should be the last sign off and responsible for approving this high price.

Frans - June 1, 2018 11:30 AM

You calculate the price using actual guests per night. This is wrong. If you hire a ship for the duration of 4 months, it will be out of the cruise circuit for that period. Cruises usually sail almost full, so the cruise company will have to be compensated for that. So given the lowest charge of 300 times 2000 times 12 (roughly four months) the amount comes to 72.000.000 and presto, that is pretty close to the paid amount.
So this is not exorbitant at all!

Brent - June 3, 2018 10:21 AM

You also have to add in all the other expenses passengers usually choose to pay, which alone often ends up being more than what they paid for the initial cruise fair.

John Goldsmith - June 3, 2018 10:54 AM

Nice sales number,The staffer who negotiated that will get a nice bonus. I would be more concerned, not about the free enterprise business make a boatload of money, but the official at FEMA who signed off on the expense.

Danny Meyer - June 4, 2018 2:00 PM

This has nothing to do with Carnival. If anyone is unhappy take it up with FEMA. Carnival gave them a price to take a ship out of it normal activity for a period of time. FEMA said how many people would be housed and for how long. Not Carnivals fault if that number was short or the time was wrong. They gave a price, FEMA accepted the price. Nothing else matters. Deal with the facts only. No different than buying a hamburger at a Wendy's or Burger King or any other food place. It is your choice same as it was FEMA's choice. Move on.

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