Last year, following a series of hurricanes which struck the Caribbean, FEMA decided to charter the Carnival Fascination to house relief workers in St. Croix. The news was widely reported last October. Carnival cancelled its sailings of the Fascination from October 2017 through January 2018 with the cruise line planning to return the cruise ship to its regular itinerary from San Juan in February 2018.
Carnival touted the deal as demonstrating its humanitarian commitment to the Caribbean relief efforts.
Carnival told the Miami Herald last year that its “history is deeply linked to the Caribbean and our ships have been sailing within the region for more than 45 years. We are pleased to be partnering with FEMA on this charter in support of the ongoing relief efforts in the Caribbean.”
I wondered at the time, what type of sharp deal had Carnival obtained at the expense of the U.S. government? This is, after all, a corporation which was incorporated in Panama and registered its fleet of cruise ships in that country to avoid paying U.S. taxes, as well as U.S. safety and labor laws and regulations. So I made a request pursuant to the Freedom of Information Act (FOIA) to FEMA, which recently responded with a copy of the Carnival-FEMA charter agreement for the Fascination (which you can see below).
The relevant terms are that FEMA agreed to pay Carnival $74,700,000 over the course of 4 months.
The charter agreement includes $39,700,000 (million) plus “costs” of $35,000,000 (million) for a total of $74,000,000 (million).
This is a whopping amount, even compared to the CCL-FEMA deal made back in 2005 when FEMA paid $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.
FEMA was criticized for paying a total of $236,000,000 for the three Carnival ship over the course of six months, an amount which the Washington Post called an “exhorbitant price.” The Post commented that if the ships were at capacity for six months, the price per evacuee would total over twice what an average passenger would pay which “would include entertainment and the cost of actually making the ship move.”
In the current CCL-FEMA charter, FEMA agreed to pay what turns out to be $18,675,000 a month for the Fascination; whereas in 2005, it paid an average of only $13,111,111 a month for each Carnival ship.
That’s over $5,500,000 a month more than what FEMA paid back in 2005 for each of the other three Carnival ships, even though the Ecstasy and the Sensation are essentially identical to the Fascination. All are Fantasy class ships with the same number of lower berths (2,056). The Holiday, which is no longer in Carnival’s fleet, had a lower capacity of lower berths (1452).
Most states in the U.S. have anti-gouging laws following hurricanes when a state of emergency has been declared. But post-hurricane gouging appears to be business as usual for Carnival.
In 2005, following hurricane Katrina, the cruise trade organization, CLIA, requested that the U.S. Treasury Department exempt Carnival from paying income tax on the cruise ships it chartered to FEMA, even though the ships were moored in U.S. waters during the entire charter, making them clearly subject to U.S. taxes. In this case with the Fascination, the cruise ship is moored in St. Croix, which is a U.S. territory where citizens are expected to pay U.S. taxes. The monies paid to Carnival for the current charter of the Fascination also should be subject to U.S. taxes. Carnival undoubtedly will seek a similar exemption from the taxes which are owing.
After the charter, the Fascination will undergo a two-week dry dock from February 4 to 17, 2018, in Freeport, Bahamas, prior to resuming its regular seven-day cruises from San Juan, Puerto Rico, beginning February 18, 2018. Carnival plans to install a Guy’s Burger Joint, Blue Iguana Cantina, Red Frog Rum Bar, Blue Iguana Tequila Bar, Cherry On Top, Bonsai Sushi Express, and the Alchemy Bar during the extensive and expensive renovation.
If you decide to sail on the Fascination next month, be sure to thank the U.S. government when you enjoy a beer and burger in the new bars and restuarants on the ship which will essentially be paid for from the excessive price of the no-bid contract with the federal government, which probably will not charge Carnival any U.S. taxes either.
I reached out to Carnival for a comment but have heard nothing to date.
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Photo credit: Verybigfish86 (talk) – Public Domain, commons / wikimedia.