Advisers don’t foresee dumping violations affecting Princess Cruises

Princess Cruises certainly won’t win any new customers from
the revelation of an illegal dumping of bilge water that led to a guilty plea
to several environmental violations and a record $40 million fine.

But it doesn’t stand to lose a lot of customers either, in
the views of several travel agents and agency executives.

“I think people are concerned,” said Bill King,
owner of Cruise Holidays of Lakeville, in Middleboro, Mass. “I don’t think
they’re concerned enough to turn away from [a company].”

Other than one person at a party he attended, King said none
of his friends have raised the topic with him.

According to the U.S. Department of Justice, engineers on
the Caribbean Princess installed a pipe to bypass the ship’s oil-discharge
monitors. It said the Caribbean Princess had been making illegal discharges
through bypass equipment since 2005, one year after the ship entered service.

King said that’s hard for travel agents to defend. “It’s
pretty egregious behavior. I can’t imagine the motivation for it,” he
said.

The Justice Department said the perceived reason for the
work was financial. “The chief engineer that ordered the dumping off the
coast of England told subordinate engineers that it cost too much to properly
offload the waste in port and that the shore-side superintendent who he
reported to would not want to pay the expense,” a statement from the
department said.

The pollution plea was widely covered in the media, from
National Public Radio and the New York Times to “CBS This Morning”
and the Guardian newspaper in the U.K.

Brad Tolkin, co-chairman and co-CEO of World Travel
Holdings, which owns travel brands such as CruiseOne and Dream Vacations, said
he didn’t think consumers would end up punishing Princess.

“No one plays error-free ball,” Tolkin said in an
interview at the CruiseOne/Cruises Inc. annual conference aboard the Carnival
Vista.

Tolkin said Princess was forthright about acknowledging its
guilt, “and people respect that” and are willing to forgive. He
acknowledged that there are potential passengers who are passionate about the
environment, but said that group is less than 5% of cruise guests.

Tolkin added that if additional regulations came from
Congress or elsewhere as a result of the guilty plea it would be a positive
because it strengthens the overall health of the environment. He said because
of added scrutiny, “the chances are very slim that it would happen again.”

As part of the plea agreement, cruise ships from eight
Carnival Corp. brands, including Carnival Cruise Line, Holland America Line,
Seabourn and Aida Cruises, will be under a court-supervised Environmental
Compliance Program for five years.

Other cruise lines have been caught in similar situations.
Royal Caribbean Cruises Ltd. in 1998 and 1999 paid $27 million in fines as part
of a guilty plea for building a bypass pipe for oily bilge water. In 2002,
Carnival Cruise Line paid $18 million in a guilty plea for the same thing.

Neither cruise company has seen a long-term impact on sales
from the episodes.

Carnival Corp. CEO Arnold Donald briefly addressed the
Princess case at the CruiseOne conference in a QA session. He said that in
addition to being the right thing to do, “it’s in our self-interest to
protect the environment.”

Eric Maryanov, president of All-Travel.com, which like Princess Cruises is based in Los Angeles,
said that although he doesn’t sell a lot of Princess, he liked that management
isn’t hiding from its culpability.

“I am at least pleased and impressed that [president]
Jan Swartz took responsibility and already addressed changes that they’ve made
to ensure that things like this do not happen again. She completely owned it,”
Maryanov said.