raffy
Nov 23, 01, 2:22 am
Source: SFGate.com
In recent weeks, some would-be passengers have seen their cruise lines sink beneath the waves, sucked into the briny depths of bankruptcy. To further abuse this metaphor, those who paid thousands of dollars in deposits are adrift without paddles in life rafts of despair.
Since the event referred to in conversational shorthand as Nine-One-One, two cruise lines - Renaissance and American Classic Voyages - have docked boats and instructed people who had paid for future cruises to file claims for reimbursement with the bankruptcy court. Their returns might come to pennies on the dollar. (American Classic continues to operate its Delta Queen steamboat and says it plans to resume operations on the Mississippi Queen next year. But its other ships, including the Patriot and Independence in Hawaii, have stopped sailing.)
In both cases, the cruise lines blamed their problems on plummeting revenues after the East Coast terror attacks. Other cruise lines - on more solid financial ground before September - appear to be surviving for the moment, but industry-watchers fear that Renaissance and American Classic might not be the only casualties before the crisis in the travel industry subsides.
The U.S. Maritime Commission has established protections for people who plop down their dollars for future cruises, but it did nothing to help the customers of Renaissance and American Classic.
Cruise lines that sail from American ports can bank up to $15 million in bond money with the commission. Should the line go under, that fund is used to reimburse what's called "unearned passenger revenue" (deposits for trips not yet taken). Apparently, this system did come to the rescue of some Regency Cruise Lines passengers when that outfit went keel-up in 1995. Under commission rules, only those who had booked sailings out of U.S. ports, including Puerto Rico, benefited. Customers scheduled to take Regency ships from ports such as Barbados were left to seek justice in the bankruptcy court.
For large cruise lines, it's likely that unearned passenger revenues will exceed the $15 million bond, so customers still might not be able to recover their costs.
In the case of Renaissance Cruises, none of this applies because its ships sailed only out of foreign ports.
American Classic was rare among cruise lines in its devotion to American ports - including Hawaii and stops along the Columbia and Snake rivers. But the line didn't post a bond with the U.S. Maritime Commission, opting instead to be "self-insured."
Self-insured is a major misnomer. The cruise line was required to document to the Maritime Commission once each quarter that its net worth exceeded its unearned passenger revenues - in other words, that it had money in the bank to cover those who had paid for future cruises. But this does not appear to be the case. A Maritime Commission executive told me that American Classic looked great on paper in its final filing last June. Yet even then, word on the streets was that it was in trouble.
The same goes for Renaissance. Its bankruptcy announcement might have taken passengers by surprise, but it didn't shock anybody in the cruise industry. Does that mean you can avoid getting burned by a cruise line's bankruptcy if you know how to check its financial status in advance?
In most cases, you can. And you can take simple steps to protect your cruise deposit in case your trip is canceled due to bankruptcy, terrorism or a host of other reasons. Here's how:
-- Book your cruise through a knowledgeable local agent who specializes in sending customers to sea. These folks keep up with industry news. The Travel Zone in San Francisco, for example, stopped placing passengers on Renaissance and American Classic cruises some time ago because they knew those companies were in trouble.
-- If you are sailing from a U.S. port, ask whether your cruise line has posted a bond with the Maritime Commission to cover your losses in case it folds.
-- Check with several companies that sell trip cancellation insurance. These are the first people to sense that a cruise line is a bad risk. Ask if they are willing to insure the line that interests you against bankruptcy. Most had scratched Renaissance and American Classic off their lists.
-- Pay with a credit card. In case your cruise is canceled, the credit-card company might refund your money under its "purchase protection" program. First,
ask what time limit it imposes on requests for reimbursement; this varies from company to company. If you make your payment as close as possible to the actual sailing, your chances of making a claim against your credit-card company are improved.
-- There are other reasons to delay your purchase. As cruise lines grow more desperate for passengers, prices continue to drop. Also, you reduce your odds of booking with a company that, over the course of a couple of months, might encounter financial squalls.
-- Once you've decided to book your cruise, buy that trip insurance (even though it can add a few hundred dollars to your costs). In today's uncertain environment, it's a good investment. Again, do your homework. Not all travel- insurance companies will cover bankruptcy or default on the part of your cruise line. CSA Travel Protection and GlobalCare Insurance Services Inc., for example, have recently dropped this benefit from their policies.
Others do cover bankruptcy, including Travel Guard (800-826-4919; www.travel-guard.com), (http://www.travel-guard.com),) one of the biggest suppliers.
While you're at it, make sure the insurance firm you go with covers cancellation due to acts of terrorism. That's how we got into this mess, after all. Many will say yes; you must next inquire about their definition of terrorism and their geographic restrictions. A lot of people came up short after Sept. 11 because their trip protection insurance covered only acts of terror committed on foreign shores.
Trip insurance also covers less exotic - and more likely - causes of trip cancellation or interruption. These can include death or injury in your family,
fire or flood in your home, strikes affecting public transportation, natural disasters, jury duty, being called into military service and loss of a job. Some even cover you if you can't make the trip because you have been hijacked.
Your travel agent might be able to recommend a company that will meet your insurance requirements. You can compare prices and features on the Web at www.insuremytrip.com (http://www.insuremytrip.com) and www.personalinsure.about.com/cs/travel. (http://www.personalinsure.about.com/cs/travel.)
In recent weeks, some would-be passengers have seen their cruise lines sink beneath the waves, sucked into the briny depths of bankruptcy. To further abuse this metaphor, those who paid thousands of dollars in deposits are adrift without paddles in life rafts of despair.
Since the event referred to in conversational shorthand as Nine-One-One, two cruise lines - Renaissance and American Classic Voyages - have docked boats and instructed people who had paid for future cruises to file claims for reimbursement with the bankruptcy court. Their returns might come to pennies on the dollar. (American Classic continues to operate its Delta Queen steamboat and says it plans to resume operations on the Mississippi Queen next year. But its other ships, including the Patriot and Independence in Hawaii, have stopped sailing.)
In both cases, the cruise lines blamed their problems on plummeting revenues after the East Coast terror attacks. Other cruise lines - on more solid financial ground before September - appear to be surviving for the moment, but industry-watchers fear that Renaissance and American Classic might not be the only casualties before the crisis in the travel industry subsides.
The U.S. Maritime Commission has established protections for people who plop down their dollars for future cruises, but it did nothing to help the customers of Renaissance and American Classic.
Cruise lines that sail from American ports can bank up to $15 million in bond money with the commission. Should the line go under, that fund is used to reimburse what's called "unearned passenger revenue" (deposits for trips not yet taken). Apparently, this system did come to the rescue of some Regency Cruise Lines passengers when that outfit went keel-up in 1995. Under commission rules, only those who had booked sailings out of U.S. ports, including Puerto Rico, benefited. Customers scheduled to take Regency ships from ports such as Barbados were left to seek justice in the bankruptcy court.
For large cruise lines, it's likely that unearned passenger revenues will exceed the $15 million bond, so customers still might not be able to recover their costs.
In the case of Renaissance Cruises, none of this applies because its ships sailed only out of foreign ports.
American Classic was rare among cruise lines in its devotion to American ports - including Hawaii and stops along the Columbia and Snake rivers. But the line didn't post a bond with the U.S. Maritime Commission, opting instead to be "self-insured."
Self-insured is a major misnomer. The cruise line was required to document to the Maritime Commission once each quarter that its net worth exceeded its unearned passenger revenues - in other words, that it had money in the bank to cover those who had paid for future cruises. But this does not appear to be the case. A Maritime Commission executive told me that American Classic looked great on paper in its final filing last June. Yet even then, word on the streets was that it was in trouble.
The same goes for Renaissance. Its bankruptcy announcement might have taken passengers by surprise, but it didn't shock anybody in the cruise industry. Does that mean you can avoid getting burned by a cruise line's bankruptcy if you know how to check its financial status in advance?
In most cases, you can. And you can take simple steps to protect your cruise deposit in case your trip is canceled due to bankruptcy, terrorism or a host of other reasons. Here's how:
-- Book your cruise through a knowledgeable local agent who specializes in sending customers to sea. These folks keep up with industry news. The Travel Zone in San Francisco, for example, stopped placing passengers on Renaissance and American Classic cruises some time ago because they knew those companies were in trouble.
-- If you are sailing from a U.S. port, ask whether your cruise line has posted a bond with the Maritime Commission to cover your losses in case it folds.
-- Check with several companies that sell trip cancellation insurance. These are the first people to sense that a cruise line is a bad risk. Ask if they are willing to insure the line that interests you against bankruptcy. Most had scratched Renaissance and American Classic off their lists.
-- Pay with a credit card. In case your cruise is canceled, the credit-card company might refund your money under its "purchase protection" program. First,
ask what time limit it imposes on requests for reimbursement; this varies from company to company. If you make your payment as close as possible to the actual sailing, your chances of making a claim against your credit-card company are improved.
-- There are other reasons to delay your purchase. As cruise lines grow more desperate for passengers, prices continue to drop. Also, you reduce your odds of booking with a company that, over the course of a couple of months, might encounter financial squalls.
-- Once you've decided to book your cruise, buy that trip insurance (even though it can add a few hundred dollars to your costs). In today's uncertain environment, it's a good investment. Again, do your homework. Not all travel- insurance companies will cover bankruptcy or default on the part of your cruise line. CSA Travel Protection and GlobalCare Insurance Services Inc., for example, have recently dropped this benefit from their policies.
Others do cover bankruptcy, including Travel Guard (800-826-4919; www.travel-guard.com), (http://www.travel-guard.com),) one of the biggest suppliers.
While you're at it, make sure the insurance firm you go with covers cancellation due to acts of terrorism. That's how we got into this mess, after all. Many will say yes; you must next inquire about their definition of terrorism and their geographic restrictions. A lot of people came up short after Sept. 11 because their trip protection insurance covered only acts of terror committed on foreign shores.
Trip insurance also covers less exotic - and more likely - causes of trip cancellation or interruption. These can include death or injury in your family,
fire or flood in your home, strikes affecting public transportation, natural disasters, jury duty, being called into military service and loss of a job. Some even cover you if you can't make the trip because you have been hijacked.
Your travel agent might be able to recommend a company that will meet your insurance requirements. You can compare prices and features on the Web at www.insuremytrip.com (http://www.insuremytrip.com) and www.personalinsure.about.com/cs/travel. (http://www.personalinsure.about.com/cs/travel.)