The Costa Concordia remains in the headline, but most reports focus on the legal implications. The Travel Detective looks at what’s to come for the actual ship and breaks down the history of marine salvage in the cruise industry.
There’s a dark science called marine salvage. If you’re driving your car and it gets totaled, the tow truck comes and you get paid some depreciated amount from your insurance company, the car gets taken to a salvage yard and gets crushed and that’s it–we’re done– the car never gets driven again. That is not necessarily the case in the cruise ship business after a major accident.
Let’s look at the story of the Sundancer. It was a ship in 1984 that was sailing to Alaska off the coast of California. It had just left Vancouver heading up north towards Alaska when it hit rocks and started sinking. The captain did the only thing he could: he used whatever power he had left and beached it at a lumberyard dock in Canada. The ship was declared a total loss. No one was actually killed, everyone got off.
Most people don’t realize in the travel industry––when you’re dealing with commercial carriers whether its an airline or a cruise line––if an operator loses the use of a ship or vessel for more than 72 hours, the insurer writes you the big check and its declared a total loss.
With the Sundancer, Lloyds of London owned the insurance policy and they paid the cruise company the big check with which they go out and buy another ship. Lloyds now owns this half sunken ship at a dock. They don’t want it, so when a marine salvage company offers anything for it, they let it go.
The marine salvage company sends about 60 guys to Canada, with generators, pumps, everything short of Styrofoam, and they float the Sundancer thing. They then tow it for 4 months, down the coast of California through the Panama Canal, across the ocean and into the Mediterranean and into Athens where they rebuild it, reflag it, repaint it, and rename it the SS Pegasus.
The Pegasus starts sailing to South America. Until two years later when it blows up and sinks off the coast of Venice, Italy. Once again, it was declared a total loss. Lloyds writes another check and once again they resell the ship for next to nothing.
Again the marine salvagers show up and they float the ship. This time they sail it as the Ionian Express. It sails for another two years and then it blows up and sinks again. Again, it’s declared a total loss and another check gets written. This time they take one look at the ship and decide to take it to Turkey where they break it up. Here’s an example of a ship that was declared a total loss three separate times, it was renamed three different times and sailed three different times and blew up and sank three different times. The economics of this are so amazing because if you get a ship for a dollar and you spend $50 million, which is nothing in the shipping business, to refit it, you’re gonna make a profit in a year.
Now, what’s going to happen to the Costa Concordia?
Within 72 hours of the incident, Lloyds wrote a check to the company that held the note on the ship for $480 million. The ship cost $550 million, but it was 6 years old so it had depreciated in value. Now, the battle begins to see who can get Lloyds to give them the ship. Sometime in the next month or two, some operation is going to tow it into a shipyard, they’re going to reflag it, they’re going torename it. It will never sail again as a Costa ship, but maybe 18 months from now, you’re gonna see ads for a ship that looks remarkably similar to the Costa Concordia doing some gambling cruise.
For more information on this incident, check out:
- Nicole Coward’s look at The Legal ABCs of the Costa Concordia
- No One Should Have Died: A Passenger Account of the Costa Concordia
- Peter’s CBS This Morning report on New Developments for the Costa Concordia
- Peter Travel Detective Blog, Beyond the Headlines of the Costa Concordia
By Peter Greenberg for Peter Greenberg Worldwide Radio