There’s good money to be made ferrying sightseers from the Lower 48 to Alaska on cruise ships. But unless the tour stops over in Canada—or some other foreign port—the Passenger Vessel Services Act of 1886 says the carrier must be flagged in the U.S. and owned, built and crewed by Americans. This requirement makes the excursion more expensive to operate and profits harder to come by.
The act, known as the PVSA for short, is a first cousin of the 1920 Jones Act, which mandates the same for the transportation of cargo between American ports. Both laws work well to keep out foreign competition and enrich the U.S. maritime lobby—shipbuilders, unionized crews and shipping firms. For this reason the maritime lobby generously donates to politicians on both sides of the aisle.
The high costs of the PVSA and the Jones Act to Americans are dispersed, so it’s politically difficult to mobilize the victims effectively. But the closing of Canada’s ports-of-call for a second straight summer because of Covid-19 is illuminating the downside of this crony capitalism.
Carriers that don’t meet the PVSA’s requirements can’t allow passengers to leave or join a cruise between U.S. ports, and the ship must make at least one stop in a foreign country. Canada, located as it is on the way to Alaska from Seattle, had given the cruise industry a way to serve mainland customers who wish to travel to the 49th state at competitive prices.
Without permission to stop in Canada, ships built or flagged outside the U.S. again this year can’t offer the voyage, which is a gut-punch to Alaskan tourism. Tourism around the Great Lakes will take a hit this summer for the same reason. There as well, ships that normally skirt the PVSA’s requirements by sailing into Canadian ports are also tied up at the pier.
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