Gruening: Canada’s gut-punch to Southeast Alaska

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By WIN GRUENING

2020 was tough on tourism.  Alaska’s cruise industry had the worst year in its history.  The global pandemic left thousands unemployed and our private-sector economy in shambles.  Then, just as vaccinations ramped up and Covid-19 infections subsided, our hopes for some semblance of a visitor industry recovery were dashed with the announcement that Canadian ports would continue to be closed to Alaskan cruises until February 2022.

It was a gut punch.  

Under archaic and often misunderstood legislation, the Passenger Vessel Services Act of 1886, or PVSA, cruises between American ports may not transport passengers except on ships that are U.S.-built, owned, and documented.  

An exception is allowed for foreign vessels departing from and returning to the same U.S. port, provided the ship visits a foreign port.  This makes at least one Canadian port call mandatory on almost every Alaskan cruise.

Cruise critics have hammered large cruise lines for years, faulting them for building and flagging ships in foreign countries. There are, however, no shipyards in the U.S. that can build large cruise ships of the size used in Alaska. Even if flagged in America, the ships wouldn’t qualify unless U. S. built.  

The cruise industry must now rely largely on other forces to overcome two major obstacles in their efforts to resurrect the 2021 season – if there’s any chance of cruise ships sailing in Alaska this year.

First, the industry needs to receive clear guidelines from the Centers for Disease Control and Prevention on safety protocols so it can acquire equipment and train crews as well as secure agreement from all the affected Alaska port communities. CDC has had almost a year to prepare for this and has yet to clarify workable guidance.

Second, the provisions of the PVSA could be waived at the congressional level (or perhaps by Presidential executive order) so Canadian stops would not be required for foreign-flagged ships.  Alternatively, a negotiated agreement with the Canadian government may secure an early termination of their cruise ship ban.  It is doubtful Canada would agree to this unless the aforementioned CDC guidelines were in place.

Governor Dunleavy and our congressional delegation are working on both issues full-time but there is no guarantee of success.

Time is rapidly running out. 

According to industry insiders, it will take at least 60 days to get ships ready and crews onboard and trained. The longer it takes to resolve health protocols and the Canadian cruise ban issue, the longer it takes before a decision can be made to salvage any part of the season.  At some point, the cost of running ships in a shortened season will be greater than leaving them mothballed with a skeleton crew.  

In a recent Southeast Conference presentation, Howard Sherman, Norwegian Cruise Line Executive Vice President, stated that if a path to resolving these issues was not found by May 1, then it would likely mean cancellation of their 2021 season.

Needless to say, the worst-case scenario  with major cruise line cancellations would be an unmitigated disaster for hundreds of small businesses and our port communities. Another round of Covid relief funding is likely, but it may not be enough.

Some have suggested ramping up independent tourism,  by ferry, for instance. It’s hard to see how current frequency, capacity, and cost of Alaska ferries could be significantly modified to attract many travelers. The one-way fare for two people with a stateroom (without a vehicle) on AMHS for the 3-day voyage from Bellingham to Haines is $1,441. 

Add a motorhome and the fare is around $4,900. Double that for the return trip due to problematic Canadian border restrictions.

Regardless, the options being considered wouldn’t come close to offsetting the decline in commercial and municipal revenues caused by a shortened or canceled cruise season.

Alaskan communities with economies dependent on cruise visitors are all hoping  for the best but are bracing themselves for the worst.

Even before the Canadian cruise ban extension, the City and Borough of Juneau was facing a $9.9 million deficit this year and an $18.4 million deficit in FY2022. Yet, the Assembly has yet to consider any serious operating spending reductions.

It would seem now is the time.

Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.

34 COMMENTS

  1. No need to blame Canadians for acting in their own supposed best interest. It’s our own impractical laws that stand in the way. Further more, it seems like a no-brainer for our own government to issue a temporary exemption to the PVSA due to COVID. Then the cruises won’t need to stop in Canada at all. The main thing would be to ensure cruises don’t become spreaders. Having a two-day prior to sailing negative test and on-board testing should be adequate. But what about passenger density on-board? Would the cruises be feasible at 1/2 occupancy?

  2. Stop in Bella Bella. It’s an autonomous First Nations community that, last time I checked, was within Canada. The Canadian governments (federal and provincial) can’t do anything about it; these First Nations communities are like American Indian reservations, they are their own sovereign countries.

    • We have to get permission from state governors to have casinos on our reservations.
      Federal and State courts have jurisdiction over felonies committed on reservations.
      Tribal courts can prosecute only tribal members for misdemeanors on reservations and recognized Indian lands.
      Reservations can’t offer sanctuary from criminal prosecution by the Fed or State.
      You don’t need a passport to enter or pass through a reservation, not even permission.
      Canadian First Nations are similarly situated … only a qualified sovereignty.
      PVSA can’t be circumvented by a call on a reservation port.

  3. When we slap around our most favored neighbor, a country we have maintained a mostly unguarded border with for hundreds of years then they slap back its best to talk about that problem and not introduce unrelated self inflicted problems such as the PVSA. The destruction of ship bourne tourism is the direct result of Democrat Party meddling. Democrats in Alaska fought hard to close down Canadian mining operations in Alaska and our fool Democrat president shut down a vital US/Canadian pipeline on his first day in office. The coming damage to alaskan tourism is collateral damage caused by our own poor trade decisions. Not only will the west lose the precious metals race with china thanks to democrats, we are going to create our own energy crisis.

  5. It looks like Southeast AK may have to look into resource extraction to survive. The tree huggers will no longer have their eco-tourism to pay the rent and will have to move back to Kalifornia.
    Funny how SE AK is the most anti-extraction part of the state and wants the most money from the oil companies. I guess they will reap what they sow.

    • No, the tree-huggers are trollers, gillnetters and government employees working at ADF&G, DH&SS, Dec, Commerce, Labor, etc. Many in Juneau and Sitka oppose cruise ship tourism (industrial tourism they call it). Haines and Gustavus push back against it. Skagway pushes back against mining (some minds changing now though). Governor Dunleavy wants to keep this fantasy-life going by taking over $9 billion from the PF. So far as eco-tourism, Uncruise stridently opposes mining, lifting the Roadless Rule, and logging. As for the Canadians, Biden is requiring their crude oil travel by rail and truck, greatly reducing it’s value to Canada. Alaska may be as much as a generation away from a time when commercial fishing lobbyists allow forest management, Norwegian Cruise Lines says logging is OK, state employees at ADF&G and DH&SS support mining, the CBJ Assembly supports mining, and remittance people from Haines to Sitka to Ketchikan stop pushing back against the private sector. Honestly, I have no good use for the Canadian government but blaming them for this is incomplete if not inaccurate.

  7. 14 February..Royal Caribbean Not to Cancel Any Canada and Alaska Cruises
    Royal Caribbean will not cancel any cruises from or to Canada including to Alaska sailings. Looks at alternative…
    — Cruise Hive
    CDC is not recommending a Covid-19 test requirement before domestic travel
    The US Centers for Disease Control and Prevention is not recommending a Covid-19 testing requirement before domestic air travel, the CDC tells…
    — CNN
    If a threshold of COVID-19 is detected on board the ship, the voyage will be ended, the ship will return to the port of embarkation, and your subsequent travel home may be restricted or delayed.  Health and safety protocols, guest conduct rules, and regional travel restrictions vary by ship and destination, and are subject to change without notice. Cruises may not be sailing right now as a result of COVID-19, but with a vaccine for the general public on the horizon and clear guidance from the Centers for Disease Control and Prevention (CDC) on what actions the cruise lines need to take to resume cruising, cruise ships will be sailing with passengers soon.

    To-date, the cruise industry has been the only segment of the travel and tourism industry within the United States that has been completely prohibited from resuming limited operations. As Cruise Critic reported in January 2021 requirements from the CDC for airline and hotel operators have been largely nonexistent. Cases of COVID-19 have been present throughout the airline industry, and hotel operators are only required to report COVID-19 cases to local health authorities.
    Last week, the CDC did, however, mandated use of masks for all forms of travel within the United States for the first time since the global health pandemic began.

    States Like Alaska and Florida Need to band together to get the CDC to update its requirements for resuming operations in states where ports may be open and viable. Time to put some pressure on the CDC to get this going for our state to start resuming a since of normal state travel.

  8. CBJ facing a 9.9 m deficit this year and 18+ m for 2022, yet no reductions. Those tax revenues should be for services rendered to the those taxpayers, yet those taxpayers aren’t here being a tax burden and services should have been adjusted.. Juneau is not alone, many communities failing to reduce expenses.

    • Juneau may not be alone but may be the worst. The Juneau Assembly directed CARES Act money to drag queen lessons; not sure what those are and don’t want to know. Juneau spent $17 million on a brass whale. Juneau is spending $300,00 per apartment to give free apartments to the homeless, and it cannot see that the result will be more homeless people moving here. Juneau is selling $15 million in general obligation debt in order to get around the mil rate cap, and it has selected one of the banks that has red-lined the North Slope as the underwriter. A property tax increase is a safe bet. I could go on. Juneau is the most poorly managed outfit north of San Francisco.

  9. It looks like just maybe the back story to what Canada did is a response to Biden shutting down the Keystone Pipeline project costing them thousands of current and future jobs. We in the US will also suffer from these actions our new president took on Keystone.

  11. If Southeast Alaska wont learn making decisions the Right way, then maybe they will learn to do right after they experienced facing the hard way.
    Even, If Trump was given four more years American peoples who did vote against him still wouldnt had seen nor appreciate our improved lives because of his policies. Maybe if Americans or Southeast Alaskans are made to live through the struggle ahead of us they will come around and see the mess they wallow in and be more open to the life they rejected out of their own ignorance, pride, and predjudice. Although some find comfort play victim refusing to get up and leave the mess thats become all too comfortable to them.
    I hate to see Alaska hit rock bottom as Californians are experiencing. Seeing Alaskans, I think Alaska will never increase until it hits rock bottom after it loses all its wealth and peoples laughter at us because of we are an Alaskan that their laughter is apparent to even us. Even then rising up out of the mistakes will be a harder climb than those who had come here building Alaska since 1880s when the earliest entrepreneurs and laborers started out from Alaska’s abundance and not out the ruins because of a State governnent’s past ignorant and selfish mistakes.

    • “…those who had come here building Alaska since 1880s…”
      Uh, Jen, us Natives had already “built” Alaska. To our standards, for our needs … several thousand years before the Russians, and anyone else.
      The new kids on the block certainly built much more than what we would have, and we’ve been trying to cope with it all ever since.
      It’s sort of like learning to live in a tree-house in your back yard, after you got run out of your home.
      Nothing new. Stuff happens all the time. We’re getting over it and moving on.

  12. I see a strong Keystone / Canadian shutdown connection myself. The Keystone project had been ongoing in Canada for many years!!

    • You are joking right, John. Canada has had this same program for months now and has just extended it due to our poor handling of virus. Add that to the CDC’s take on safety of tour ships and there you have it. Canada has also stopped unnecessary land travel into their country causing much grief to their own tourist business.
      This may change if we get a grip on our virus IMO. Has not a damned thing to do with Keystone pipeling. You just are needing a whine on Biden IMO. Heheh!

      • We will see if you are singing the same song two years from now. If you need help, follow the money. You and people like you just don’t get it. Nobody cares about the causes that they claim, only the money. You and your generation have been buffaloed by big money because very few understand the meaning of integrity. Save the snails.

        • Two years is a long time and what is this “same song” you mention above?
          And I don’t need help either. Further, what generation do you think I’m part of? So………..it’s only you that understands “the meaning of integrity?” You just make this up as you go? The stupid is just too strong on here today. “Save the snails” indeed. Get a grip.

  13. Jones Act is a bigger target!! Tourism isn’t the focus. While ya’ll were looking the other way Lisa Murkowski has partnered with the left to raise hell on the state look up Alice Rogoff & Lisa M trip to Iceland 2017. Alice Rogoff!! Lisa Murkowski!! Reykjavik, Iceland Arctic Circle assembly summit 2017 on shipping making Nome a home port for world wide shipping commerce. Lisa Murkowski was a guess speaker in Iceland in 2017, invited by Rogoff.
    Iceland Builds Arctic Port as Global Shipping Routes Get Redrawn. As global warming creates shipping routes that can cut across the northern tip of the planet, a new port is being built on the fringe of the Arctic circle. … The port also envisions becoming a hub for Greenlandic commodities exports, as well as Icelandic hydrogen. The development phase will take three to five years.

    • Iceland may be able to use their abundant geothermal energy to make electricity, to pull hydrogen and oxygen out of water. Lots of technical material about it on Google.

  14. The headline should scream “Holy City of Juneau Goes Broke! Canadians To Blame!”
    .
    Gotta feel sorry for a town going broke because Government, its -only- cottage industry, suddenly got too big, and started biting the hand that feeds it.
    .
    Passenger Vessel Services Act’s been around for 134 years, suddenly it’s the problem?
    .
    Canadians’ve been around for 19 years longer, suddenly Canada’s the problem?
    .
    Masters of the Holy City of Juneau took how long to spend themselves and productive residents into a $20M hole, suddenly it’s the problem?

    Legend has it that Peoples Federal Senator Murkowski came into office with overwhelming support from the Holy City of Juneau, Sealaska Corporation, and the Southeast colonies… but The Senator didn’t see the problem coming and apparently can’t or won’t do anything to fix it?
    .
    …that Peoples President Biden came into office with overwhelming support from the Holy City of Juneau, Sealaska Corporation, and the Southeast colonies… but The President didn’t see the problem coming and doesn’t care about it?
    .
    …that the Peoples State House created a brand-new Peoples Ways and Means Committee to figure out some way to force productive Alaskans to pay an income tax, sales tax, whatever tax to help the Holy City of Juneau regain its former financial glory.
    .
    Of course -no- American activity these days may happen or even be contemplated without “clear guidelines from the Centers for Disease Control and Prevention on safety protocols”, Constitution, Bill of Rights… life, liberty, pursuit of happiness be damned… plus Canada has to say it’s okay, right?
    .
    So, things’ll probably stay that way.
    .
    Until productive Alaskans decide differently.

    • Funny thing. The bulk of Alaska relies on cruise ship tourism. Anchorage, Whittier, Denali Park, Seward, the Copper River area, to a lesser degree the Kenai.

      While SE wil be hit hardest by this, it’s a statewide problem.

  16. Canada’s general lack of neighborliness on Grandpa Sniffies decision to wipe out the XL pipeline on a whim. What a way to run a country.

    • Lots of low-brows on here think these two things are related, you included. While you’re at it give us your take on Nov. election results. Heheh!

  17. Kelly, how can they make Nome a “home port” for world wide shipping when the sea is frozen for most of the year?

    • Global warming or whatever is thinning the Arctic ice. Russia has been using the Arctic to reach Northern Siberian ports for decades.
      The Siberian route is easier, as prevailing winds and ocean currents generally push the arctic ice pack against Alaska’s and Canada’s coastlines.
      A few years back a specially hulled super tanker transited the Arctic in a test. It had an ice breaker bow, and reinforced propellers.
      Summer transit has been going on for a long time. Year around transit is beginning to look to be more possible now.

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