Efforts to boost cruise tourism sail into rough weather

Efforts to boost cruise tourism sail into rough weather

Bangalore: If you were planning a holiday on a cruise liner from India this year, you might have to make new plans.

Dealing a blow to the efforts to boost cruise tourism in India, the Union government-owned port at Kochi has withdrawn a 33% discount in rates for cruise ships calling at the port.

For around six weeks in December-January, the Kochi port had been the only facility for tourists wanting to go on cruises beginning and ending in India. In 2009-10, the harbour hosted 44 cruise ships, making it the biggest cruise port in the country in terms of numbers.

Still, in a submission to the tariff regulator, the Tariff Authority for Major Ports, it said there wasn’t much demand for cruise ships.

“There is no steady growth in cruise traffic as well as vessel-related income for the last three years due to concessional vessel-related charges for cruise vessels," the port said in its submission. “Hence, the concession is being withdrawn."

The regulator gave its approval on 7 April.

Even with the rebate, charges for cruise ships calling at the Kochi port were high.

In January, just weeks into its operations, the world’s fifth largest cruise line operator, Louis Cruise Lines, decided to stop using Kochi as its home port, citing the high charges, after having carried around 13,500 passengers in the six weeks that it ran the service.

The subsidiary of Cyprus-based Louis Plc had planned to run the service from 2 December to 25 April, offering Kochi-Maldives-Kochi and Kochi-Colombo-Kochi routes.

Cruise tourism in India is in its infancy and had just started generating interest.

Louis Cruise Lines had been the only luxury liner to run cruises from India after the Union government eased taxes and policies to encourage the industry. Local tourists have no option now but to fly abroad to be able to go on cruises.

Earlier in 2007, Genting Hong Kong Ltd, formerly Star Cruises Ltd, had pulled out of Mumbai after operating the Superstar Libra ship for two seasons, and MV Ocean Odyssey, run by UK-based Cruise Line Ltd, pulled out of Mormugao port in Goa, blaming poor demand and the costs of accessing port infrastructure.

Louis Cruise was paying around $73,000 (around Rs33 lakh) a week to the Kochi port, Vijay Puthran, head of sales and marketing at Louis Cruise India, said in a phone interview from Mumbai on Thursday. MV Aquamarine, the cruise ship owned by the firm, used to stay at Kochi for around 15 hours a week.

Another impediment to cruise ships is how taxes are levied on some on-board activities. A cruise ship has to sail some 200 nautical miles off India’s coast to not be taxed for serving liquor or operating the casino, Puthran said. Earlier, ships had to sail just 12 nautical miles away to escape the taxes.

The Kochi port has now also got the tariff regulator’s approval to levy a passenger fee and security cess of Rs100 per passenger on cruise ships. Another Rs200 will be levied from each passenger for checking and baggage examination.

Globally, cruise tourism has been growing at around 12% a year and generating in excess of $14 billion a year in revenue from at least 10 million passengers.

As no Indian company owns a luxury cruise line yet, the Union government has been encouraging foreign cruise liners to undertake coastal runs. In July 2008, the cabinet approved a cruise shipping policy exempting operators from income tax, excise duty, customs duty, corporate tax and service tax. But the policy was never implemented, said an executive at a European cruise line, asking not to be named.

In March 2009, the government also eased laws that had banned foreign-registered ships from carrying passengers between Indian ports without a licence from the Indian maritime regulator. The relaxation is valid for 10 years. But because of the high charges, this hasn’t helped either.

“Most of the things pertaining to the cruise shipping policy, particularly those on taxation, have to be done by the finance ministry," said Rajiv Gupta, a joint secretary in the shipping ministry. “We had written to them about this, but they are taking their own time."

The ministry also wants to increase budgetary support for cruise shipping-related infrastructure projects at ports. “Once we start investing, we would be in a position to advise the ports on tariff-related issues," Gupta said.

Other Indian cruise ports such as Mumbai and Mormugao, both owned by the Union government, also offered discounts in charges to cruise ships. But the conditions attached to such discounts in Mumbai make it impossible for cruise ships to avail the lower rates.

The Mormugao port offered a 50% discount in port dues and a 30% rebate in berth hire and pilotage to cruise ships. But the problem with Mormugao is that cruise ships have to dock at a coal terminal.

“It’s like standing in a coal mine," said the executive at the European cruise line mentioned earlier.