How’s a voy­age up the Mis­sis­sippi to com­pete with those Danube and Volga cruises?

U.S. river tour com­pa­nies look to ex­pand, de­spite pro­tec­tion­ist law “If not for the Jones Act, it prob­a­bly would be a lit­tle eas­ier”

Bloomberg Businessweek (Asia) - - CONTENTS - −Justin Bach­man

Over the past 20 years, mil­lions of peo­ple have hopped aboard cruise ships to sail Europe’s great rivers, from the Loire to the Volga. Com­pa­nies such as Vik­ing River Cruises have been so suc­cess­ful that they’re ex­pand­ing into Asia, sell­ing jour­neys along the Ir­rawaddy, Mekong, and Yangtze rivers. Yet river cruis­ing re­mains largely un­de­vel­oped in the U.S.

Many in the in­dus­try blame the Mer­chant Marine Act of 1920, also known as the Jones Act, a fed­eral law that re­quires travel be­tween U.S. ports to be con­ducted on U.S.-built ships owned by Amer­i­cans, with Amer­i­can crews. This makes a cruise along U.S. rivers more ex­pen­sive than many of those avail­able in Europe and sig­nif­i­cantly pricier than the av­er­age week­long ocean cruise on Car­ni­val or Royal Caribbean. “The le­gal side is a lit­tle bit of a chal­lenge,” says Rudi Schreiner, pres­i­dent of

Cal­i­for­nia-based AmaWater­ways, which of­fers up­scale river cruises on 20 ves­sels in Europe, South­east Asia, and Africa. “If not for the Jones Act, it prob­a­bly would be a lit­tle eas­ier.”

The law was spon­sored by Sen­a­tor Wes­ley Jones, a Repub­li­can from Wash­ing­ton state who wanted to se­cure Seat­tle’s ad­van­tage over Cana­dian ports in ship­ping goods to and from Alaska, then a U.S. ter­ri­tory. It’s been fiercely de­fended ever since by do­mes­tic ship­builders and cargo ship­pers. Last year, Ari­zona Repub­li­can Sen­a­tor John McCain, cit­ing in­creased costs to con­sumers for goods moved by sea be­tween U.S. ports, tried and failed to re­peal the act, which he de­scribed as “an an­ti­quated law that has for too long hin­dered free trade.”

About 700,000 peo­ple go on river cruises world­wide each year. Only 55,000 of them set sail in the U.S., where the mar­ket is dom­i­nated by Amer­i­can Cruise Lines and Amer­i­can Queen Steam­boat. Amer­i­can Queen’s av­er­age fare is $3,400 per per­son for an eight-day sail­ing; Amer­i­can Cruise’s low­est rate for a com­pa­ra­ble sum­mer voy­age is more than $4,500 per per­son. Off­sea­son fares are slightly less, but a cou­ple can eas­ily spend $15,000 for a week on the Mis­sis­sippi.

The po­ten­tial for growth in the U.S. mar­ket has led river cruise oper­a­tors to take a se­cond look, de­spite the bur­dens im­posed by the Jones Act. Last year, Vik­ing an­nounced it would be­gin tours up the Mis­sis­sippi in 2017, sail­ing two spe­cially com­mis­sioned U.S.made river­boats from docks near the French Quar­ter in New Or­leans. The Los An­ge­les-based com­pany said in Fe­bru­ary it would de­lay the start of cruises a year, to 2018.

While Euro­pean river cruises visit me­dieval towns and cas­tles, Mis­sis­sippi voy­ages typ­i­cally fea­ture a heavy dose of Mark Twain-in­flected nos­tal­gia and rag­time melodies. “It’s a whole Nor­man Rock­well thing,” says Ted Sykes, pres­i­dent of Amer­i­can Queen. One port of call, Ch­ester, Ill., is known as the “Home of Pop­eye” be­cause the car­toon’s cre­ator, E.C. Se­gar, was born there. In the Pa­cific Northwest, cruises along the Columbia and Snake rivers ad­ver­tise scenic vis­tas and themed voy­ages fo­cused on wine or craft beer.

In Fe­bru­ary, Amer­i­can Cruise Lines re­duced prices on some of its Pa­cific Northwest itin­er­ar­ies to $1,975 per per­son. The Con­necti­cut-based com­pany owns a ship­yard in Mary­land where it builds tug­boats and pas­sen­ger ves­sels, as well as river cruis­ers. The “very small ex­per­i­ment” on pric­ing will help gauge de­mand at the lower end of the mar­ket, says Chief Ex­ec­u­tive Of­fi­cer Charles Robert­son.

Amer­i­can Queen plans to add three ships to its fleet by 2020, in­clud­ing its first new one, and move into Great Lakes cruises. Many U.S. river cruis­ers, says Sykes, are seek­ing a va­ca­tion that is “safe, se­cure, and close to home”—with no in­ter­na­tional air­line travel re­quired.

The bot­tom line A 96-year-old law ban­ning for­eign oper­a­tors from sail­ing be­tween U.S. ports has stunted the do­mes­tic river cruise mar­ket.

Per per­son fare for an Amer­i­can Queen cruise from New Or­leans to Mem­phis, March 27-April 4 $2,249 to $7,199

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