Alan Lam reporting from Fort Lauderdale
As the South America cruise business softens, Costa Cruises has been forced to reduce capacity in the region. CBR spoke exclusively with Neil Palomba, President of Costa Crociere S.p.A., about prospects and challenges of this once promising market.
It would appear that the economic crisis of the region is only one half of the story, what is equally disconcerting is the prevailing hostile operating environment. “Right now we believe we have the right capacity for this market,” said Neil Palomba. “We have one ship out of Brazil and one ship out of Argentina. We are anxiously waiting for the decision from the Brazilian government about the renewal of an agreement that would allow us to continue developing the market. There is a lot of potential in South America, but in order for us to invest in this market, we need a sustainable environment.”
By that he meant permanently overcoming specific legislative constrains. “There are certain laws that have been introduced,” he went on, “especially the requirement of recruiting Brazilian crews on our ship, which are limiting our development prospects.”
After devaluating its currency, Argentina, according to Neil Palomba, was now back on track. He saw massive opportunities in both Argentina and Brazil that were not being taken advantage of. “We would like to deploy more ships there,” he said, “but the high costs in Brazil and Argentina are limiting our development. Buenos Aires is the most expensive port in the world to operate out of. This is something has to change otherwise they will lose valuable business. It is difficult for us to invest in a market that has such a high cost. We are constantly in talks with the authorities there over these issues. So far no sustainable agreement has been reached.”
But Neil Palomba is hopeful. “I am confident that the Brazilian government will see the value of cruise business to the country’s economy,” he concluded, “especially through job creation. Because of the smaller number of ships deployed now, there are fewer jobs available than it used to be.”
Costa was a forerunner in the South American cruise market. Its tenacious spirit was forged in those early pioneering days. It has never lost that steadfastness in confronting challenges. We believe it is the very same spirit that has prompted the company to invest in two LNG-powered mega ships (the first of which will be introduced in 2019 and operate out of Savona).
It absolutely must be recognised that Costa has that rare quality of indefatigability that will serve its ambition well. It will never let go of pursuing the South American market.
