Goa Blog

To attract private participation, ports will have to bundle cruise terminals with revenue-generating options.

Mamuni Das

Witnessing a demand for cruise tourism in India, international cruise operators want the Indian Government to set up one or two good ports of call in the short run rather than planning to set up cruise hubs (which can be taken up as long-term projects).

In 2007-08, about 54 cruise companies sought permission to enter the Indian cruise circuit, according to an Evalueserve-FICCI study. India had 9.3 million outbound passengers in 2007-08, of whom 92,000 were cruisers. The most popular segment of the market is the ‘fly-cruise’ segment — where Indians take a flight from the local airport to a cruise destination.

The real needs of a cruise line are clean, safe and secure ports that can handle larger ships, according to Mr Rama Rebbapragada, Managing Director-Asia Pacific, Royal Caribbean Cruises (Asia). “Low-cost structure, great shore excursions at reasonable prices, reliable port agents and good relations with Government are also important,” Mr Rebbapragada said, adding that there is a growing demand for visits to India.

For a destination to emerge as a cruise hub, operators look for a good sourcing base, apart from fiscal incentives, and India is yet to emerge as a key local sourcing market.

“While a large number of Indians do go for international cruises, most of the international ships are large and Indians do not form the majority of clients on board,” explained Mr Sunder Advani, Chairman of Advani Hotels and Resorts, a company that owns a beach resort (Ramada Caravela) and offers cruise service in Goa.

SHIP SIZES Now, international operators are adding larger ships by the day which calls for more passengers as well as dedicated infrastructure at ports. “Between November 2008-May 2012, cruise industry will add 34 new builds with $23.9 billion investment. The average size of each newbuild is over 100,000 tonnes with an average passenger capacity of 3000,” Mr Rebbapragada said. Royal Carribean has opened offices in Singapore and Shanghai about a year ago and has decided to deploy a ship with relatively “lower capacity” of 2,076 passengers — Legend of the Seas — from December 2008-April 2009.

In the backdrop of growing ship sizes, Star Cruises’ recent experience with 1,480-passenger capacity Superstar Libra, (which started services on Mumbai-Lakhshadweep and Mumbai-Goa routes 2005 onwards but subsequently withdrew services) serves as a deterrent to many operators.

Industry watchers say the company withdrew services because it found that the operation was not as profitable as projected. “Although Star Cruises did charge Rs 35,000 for an executive room, most of the rooms were sold at heavy discounts when Mumbai-Goa airfares were below Rs 3000,” stated an industry source. The ship had a low turnout (about 50 per cent of its total passenger capacity) of tourists in its first year.

Star Cruises’ official stand, however, is guarded on the issue. “We had written about our issues to the Government. We believe in the Indian domestic market,” Mr Jackson Loy, Vice-President, Marketing and Sales, Star Cruises said while stressing upon the need to have better “soft” infrastructure at ports. The behaviour of immigration and customs officials with tourists, allocation of cargo berths for tourists are issues that need to be addressed.

PORTS’ DILEMMA Indian ports prefer cargo vessels, given their revenue earning potential. “While cruise liners generate revenues for the destinations owing to tourist spending, ports trusts do not receive any significant revenues. Rather, our earnings get hit,” Mr N. Ramachandran, Chairman, Cochin Port Trust said.

Thus, to attract private participation for improving facilities by creating dedicated cruise terminals at ports, the port trusts will have to bundle the terminals with revenue-generating options, such as hotels and duty-free shopping options (like airports).

“The Shipping Ministry proposes to develop cruise terminals at ports that include Cochin, Mumbai and Goa,” Mr A.P.V.N. Sarma, Secretary, Department of Shipping said. “All that the cruise operators want right now is at least one clean port of call with smooth immigration and Customs clearance and basic infrastructure,” said Mr Himmat Anand, Co-Chairman, FICCI Tourism Committee.

GOVT INCENTIVES “As a part of cruise shipping policy (approved by the Cabinet recently), cabotage law has been relaxed for a further period of ten years from December 2008,” Mr R Gupta, Joint-Secretary, Department of Shipping, said. This will allow foreign cruise ships to carry Indians from one Indian port to another, without having to touch a foreign port in between. Cabotage law was relaxed for five years from December 2003 onwards.

According to Mr Oneil Khosa, Vice-President, Investment Manager (Cruise and Ferry Funds), The Netherlands-based DVB Bank, which has a cruise-related loan book of $1.5 billion, “Several firms have shown an interest in operating in India, but unaffordable bunker costs (due to duties) and taxes for local operations are the challenges.” Bunker prices in India ought to be at par with global prices (20 per cent of operating cost of a cruise is on account of fuel), Mr Khosa said.

Indian Government levies a 12.33 per cent tax on services rendered on cruise liners and ferries within a distance of 200 nautical miles from the shore, while as the international norm is 12 nautical miles. India had an estimated 92,000 outbound cruise passengers in 2007-08 against 75,000 (2006-07) and 60,000 (2005-06).

Courtesy: Thehindubusinessline.com