Costa cruise company's future in doubt

Italy's Costa Crociere and its giant US parent company Carnival Corporation - the world's biggest cruise operator - are on the ropes after two accidents on their luxury cruise ships in under two months.

Shares in Carnival dropped 1.44 per cent in early trading in New York on Tuesday, as the stricken Costa Allegra was being towed to the Seychelles through pirate-infested waters in the Indian Ocean after a fire on board.

Italian newspapers even reported a rumour that the Costa Crociere brand itself - originally founded in the 19th century by Giacomo Costa in Genoa in northern Italy - could be eliminated at a Carnival board meeting next month.

"It's a terrible coincidence," Costa Crociere's director of maritime operations Giorgio Moretti told reporters after the accident, as the company struggled to convince a wary public with a major communications campaign.

The Costa Allegra is from the same fleet as the Costa Concordia which crashed into the Italian island of Giglio on January 13 with 4,229 people on board in a disaster that claimed 32 lives including that of a five-year-old girl.

Costa Crociere "is still being dragged down by the first accident, which was a terrible human drama," said Florent Chapel, deputy director of a crisis management communications consultancy, LJ Corporate, in Paris.

"There were communication problems at the time. Costa was not very responsive at the start and then blamed it all on the captain, which is not a very good message in terms of taking responsibility," he said.

"The Seychelles accident, which is technical and minor, therefore risks costing them dearly," he added.

In a written response to questions from AFP, Costa Crociere said that the incident with the Costa Allegra "cannot be compared with the Costa Concordia."

"These two incidents are very different in nature," it said.

Nine people are currently under investigation over suspected human error in the Costa Concordia tragedy, including three Costa executives, the ship's now notorious captain Francesco Schettino and five other crew members.

At least one of the executives being investigated - Roberto Ferrarini, head of Costa's crisis unit - is helping in the Costa Allegra operations.

Officials have ruled out the possibility of arson on the Costa Allegra.

"Costa Crociere is undergoing a series of a challenges," Costa Crociere said, adding that it was "aware that the proximity of the two events damage its reputation: the company will be able to overcome them."

"The Costa Allegra incident will be rigorously studied in order to draw conclusions in a continuous process of improvement," it said.

The headlines in Italy were more unforgiving, however. "The nightmare returns," said one. Another read: "It's a curse."

The Corriere Della Sera also reported a third incident a few days ago when a fire broke out on the Costa Romantica as it was being repaired.

As with the Costa Allegra blaze, there were no casualties.

Analysts say both Carnival, which controls three-quarters of the global cruise industry, and its closest rival Royal Caribbean are already suffering from high fuel prices and economic slumps in Europe and the United States.

The current troubles come in the wake of a boom for the cruise ship industry over the past decade that saw the number of passengers reach 16.3 million last year, according to the Cruise Lines International Association.

A French travel agent, who spoke on condition of anonymity, said: "Explain to me who would want to book a Costa cruise now? Would you go?"

The agent said he was having trouble "selling the concept of a cruise."

Miami-based Carnival's share price has already lost around 15 per cent since the Costa Concordia disaster, and the company has said it expects profits to fall by up to $175 million (130 million euros) this year.

Cruise companies have promised a review of safety procedures on board, but critics say the industry is not sufficiently regulated - unlike, say, air travel - and are calling for better training for crew members.

Some are pointing at the design of cruise ships themselves as a problem.

"The real problem ... is gigantism in shipping," Remo Di Fiore, an Italian trade union leader for the cruise ship industry, told the daily La Repubblica.

"I'm not just talking about cruise ships but also ferries, which are getting bigger and bigger to load as many people as possible," he said.


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