In the wake of coronavirus and tanking stocks, cruise companies have sought assistance from the US government. But for decades, the industry has done everything in its power to avoid paying into the system.
Cruise ships are often called “monsters” of the sea.
If you’ve ever seen one in action, you’ll understand why: A vessel like Royal Caribbean’s Symphony of the Seas is longer than 12 blue whales. At 228k gross tons, it is 5x the size of the once-formidable Titanic. It can hold 6,680 passengers and 2,200 crewmembers, the population of a small American town.
In 2018, 28.5m passengers — the bulk of them from America — spent more than $46B on cruises globally. The biggest players see annual profits in the billions.
But cruise companies have done more to earn the “monster” moniker than churning out huge ships and market gains.
For decades, these companies have utilized century-old loopholes to avoid paying corporate taxes. They’ve gone to great lengths to bypass US employment laws, hiring foreign workers for less than $2/hour. They’ve sheltered themselves as foreign entities while simultaneously benefitting from US taxpayer-funded agencies and resources.
To better understand the dynamics of this wild industry, we spoke with maritime lawyers, legislators, and cruise experts in 3 countries.
The cruise industry at large
Before we get into how cruise companies circumvent US taxes and regulations, let’s take a quick look at the major players, the money they make, and how they make it.
The global market comprises dozens of cruise lines and more than 250 ships. But 3 players — Carnival Corporation & PLC, Royal Caribbean Cruises LTD, and Norweigan Cruise Line HLD — control roughly 75% of the market.
Zachary Crockett / The Hustle
These companies, which preside over an empire of subsidiary cruise lines, collectively raked in $34.2B in revenue in 2018.