Carnival Cruise Line



Fire Aboard a Stranded Cruise Ship


“During the next 10 minutes I kept talking to the guests reminding them to stay in their cabins and did my best to keep them calm. I also spoke to the crew, telling them to remember their training and


to also stay calm. And they did, both the guests


and the crew did exactly what I asked of them and


meanwhile I waited for the captain to tell me what


was next. And what was next was that the smoke


was so intense and so thick that, even with


breathing apparatus on, the teams could not get


close to the source.”1


These were the words of Cruise Director John Heald


as he reflected on the events that transpired during the


early hours of Monday, November 8, 2010. Thick


smoke was billowing from the aft engine room of


Carnival Splendor, one of the largest vessels owned and


operated by Carnival Cruise Lines, and none of the


ship’s fire squads could stay in the engine room long


enough to determine the cause of the smoke.


As Cruise Director, Heald was responsible for


keeping the guests informed of any emergencies


during the cruise, and to do so calmly, reassuringly,


truthfully, and as often as possible. Thus, with limited


information and a sense of urgency, Heald began


making frequent updates to guests regarding the


“smoke” situation. Little did he know that the thick


smoke was the product of a debilitating fire that would


leave the Carnival Splendor without electrical power


200 miles off the coast of California. The next three


days would prove to be among the most trying


experiences in the company’s history as John Heald and


Tim Gallagher, Carnival Cruise Lines’ Vice President


of Corporate Communications, attempted to control the


situation and ensure the safety and well-being of all


passengers onboard the stranded cruise ship.


Carnival Cruise Lines


Carnival Cruise Lines was founded in 1972 by


entrepreneur Ted Arison with the vision of making


cruising, a vacation experience once reserved for the


rich, available to the average. Carrying more passengers


than any other cruise line, Carnival has become the


largest cruise line in the world, and in 1987, earned the


distinction, “The Most Popular Cruise Line in the


World.” Carnival operates 1,400 voyages per year with


a fleet of 22 ships, and serves approximately four


million passengers per year.2


Carnival has 3,800 shoreside employees and


33,500 shipside employees. It operates voyages ranging


from three-to-sixteen days in length to some of the


most popular vacation destinations in the world,


including The Bahamas, Caribbean, Mexican Riviera,


Alaska, Hawaii, Canada, Europe, the Panama Canal and


Bermuda.3 The company prides itself on providing


an entertaining and relaxing experience for all guests


onboard its “Fun Ships.” Carnival builds all its


ships with one goal in mind: “to make sure that every


time you walk up the gangway, you get the sense


that you’re crossing over into a whole new world of




Carnival Cruise Lines is the flagship brand in a


portfolio operated by its parent company Carnival


Corporation & plc. Carnival Corporation has


headquarters in Miami, Florida and London, England


and is publicly traded under the ticker symbol CCL on


the New York and London Stock Exchanges. Carnival


Corporation & plc is the only group in the world to be


included in both the S&P 500 and the FTSE 100




Operating many of the world’s best known cruise


brands including Carnival, Princess, Holland America,


Seabourn, Cunard, and P&O, Carnival Corporation &


plc is a global cruise company. As one of the largest


vacation companies in the world, the corporation’s


mission is to deliver exceptional vacation experiences


that cater to a variety of different geographic regions


and lifestyles, while delivering outstanding value.6 The


corporation maintains its top position in the industry by


leveraging its cruise lines to penetrate a variety of


markets. For instance, Carnival Cruise Lines and


Princess both target families, retirees, and other upper


middle class customers with competitively priced cruise


packages whereas the Seabourn brand provides its


upscale travelers with luxury cruises to exotic


destinations.7 Carnival Corporation has a decentralized


Management Communication: A Case-Analysis Approach, Fifth Edition, by James S. OʼRourke. Published by Prentice Hall.


Copyright © 2013 by Pearson Education, Inc.


Copyright © 2011 Pearson Education. All Rights Reserved.


138 Chapter 5 • Writing


operating structure and each of its brands has its own


headquarters and operating team. The company


believes this system helps create the ownership culture


it believes to be an important driver of performance.8


The company maintains a strong balance sheet


with the goal of investing in new and innovative ships,


a strategy the company feels is critical in strengthening


the leadership position of its brands. Across all brands,


Carnival Corporation operates 98 ships and plans to add


two to three ships annually in 2012 and beyond.


Carnival Cruise Lines operates approximately 18% of


Carnival Corporation’s total passenger capacity of


191,464 cabins, while serving approximately four


million of Carnival Corporation’s 8.5 million guests




To fuel its future growth and fill its expanding


inventory of cruise ships, Carnival Corporation has


expanded its number of home ports to move its cruises


closer to its customers. In addition, it has invested


heavily in marketing, especially targeting those


consumers who have never before sailed. Since 2009,


the firm has been moving away from print media and


expanding its efforts in social media, such as Facebook,


YouTube, Twitter, Flickr, and Podcasts. For instance,


Carnival Cruise Lines manages its own “Funville” blog


through its website, with the goal of engaging in twoway


conversations with potential customers about the


experience of cruising. Through such tools, Carnival


hopes to attract new guests and create brand fans to


continue its reign as the world’s largest cruise




During the fiscal year ending November 30,


2010, Carnival Corporation reported earnings of $2.47


per share diluted on nearly 14.5 billion dollars in total


revenue.11 Following the engine fire on the Splendor, in


a press release dated November 16, 2010, the company


estimated that the total impact from voyage disruptions


for the Carnival Splendor and related repair costs will


result in an approximate $0.07 reduction in the


company’s 2010 fourth quarter earnings per share. The


company stated that impact of voyage disruptions in the


first quarter of 2011 is not expected to be material to


the company’s 2011 earnings.12


The Cruise Line Industry


According to the Carnival Corporation’s 2010 Annual


Report, “The multi-night cruise industry has grown


significantly [over the past decade], but still remains


relatively small compared to the wider global vacation


market, which includes a variety of land-based travel


destinations around the world. For example, there were


only about 215,000 cabins in the global cruise industry


on November 30, 2010, which is less than the 265,000


rooms in just two North American vacation


destinations: Orlando, Florida and Las Vegas, Nevada.


Within the wider global vacation market, cruise


companies compete for the discretionary income spent


by vacationers. Within that context, a recent Nielsen


Global Confidence Survey found that after providing


for savings and living expenses, the number one global


spending priority is for vacations.” 13


As a result of these factors and other favorable


cruise industry characteristics, Carnival Corporation


believes that the cruise industry exhibits opportunities


for growth. The industry’s customers have increased at


a compound annual growth rate of 5.7% from 2005 to


2010. In 2010, the global cruise industry marketed


capacity of 423,000, with Carnival Corporation & plc


representing 44% of this capacity. The cruise industry


points to exceptional value proposition, wide appeal,


low market penetration, positive guest demographics,


and high guest satisfaction rates as positive growth


dynamics that demonstrate the high potential within the




Trouble at Sea


The cruise industry has experienced its fair share of


crises at sea. Facing issues that range from pirates to


virus outbreaks to fires, cruise ships must develop and


practice extensive contingency plans and drills that


meet the International Maritime Organization (IMO)


and U.S. Coast Guard standards. The Cruise Lines


International Association (CLIA) states that these


standards are internationally mandated and govern the


design, construction, and operation of cruise vessels. To


ensure compliance with both international and U.S.


regulations, the U.S. Coast Guard examines all new


cruise vessels and thereafter inspects each quarterly. If


any deficiencies are discovered, the U.S. Coast Guard


may require correction before allowing any passengers


aboard the ship.15


Despite comprehensive precautionary measures,


crises aboard cruise ships still occur regularly. One of


the most notable occurred on August 4, 1991 when the


Management Communication: A Case-Analysis Approach, Fifth Edition, by James S. OʼRourke. Published by Prentice Hall.


Copyright © 2013 by Pearson Education, Inc.


Copyright © 2011 Pearson Education. All Rights Reserved.


Chapter 5 • Writing 139


cruise ship Oceanos sank off the coast of South Africa.


The disaster could have been avoided had the ship not


been in a “state of neglect,” with loose hull plates,


missing valves, and a hole in what was supposed to be a


watertight bulkhead.16 Although all 571 guests and


crew survived, the captain and crew were widely


ridiculed as cowardly and irresponsible for being


among the first to leave the sinking vessel.17


Unlike the Oceanos incident, which was


attributed to human neglect, many cruising hazards


originate outside of the cruise line’s direct control.


Cruise ships are subject to a dangerous movement


known as roll, which is a nautical term for rotation


about the ship’s longitudinal (front to back) axis, when


encountering rogue waves or making sharp turns. On


April 21, 2010, sixty passengers were injured aboard


Carnival Ecstasy when the ship rolled twelve degrees


after suddenly turning to avoid a drifting buoy that


could have caused a hole in the ship’s hull upon


impact.18 In 2008, a P&O cruise ship operated by


Carnival Corporation caught in severe storms off the


coast of New Zealand sent passengers and furniture


flying as waves lashed up as high as the fifth deck,


injuring 42 people.19 More recently, on March 3, 2010,


two guests were killed and six others injured when


three abnormally high waves up to 26 feet high


smashed glass windows in a public lounge in the


forward section of Louis Majesty, sailing near the


French Mediterranean port of Marseilles.20 Such an


incident could have been avoided if only the crew had


instructed passengers to remain in their cabins during


the storm.21


A cruising vacation may also be ruined by an


outbreak of norovirus, a one-to-two day infection often


transmitted through food that causes diarrhea, vomiting,


nausea, and stomach cramping. The Centers for Disease


Control and Prevention (CDC) warns that the norovirus


can spread rapidly from person to person in crowded,


closed areas such as cruise ships.22 Since neither a


vaccine nor a treatment exists for the norovirus, many


cruise ships have found themselves helpless in the face


of an outbreak once a ship has already left port. If


presence of the norovirus is discovered early enough in


the trip, the crew may altogether cancel – or cut short


the cruise as in the case of the Holland America cruise


liner ms Oosterdam operated by Carnival Corporation


in March of 200923


Depending on the geographic area of cruising,


pirate attacks may pose a significant threat. In


November of 2005, Seabourn Spirit, a ship operated by


the Carnival Corporation subsidiary Seabourn Cruise


Line, was chased and attacked by Somali pirates. The


cruise ship was able to repel the two speedboats


carrying the pirates without returning fire by using an


on-board loud acoustic bang to create the illusion of


gunfire. None of the 151 terrified passengers was


injured, and the cruise line spokesmen were pleased


that their safety measures worked.24 According to the


International Maritime Bureau (IMB) Annual Report


2010, a total of 445 actual and attempted pirate attacks


occurred around the world, with a strong concentration


of the attacks around Africa.25 The IMB, a non-profit


division of the International Chamber of Commerce


created to fight against maritime crime and malpractice,


advises all mariners to exercise caution and take all


necessary precautionary measures when operating in


certain areas 26


Finally, fires pose a serious concern for anyone


sailing hundreds of miles from land. In 2006, Star


Princess, another ship owned by Carnival Corporation,


was set ablaze as it sailed toward Jamaica. Believed to


be caused by a cigarette left on a passenger balcony, the


fire killed one guest, injured 11 others, and damaged


150 cabins before the crews could douse the flames.27


As a result, additional sprinklers were installed on


balconies and the ship had fewer designated smoking




Carnival Splendor Sets Sail


Carnival Splendor, a 113,300 ton, 952-foot long


behemoth, is one of the largest vessels owned by


Carnival Cruise Lines. With 13 passenger decks,


Splendor’s 1,503 guest staterooms can accommodate


over 3,000 guests per voyage.29 A ship the size of


Splendor requires six diesel engines, three of which are


housed in the aft engine room and the other three in the


forward engine room. Two electric switchboards are


connected to each engine’s generator by electric




Cruise ships are governed by the laws of the


country under which each ship is registered. Since


Splendor is registered in Panama, any issues that arise


at sea would be under the scrutiny of the Panamanian


Management Communication: A Case-Analysis Approach, Fifth Edition, by James S. OʼRourke. Published by Prentice Hall.


Copyright © 2013 by Pearson Education, Inc.


Copyright © 2011 Pearson Education. All Rights Reserved.


140 Chapter 5 • Writing


government. However, small countries like Panama are


usually reluctant to conduct strenuous investigation into


any mishaps at sea because that could result in the ship


operator being required to make costly improvements,


which would hurt Panama’s flag of convenience




Carnival Splendor departed Long Beach,


California on Sunday, November 7, 2010 for a


weeklong cruise of the Mexican Riviera. The ship’s


normal itinerary included stops in Puerto Vallarta,


Mazatlan, and Cabo San Lucas, Mexico. The sevenday,


six-night cruise was scheduled to arrive back in


Long Beach with its 3,299 guests and 1,167 crew on


Saturday, November 13 until a crisis struck during the


first leg of its journey.32




By early morning on Monday, November 8, 2010, the


ship was sailing in calm seas 200 miles south of San


Diego, California. At 6:00 a.m., a fire started in the aft


engine room and passengers reported smelling smoke


and seeing it billow out of the rear of the ship. The


blaze was extinguished within a few hours by crew


members with the aid of the built-in fire-suppression


system. No passengers or crew members were injured


as a result of the engine fire.33


Engineers were unable to restore ship power and


auxiliary generators had to be used. Though the ship


was designed by reputable Italian shipbuilders to ensure


that damage to a single generator and switchboard


wouldn’t inhibit the rest of the ship’s engines, the fire


unexpectedly disabled all power generation onboard


Splendor. The intense heat of the fire severely damaged


the power lines housed in the ceiling of the aft engine


room, which consequently made the forward engine


room also inoperable. As a result, the destruction


caused by the fire was much more widespread.34 The


ship had previously been regularly inspected by the


Coast Guard and other maritime regulators and found in


regulatory compliance.35


The initial speculation about the cause of the fire


was that one of the generators for an aft engine ignited


and damaged its accompanying switchboard. The


damage to the switchboard and overhead power lines


prevented electrical transmission to propulsion,


communication, and other operating systems, leaving


the ship dead in the water.36 Gerry Cahill, CEO of


Carnival Cruise Lines, later confirmed that the fire was


a result of a catastrophic failure in one of six diesel


generators. Cahill said he doubted that any of the other


ships in the company’s fleet were at risk.37


Because the ship was registered in Panama, the


Panamanian government would be responsible for


probing into the official cause of the fire. However,


because most of the passengers traveling on the


Splendor were American citizens, Panama agreed to


allow the U.S. Coast Guard and the National


Transportation Safety Board, an independent U.S.


federal agency charged with determining the probable


cause of transportation accidents and promoting


transportation safety, to join the investigation. The three


parties would conduct a full examination into the causes


of the fire after first ensuring the safety of the


passengers and the crew.38


At 6:30 a.m. on Monday, passengers were


awakened by a message transmitted over the ship’s


public address system from Splendor Cruise Director


John Heald. Guests were initially instructed to remain in


their cabins but were soon evacuated to the ship’s upper


deck.39 Although passengers were later allowed to return


to their cabins, many spent the majority of the remainder


of the voyage on the upper levels of the ship. By the


afternoon, the U.S. Coast Guard had dispatched three


cutters and an airplane to provide aid and medical


assistance to Splendor. The Mexican navy also responded


with aircraft and relief boats.40 Ongoing announcements


from Heald about the fire, decisions, and progress kept


passengers informed about the situation.


The “Circus” Aboard Carnival


In one of his first public statements about the incident,


CEO Gerry Cahill acknowledged that the passengers


endured “an extremely trying” situation aboard


Carnival Splendor. He publicly apologized for the


distress and inconvenience of the passengers. Guests


endured challenging circumstances including no


electrical power, no Internet service, no refrigerated


food, very long lines to obtain food, sanitation


problems, and boredom. Air conditioning and hot food


service were also unavailable, and the disabled


elevators due to the lack of electrical power meant that


passengers would have to climb as many as 13 floors to


get to the food. Some passengers reported that


Management Communication: A Case-Analysis Approach, Fifth Edition, by James S. OʼRourke. Published by Prentice Hall.


Copyright © 2013 by Pearson Education, Inc.


Copyright © 2011 Pearson Education. All Rights Reserved.


Chapter 5 • Writing 141


plumbing was almost to capacity and that the odor in


sections of the ship smelled like vomit.41


Cahill admitted that after 35 years of business,


nothing like the Splendor situation had happened


before.42 The Cruise Director, John Heald, tried to keep


passengers’ spirits up with frequent announcements


from the bridge using the ship’s PA system. Heald, an


avid blogger of, a blog featured on


Carnival Corporation’s website, told his eight million


readers in a post on Wednesday, November 10 that he


didn’t know how his attempts to add humor in his


announcements were being received by the guests.


Heald praised the passengers saying, “…the guests have


been magnificent and have risen to the obvious


challenges and difficult conditions onboard.”43


After the fire, Carnival Splendor was some 200


miles south of San Diego and dead in the water.


Originally scheduled as a seven-day cruise from Long


Beach to Puerto Vallarta, the new objective was to


safely transport the passengers to a port as soon as


possible. Within two hours of the fire, Gallagher had


opened and fully staffed the crisis command center at


the Carnival corporate office and worked collectively to


aid the Splendor crew and passengers.44 Their initial


plan was to tow Splendor to the Mexican port of


Ensenada;45 however, the crisis response team soon


decided to change the destination to San Diego.46 The


rationale was that passengers would be more


comfortable onboard the ship and that the new plan


would not require the customers to go through the


difficult customs process in Mexico.47


The Mexican navy sent multiple tugboats to the


aid of Splendor, one of which had to turn back because


it wasn’t powerful enough. The tug boats reached the


cruise ship midday on Tuesday, November 9, 2010.48 In


addition, to the good fortune of Carnival Cruise Lines,


the U.S. Navy was conducting regularly scheduled


training in the area. At the request of the Coast Guard,


the U.S. Navy resupplied the ship on Tuesday with


70,000 pounds of bread, canned milk, and other food


including Pop Tarts and Spam, and supplies that had


been flown from North Island Naval Station in


Coronado. The supplies were then ferried by helicopter


from the USS Ronald Reagan (CVN-76), an aircraft


carrier diverted from maneuvers nearby.49 According to


Navy officials, maritime tradition, customs, and treaties


demand that ships in the area must respond to ships in


distress whenever possible.50


Toilet service to all public bathrooms and most


cabin rooms, as well as cold running water, was


restored late Monday night much to the relief of


uncomfortable passengers.51 One passenger considered


the voyage a “diet cruise” because of the lack of hot


food. Instead of the fine dining expected aboard any


cruise line, passengers were served salads, fruit, small


sandwiches, and canned crab meat. First-time Carnival


guest Peg Fisher said, “This could be the only cruise


ever where people lost weight instead of gaining


weight.”52 With no power, swimming pools were closed


due to lack of filtration and casinos were also closed.


Interior state rooms were pitch black and stuffy due to


the lack of electricity and air flow. Passengers passed


the time with live music, scavenger hunts, trivia


contests, and card games. However, bars were open and


did offer free drinks.53


Less than one day after the engine fire, Carnival


Cruise Lines announced that they would offer all


passengers a full refund for the cruise and a credit equal


to the price they paid for a future Carnival cruise. In


addition, Carnival arranged and paid for all necessary


hotels and flights for passengers arriving in San


Diego.54 The ship was expected to arrive in San Diego


the morning of Thursday, November 11, more than 62


hours after the fire disabled Splendor. Initially, it was


unknown how long the ship would be out of service


while necessary repairs were being made.


News and Social Media Response


The events on Monday and Tuesday happened outside of


cellular phone service range. In addition, Internet service


was knocked out due to the loss of power. Passengers


were unable to personally update friends and family


of their safety until the ship got closer to the coast on


Wednesday, November 10, 2010.55 On Wednesday,


individuals could finally assure loved ones of their safety


and share their experiences on the cruise. Passengers


called home and sent text messages to communicate with


friends and family about arrival in San Diego.56


Witnesses tweeted pictures and messages about the ships


arrival.57 In addition, national news outlets began


interviewing passengers aboard the ship via cell phones


and their reports covered the evening news.


Management Communication: A Case-Analysis Approach, Fifth Edition, by James S. OʼRourke. Published by Prentice Hall.


Copyright © 2013 by Pearson Education, Inc.


Copyright © 2011 Pearson Education. All Rights Reserved.


142 Chapter 5 • Writing


Carnival used Twitter, Facebook, and its Funville


blog primarily as push mechanisms to provide factual


updates about the cruise.58 John Heald also used his


personal blog to provide a brief update to readers about


the cruise ship on Wednesday, November 10.


Passengers had been taking pictures and videos


throughout the cruise and many videos were uploaded


to YouTube following arrival.59 The increasing volume


of social media that mentioned the Carnival Splendor


created significant buzz on the Internet.


After learning about the delivery of Spam to the


Splendor, some media outlets used “Spam Cruise” as a


tagline for articles about the event. Carnival attempted


to use Twitter to address the incorrect view that Spam


was served to its passengers: “Despite media reports to


the contrary, Carnival Splendor guests were never


served Spam!”60 However, news and social media


outlets continued to embrace the Spam angle, and a new


phrase, “Spamcation” emerged online. As passengers


departed the ship on Thursday, November 11, they were


eager to buy $20 T-shirts emblazoned with the phrase:


“I survived the 2010 Carnival Cruise Spamcation.”61


Decision Point


As Carnival Splendor approached the San Diego port at


8:30 a.m. on the morning of Thursday, November 11,


Gerry Cahill and Tim Gallagher knew that their work


was just beginning. Carnival Cruise Lines had already


announced that all guests would receive reimbursement


for the trip and travel costs. Cahill and Gallagher had


been working around the clock to coordinate the arrival


of the ship by arranging transportation and hotels for all


guests. But unless Gallagher and his team could quickly


address the other issues, Carnival Cruise Lines was at


risk of losing a lot more than simply one week of cruise





Answer The questions below in 3-5 sentences per question


1) What is the business problem?
(2) What are the implications of the company’s decision?
(3) What are the implications of effective employee communication

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