Carnival Cruise Line

CARNIVAL CRUISE LINES:

 

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

 

fun.”4

 

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

 

indices.5

 

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

 

annually.9

 

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

 

operator.10

 

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

 

industry.14

 

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

 

areas.28

 

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

 

cables.30

 

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

 

business.31

 

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

 

Fire!

 

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 johnhealdsblog.com, 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

 

revenues.

 

 

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

Still stressed from student homework?
Get quality assistance from academic writers!

WELCOME TO OUR NEW SITE. We Have Redesigned Our Website With You In Mind. Enjoy The New Experience With 15% OFF