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INllRODUClTION AND OUTLOOK A ride in a passenger-carry~ng submarine, or tourist submersible, is both novel and affordable. In just a few short years, nearly three-quarters of a million people have already enjoyed this memorable experience. The potential number of those who might do so is substantial, given the current demographics of the leisure industries. It is a market environment in which there may be a dramatic proliferation of tourist submersibles of different types, depths, and site locations during the next two decades. During the year the committee worked on this study (1989) the number of tourist submersibles in the world increased from 16 to 25. This figure includes those vessels currently operating and those under construction and soon to go into operation (firm orders exist for five more). Seven operate under U.S. Coast Guard regulatory jurisdiction, though one is not a U.S.-flag submersible. This is the largest number of tourist submersibles under a single national jurisdiction. With some extrapolation and adaptation of existing rules for surface vessels, the Coast Guard has certificated five submersibles. However, it is not a routine process; these vessels are unusual in many ways. Given their mode of operation, the number of dive cycles for a given submarine is impressive perhaps 10 cycles per day on a regular basis. (Other submersibles, used for research and military purposes, would not be subjected to in a lifetime as many cycles as these see in a year.) They are constructed of materials not commonly used in research or military submarines, and employ larger area viewports. Compared with research or work (industrial) submersibles, their passenger count is high, and the passengers are less knowledgeable of the environment and potential hazards. These considerations suggest a need for more comprehensive rules and standards for design, construction, and operation of tourist submersibles. Development of the tourist submersible industry would be inhibited if safety-related incidents were to generate a public impression that makes the underwater experience aboard one of these vessels either frightening or unattractive to the average potential customer. Investment will also be discouraged if the business is unable to operate with conventional, affordable insurance against liability. Safety should thus be of paramount concern not only to the passengers and the regulators of this industry, but also to the builders and operators. This report will use the term "tourist submersible" to designate manned submarines employed by private companies to carry a crew and paying passengers on brief underwater sightseeing excursions. 1

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2 Because this is a new type of marine activity, it is useful to review the current state of the business before considering technical and operational issues in succeeding chapters. This introductory chapter surveys the evolution and present state of the tourist submersible industry, then briefly examines business considerations that may determine its future growth. NATURE AND STATUS OF THE TOURIST SUBMIl:RSIBLES INDUSTRY Precursors of Today's Tourist Submersible Small manned submarines did not originate with the current fleet of tourist submersibles. Over the past three decades nearly 100 deep submergence vehicles (DSVs) have been put into service. The typical DSV carries a crew of three (no passengers) and is used in support of offshore gas and oil development or for oceanographic research. These submersibles have made dives as deep as 11,745 meters (35,800 feet) (the deepest known place in the ocean)~lthough most operate at depths of 366 meters (approximately 1,200 feet) or less. Because passengers are not carried and crews are small, there has been virtually no government regulation of these operations. However, almost all have been built and maintained according to established rules of the major ship classification societies (see Chapter 2~. This has helped them to achieve an excellent safety record. In thousands of dives over a 30-year period, there have been only three fatalities (none included tourist passengers) and no loss of a DSV. Thus, well before the modern (since 1970) tourist submersible appeared on the scene, there was a considerable international body of design expertise and operational experience for small manned submersibles of all types. The first true tourist submersible was the AUGUSTE PICCARD (Figure 1-1). Developed by Dr. Jacques Piccard (whose father, Auguste, invented the bathyscaphe family of submersibles), it was designed to dive to 820 meters (2,500 feet). It was built in Switzerland in the early 1960s, and the American Bureau of Shipping (ABS) reviewed and inspected its design. This submarine was operated at the year-long Swiss National Exposition, held in 1964-1965. It carried 40 passengers, plus a crew of 4, to depths of nearly 250 meters (820 feet) in Lake Geneva. At the fair's end the AUGUSTE PICCARD had made 1,112 dives, safely carrying over 32,000 passengers. Recent Development of the Industry FIGURE 1-1 The August Piccard demonstrated at the Swiss National This is still an infant ins, less Expo in 1964-196s. than a decade old in presenting entertainment-oriented submerged travel on a large scale. Near term, the focus is on the increasing number of 25- to 50-person tourist submersibles regularly offering rides in shallow waters near resort centers. Eventually a distinctly different group of smaller submersibles will be developed to go to deeper depths, into more exotic underwater environments, and probably will serve a more affluent clientele. This market is presently being served by converted research or work submersibles. Although the operating and technical elements for the undersea experience will have much in common, these latter submersibles are likely to be fewer in number and more exclusive a "safari" rather than a Jungle theme park" visit. Table 1-1 lists the tourist submersible eet as of late 1989 (not counting those under construction). Research Submersibles Ltd. (RSL), of Grand Cayman, British West Indies, was first in today's tourist submersible business. In the early 1980s the company purchased several work submersibles, mostly retired

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TABLE 1-1 Summary of Tourist Submersibles Operating in 1989 Year Name Builder BUT Pass Location Operator ATLANTIS I Sub Aquatics 1985 28 Grand Atlantis Development Cayman Submarines Corp. Island (Cayman) Ltd. ATLANTIS II Sub Aquatics 1987 28 Georgetown Atlantis Development Barbados Ltd. Corp. ATLANTIS III Sub Aquatics 1987 46 St. Thomas, Atlantis Development U.S. Virgin Submarines Corp. Islands ATLANTIS IV Sub Aquatics 1988 46 Oahu Atlantis Development (Waikiki), Submarines Coup. Hawaii Hawaii, L.P. ATLANTIS V Sub Aquatics 1988 46 Apra Harbor, Atlantis Development Guam Submarines Corp. Guam ATLANTIS VII Sub Aquatics 1989 46 Kona, Atlantis Development Island of Submarines Corp. Hawaii Hawaii, L.P. CORAL ADVENTURE Wartsila 1988 46 Amami Coral (RS-250-4) Laivateol- Oshima, Marine Co., lisuus Kyushu, Ltd. Japan DEEPSUB Perry 1975 10 Cozumel, Del Mar (PC-1202) Offshore Mexico Deep Sub ENTERPRISE Fluid Energy 1988 48 St. George, Looking (LG-50-2) Ltd. Bermuda Glass Tours Ltd. Stopped business at end of 1989 GOLDEN TROUT Wartsila 1988 46 Lake Finnish (RS-250-2) Laivateol- Simoja~vl, Submarine lisuus Finland/ Tours Inc./ Tennerife, SUBTREK Canary S. Islands Listed alphabetically by name of vessel. ** Based on end of year 1989 information.

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4 Table 1-1 (CONTINUED) Year Name Builder BLT Pass Location Operator LOOKING GLASS Fluid Energy 1988 48 St. Thomas, Submarines (LG-50-1) Ltd. U.S. Virgin Tours Ltd. Islands of St. Thomas. Stopped business March, 1989 MARIEA I Wartsila 1987 46 Saipan, DOSA (RS-250-1) Laivateol- Temto~y Sub-Sea lisuus of N. Co., Ltd. Mananas MARIEA III Wartsila 1988 46 Cheji-do, Daekuk (RS-250-3) Laivateol- Korea Subsea lisuus Co. GOLDEN SALMON Wartsila 1989 46 Tennenfe, SUBI~EK, (RS-250-5) Laivateol- Canary S.~/ lisuus (hullers Islands/ Finnish with submarine Lake Submarine (assembly) Simoja~vl, Tours Finland Inc. MOGLYN Mitsubishi 1989 40 On'na Japan Heavy Ind. Village, Submarine Okinawa Tourism Co., Ltd. PAU PAU Perry 1975 2 Rota Micro- (PC-1201) Offshore Island, nesian In- Temtory vestment of N. Co~ora- Mananas lion PC-1205 Perry 1978 2 Grand Research Offshore Cayman, Submersi- BWI bles, Ltd. PC-1802 Perry 1978 3 Grand Research Offshore Cayman, Submersi- BWI bles, Ltd. from operations in the North Sea, to provide worldwide scientific, salvage, and tourist services. At one time, with 7 units, RSL was the largest owner/operator of DSVs in the world. They were built in the United States by Perry Offshore Corporation (largest manufacturer of submersibles in the world, with 28 built) and in Canada by the former HYCO company (the second largest, with 14 built).

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SDSV-type submersibles were originally designed to carry a pilot and 2- to 3-man crew. Diver lockout versions carry 2 divers in addition to pilot and crew. Depth capabilities are from 100-500 meters (328-1,640 feet), the depths associated with their application to offshore oil and gas development work. This type of submersible offers a relatively low-cost way to enter the tourist submersible business. However, the worldwide fleet of DSVs is aging and decreasing in numbers. Perry built their last DSV in 1982, and HYCO went into receivership in 1979. RSL's passenger operations with DSVs began in 1983; by late 1989 they had made more than 6,500 passenger-carrying dives. For a ticket price of $200 each, two passengers can dive to a depth of 250 meters (820 feet) down the Grand Cayman Wall. In addition to RSL, there are two other DSV operations, one at Rota Island in the Marianas Islands (Micronesian Investment Corporation) and at Cozumel, Mexico (Del Mar Deep Sub). Both use Perry DSVs. A third operation (also a Perry DSV) is planned by Subsea Tours Inc. for 1990 in the Florida Keys. The Cozumel and Florida Keys submersibles carry 6-8 passengers. Although RSL was the first company to offer tourist rides in submersibles since AUGUSTE PICCARD in 1964, they were not the first to introduce the modern built-for-the-purpose tourist submersible. This was done by Sub Aquatics Development Corporation (SADC) of Canada with their ATLANTIS class (Figure 1-2~. Formed in 1983 at Vancouver, SADC's first submarine, ATLANTIS I, with a 28-passenger (+2 crew) capacity, was put into service at Grand Cayman Island in January 1986. In March 1987, ATLANTIS II (also 28 passengers) began operations at Barbados. In August 1987, Sub Aquatics' third unit, ATLANTIS III, began operations at St. Thomas, U.S. Virgin Islands. ATLANTIS III is an improved design carrying 46 passengers and a crew of 3. This family of submersibles can operate to a depth of 45 meters (148 feet). These first three submarines, and their operating companies, are owned by SADC. The operations are now profitable, with gross 1988 sales for the operation at Grand Cayman estimated to be more than $3 million (operating at better than 80 percent of the 28-passenger capacity). Since this one-year gross is about 90 percent of the full cost of that submarine system, the rate of return on investment is attractive. In August 1988, ATLANTIS IV was put into service at Kona, Hawaii; in September 1988, ATLANTIS V started operations at Guam. ATLANTIS PI is under construction in Canada and will be put into service at Aruba, Netherlands Antilles, in 1990. The U.S.-built ATLANTIS VII was delivered to Hawaii, where it became operational in September 1989. SADC estimates that ATLANTIS submarines will have carried over 600,000 passengers by the end of 1989. This is a remarkable record for a company less than six years old, whose first submarine operation did not begin until 1986. In 1986, RSL also recognized the limitations of using work submersibles to carry passengers. As a result, they joined with the Fluid Energy Ltd. (FEL) company in Scotland and developed the design for the LG-50, a 48-passenger (plus 2-3 crew) tourist submersible. This would be a built-for-the-purpose submersible that could carry a large number of passengers on shallow dives (30-50 meters, or 98-163 feet) with quick turnaround times between dives. FE:L set up a manufacturing facility in Scotland, where it produced two LG-50 series submersibles. As of late 1989, the two companies operating these submarines had failed in business, and the submersibles are out of service. Earlier, RSL/FEL had granted a license to the Finnish shipbuilding company, Wartsila, to build the submersibles (designated by Wartsila as the RS-250~. A total of four RS-250 submersibles were built under license at Wartsila's Laivatoellisuus Shipyard. The average cost of these submersibles was about $2.7 million each. Despite their initial success, Wartsila nevertheless determined that their internal rate of return in this business was inadequate. They terminated the program with a fifth RS-250 hull completed at the Laivateollisuus Shipyard. Meanwhile, in 1988 FEL (the licenser) also experienced financial difficulties and Perry and HYCO faced a reduced commercial market due to (1) competition from new unmanned, remotely operated vehicles, (2) improved diving technology permitting deeper work capabilities, and (3) reductions in offshore oil activity during the early 1980s.

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6 \ \ i\ t~-~-~- ~~ ~~ ~ ~~1w ~ ~ ~ ~~ ~ ~ ~1~ ~ ~ ~ ~1~ ~ ~ AN FIGURE 1-2 Cross-section (top) and photo (bottom) of ATLANTIS class submersibles. Photo courtesy of Don Walsh. went into receivership. Design, engineering, and technical personnel associated with the RS-250 work at Laivateollisuus spun off into two companies: W Sub Welding and Submersibles and SubMarine Oy. W Sub obtained the rights for the RS-250 and the fifth hull, while SubMarine Oy obtained a new tourist submersible design developed by Wartsila (SubMarine Oy calls this design the SM-100.) In 1989, Mitsubishi Heavy Industries (MHI) completed construction of a tourist submersible at their shipyard in Kobe, Japan. Launched in late summer and put into operation at On'na Village, Okinawa,

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7 in December 1989, the MOGLYN is a 40-passenger (+3 crew) submersible designed for operations at depths of 20-30 meters (66-98 feet). MHI's major partners in the operating company are Japan Travel Bureau and Japan Airlines. FIGURE 1-3 Looking Glass, St. Thomas, U.S. Virgin Islands. The successful market entry of RSL, Sub Aquatics, Fluid Energy (Figure 1-3) and Wartsila, in only three to four years, encouraged other builders and investors to look carefully at this new business sector. But the experience has amounted to more of a feasibility demonstration than market success for most companies. Among the operators, two operations (St. Thomas and Bermuda) have failed, while two or three other operations appear to be marginal due to poor site selection. (The submersibles selected were simply too large for the tourist market at those sites, Odin some casesthe market was already saturated.) Among the submersible builders, Fluid Energy and Wartsila have left the business. These two companies accounted for nearly half (seven) of the large tourist submersibles presently in service. In the spring of 1989, HYCO Technologies (which had been acquired by RSL) ceased business. The company has been attempting to refinance its operation and resume development of the 40-passenger ARIES and GEMINI submersibles which would use transparent (acrylic) hull designs. Present Tourist Submersible Programs Although no one knows what the total world market will be for tourist submersibles, estimates made by industry consultants have ranged from 50 to 100 units. Table 1-2 lists submersibles presently under construction or for which firm orders exist. The table illustrates the rate of change occurring in this business. With the demise of Fluid Energy and Wartsila's tourist submersible construction businesses, Sub Aquatics has virtually a market monopoly for at least a year. These three companies were the only ones who had built-for-the-purpose tourist submersibles in serial production, building a total of 14 among them. Three of them are headquartered in Finland: SubMarine Oy (two SM-100 class), W Submarine and Welding (two RS-250 class), Malmari & Winberg (two MERGO class). The fourth company is International Submarine Engineering (ISE) in Canada, which has built one 36-passenger ODYSSEY (Figure 1-4) class submarine for Saint Martins, Netherlands Antilles, and is now assembling a second for Bali, Indonesia. All of these submarines will enter service in 1990. W Sub also provides technical, spare parts, and training support services to all RS-250 submersibles. As of 1989, there were three companies building more than one tourist submersible. In Switzerland, the Deep Line Company of Zurich engaged the services of Jacques Piccard to help design the 16-passenger SPT-16 tourist submersible. SPT-16 is being built by Sulzer Brothers Company in Winterthur, Switzerland, and will be operational in early 1990. A French company, COMEX Marine Parks, has developed a unique tourist submersible design. They propose an acrylic, transparent-hulled vessel, SEABUS, which can operate in three modes: free- swimming, tethered, or on underwater rail tracks. COMEX, one of the world's largest commercial diving

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8 TABLE 1-2 Tourist Submersibles Presently Under Construction Year Name Builder BLT Pass Location Operator ATLANTIS VI Sub Aquatics 1990 46 Aruba, N.^ Atlantis Development Submarines Corp. Aruba MERGO 10 Malmari and 1990 10 Sharm ash (unknown) Winberg, Shaykh, Finland Egypt MERGO 10 Malmari and 1990 10 Cyprus (unknown) Winberg, Finland International 1990 36 Sint Submarine Submarine Maartens, Sa&ris of Engineering, N.A. of Alberta Canada ODYSSEY International 1990 36 Bali, Interna- (CLASS) Submarine Indonesia tional Engineering, Submarine Canada Safaris SEAVIEW Sea View 1990 10 Hawaii Sea View Enterprises, or Enterprises USA 30 SEAVIEW PerIy 1990 6 Key Largo, Subsea Offshore Florida Tours, (PC-12), Inc. USA SM-100 SubMarine Oy/ 1990 48 Eilat, SCANDIVE FRABECO, Israel (Norway) Finland/ & Morris Belgium Kahn (Israel) SM-100 SubMarine Oy/ 1991 48 (unknown) (unknown) F~ABECO, Finland/ Belgium SPT-16 Sulzer 1990 16 Swiss Lakes Deep Line Brothers, AG Switzerland NOTE: Lois listing is based on best information available at the time of publication of this study. However, the fast changing nature of this business results in changes that are difficult to track. Therefore, this table should be used as a guide to the dynamics of the tourist submersible sector rather than an absolute forecast of what will happen in 1990- 1991.

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9 72 hour emergency life support. Stereo P/A sound system. ( Easy entry hatch Forward steering thruster enables craft to pivot on it's own axis. Continuous communications to Aft w~hrc,nm Non-skid safety deck. _ 18 x 22- side viewoorts . Individual emergency respirators. Halon fire system. - Drive thrusters 3 knots maximum. FIGURE 1-4 Cross-section of the Odyssey class submersible. 49- front viewport. companies, has also had extensive experience with the design, construction, and operation of manned and unmanned submersibles.- However, they have not yet built or sold a SEABUS. W Sub Welding and Submersibles completed the fifth RS-250 hull, which they obtained from Wartsila, in mid-1989. In 1989, Sea View Enterprises Company of Hawaii began construction of a 10-passenger tourist submersible in San Diego, California. This design will use an acrylic cylindrical hull with acrylic hemispheric end domes. Some of the hull sections have been completed. If technical questions associated with the use of massive acrylic for submarine hulls can be overcome, this company also proposes to build a 30-passenger version of SEA P7EW. COMEX Marine Parks, Sea View Enterprises, and Hyco Technologies (if they return to the business) all face a number of technical problems since each of their designs use massive acrylic as a pressure hull structure material. These problems are discussed in the next section and in greater detail in Chapter 3. In Florida, SUBSEA Tours, Inc., is completing conversion of a Perry PC-12 workboat submersible to a tourist submersible. The conversion will increase the capacity to six passengers in addition to the pilot. This DSV should be operational in 1990. Projected Trends in Tourist Submersible Development There are three new developmental directions that should be mentioned, even though they are in their earliest stages: (1) the use of acrylic materials, (2) design of deeper diving submersibles, and (3) the trend toward smaller submersibles.

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10 Acrylic Materials Acrylic has the same index of refraction as seawater. Therefore, a hull made from this material would in theory provide the passenger with an Infinite window" into the sea. However, the distance between theory and practice is considerable. Acrylics have been approved for use as viewing ports and hemiheads (at the end of metal pressure hulls) for several years. Also, at least five DSVs have been constructed with spherical hulls made entirely from acrylic. Recently, designs have been proposed in which cylindrical submersible hulls would be built entirely out of thick-walled acrylic plastic. However, the classification societies have not yet established rules governing design, construction, and testing of this type hull. (See Chapter 3 for further discussion.) Deeper Diving Submersibles Some designers are now considering how tourist submersibles can be developed for depths as great as 300-500 meters (975-1,625 feet). This would permit taking passengers into depths beyond the penetration of sunlight, where distinctive life forms are found and where powerful exterior lighting will be required. While more than 80 percent of marine life forms can be seen in the upper 20 meters (65 feet) of the sea, the adventure and novelty of visiting the deep ocean can be expected to attract a certain percentage of tourist submersible passengers. These submersibles will be of a different design and will have less passenger capacity than current shallow-diving submersibles. The design challenge will be to build them at a "per seat costs that will permit the operator to make an adequate profit while making fewer dives per day and taking fewer passengers per dive. Smaller Sul~mersil~les The third important developmental trend is also related to small tourist submersibles. Comparisons show that the larger a submersible's passenger capacity, the lower the per-seat cost. Downsizing is nonlinear; that is, a 25-passenger version of a design will cost more than half as much as a 50-passenger version. Yet there are compelling market reasons to develop tourist submersibles in the 6-20 passenger range. Many resort locations do not have the throughput of tourists necessary to fill a 50-passenger submersible, 6-10 times a day, 6-7 days a week, year-round. (This problem has caused at least one operation to fail.) A small submersible designed for this type of service would have a greater chance of commercial success in such locations. When it enters service in early 1990, Deep Line's SPT-16 will be the first of this group of tourist submersibles. By the end of 1990 it will have completed a major operational series in five Swiss lakes. At this time the concept of the smaller submersible can be more carefully assessed. BUSINESS CONSIDERATIONS Market Development Potential There appear to be about 50 sites worldwide where natural characteristics like reefs and tourist demographics (numbers and affluence) are favorable for tourist submersible operations. ~Location, location, and location" is a crucial consideration for mass-market tourist ventures, submersibles included. Popular tourist destinations for land-based or cruise ship-visited pleasure include scenic islands and seashore resorts,

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11 which often have natural underwater attractions. For the tourist submersible, nature can be imaginatively augmented with specially created underwater reefs, shipwrecks, and scuba-diving actors who both perform and offer food to attract marine life. Factors that resort or hospitality owners consider in presenting entertainment to their visitors include novelty, the time required to participate, appeal to age or sex groupings, safety, and, of late, whether the activity is seen as having a neutral or even positive, rather than negative, impact on the environment. In fact, several current operations are now doing this type of dive site enhancement with excellent results. Against these indices, tourist submersibles are desirable attractions. Tourist destinations and cruise lines measure the potential of their market by highly refined techniques that consider the numbers of people who can afford to enjoy their services. For example, whereas 3 million North Americans have enjoyed cruising annually' there are 50 to 70 million who might quality for the experience on the basis of income, age, or status as a consumer of leisure products. By this measure, the number of people who have ridden in tourist submersibles is quite small compared to the potential market. The undersea trip has developed with certain parallels to recreational air travel like helicopters, balloons, and gliders. The price of a ticket is standard, and is roughly equivalent to that of a snorkeling trip, scuba boat ride, or bus excursion. Further, sales of collateral items on shore offer other opportunities to generate revenues. Insurance is a factor with significant potential impact on market development and business expansion. The international insurance market has had no real difficulty in providing coverage for tourist submarine operations. Insurance has been available at fair rates for those few programs now operational. The insurance is costlyat least by comparison with other water asset coveragesbut this is because the understanding and evaluation of risk are more mature and experience with conventional marine operations is much greater. Premiums appear to be 5 percent (or thereabouts) of value or achievable sales, whereas a cruise or hotel insurance rate would be approximately one third as much. As additional operations are set up in diverse geographic areas, there may be some problems in assessing the on-site risks for the insurance market. However, insurance costs will likely be reasonable if the operator builds the submarine to classification society standards, fully complies with governmental regulations, and follows requisite standards for training and safety that evolve from the classification, certification, and underwriting interaction. Investment Aspects It is in the investment dimension where the uniqueness and immaturity of the tourist submersible business are felt. The relative youth of the industry and the uniqueness of each environmentboth physical and geopoliticalmake the tourist submersible investment a venture capital matter at this juncture. Funds are costly and investors seek a generous return. Theoretically, at least, generous operating rewards are possible to offset (1) the risks of choosing a specific site and establishing a beachhead to discourage competition, (2) the task of containing costs, and (3) the potential that any accident, however insignificant, will be highly publicized and thus business threatening. But experience has yet to prove these profits achievable on a large scale, and the risks make financing very difficult. In the current tourist submersible business, almost all the operators and investors are small companies. Many have had no significant previous experience with marine-related tourism. This fact places special emphasis on the importance of review by suIveyors and inspectors and control by the classification societies and the Coast Guard. However, the entry of the joint venture made up of the giant Mitsubishi, Japan Airlines, and Japan Travel Bureau companies is significant for this new business sector. It is the first time large companies, with experience in underwater engineering and tourism, have become involved in a significant way. Among the current players, a high profile is held by one North American firm, SADC, whose design, production acumen, and operating approach appear able to withstand rigorous inquiry. Should

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12 market developments move in the current direction of intensified concentration of operators or licensees, then there will be a business challenge to maintain the high and obviously costly standards of the market leader. But the tourist industries are typically characterized by price competition, with a desire to attract customers via lower rates, discounts, and other revenue-reducing incentives. The entrance of competitor firms and designs in the future may introduce pressures on investment return that would have the dual effect of discouraging initial investments in new tourist submersible units and introducing pressures to cut costs in the operation of existing ones. A variant of this situation exists today where units are available due to financial failure of their original operator. The nature, resources, and operating philosophy of the eventual owner of these units cannot be predicted. Clearly there is the possibility of a cut-rate operation following a bargain purchase which, should it begin to be a trend, will test the mettle of the various regulators who are concerned with the business. The policeman (U.S. Coast Guard) will have to be both statesman and technician and will have the future of the industry in its hands. Governmental Responsibilities Throughout the world, almost all seagoing passenger-carrying operations (i.e., surface ships) are under the regulation of governmental agencies. This helps to ensure both public safety and efficient operations at sea. However, present regulatory systems do not explicitly address the carriage of passengers under the sea. Adapting existing rules to an entirely new marine operation has proved difficult. The U.S. Coast Guard has acquired considerable "on-thejob learning as a result of having to adapt existing rules for surface vessels to immediate requirements. The Coast Guard is now facing the need to improve guidelines for design, training, operations, and safety for submersible operations. The Coast Guard has inspected and approved operations at St. Thomas, U.S. Virgin Islands (two submersibles); and one each at Kona and Waikiki, Hawaii; Guam, Saipan, and Rota Island. At St. Thomas, Guam, Saipan, and Rota Island the Coast Guard has been involved in approval of submersible operations at each of these locations even though the operations do not fall under the regulation of the Jones Act (i.e., U.S. citizen built, owned, and manned vessels). For example, the vessel at Saipan was built in Finland and operates under the Panamanian Flag. Nevertheless, since the Territory of Northern Marianas is affiliated with the United States, the Coast Guard has regulatory responsibilities for maritime operations in the territory. SUMMARY Growth of the tourist submersible business has been phenomenal. Within the span of half a decade the built-for-the-purpose tourist submersible has been designed, built, and successfully deployed. The number of vessels in service is not large, but the number and throughput rate of passengers are quite large. By the end of 1989, three quarters of a million passengers had made dives with no serious accidents. Nearly all of the present fleet of 14 large tourist submersibles were put into service in 1988-1989. The operational and technical learning curve has been not only steep but harsh. After only two years, at the end of 1989, two operators and two of the three major manufacturers had left the business. Other operators will probably follow. These business difficulties do not imply limited opportunity in this new sector; rather, they have been due to problems of poor cash flow and bad management as well as a failure of the builders, investors, and operators to understand their market. By and large, those builders and operators who remain in the business are competent, professional, and safety-conscious. However, because of the business climate, it is difficult to predict whether those virtues will continue to characterize the industry. There are several tourist submersibles now entering the secondary market, which may be bought by less experienced and perhaps less safety-conscious operators. By the end of 1990, the number of passenger-carrying submersibles in service is expected to be nearly double the count at the end of 1988. Operating locations will expand from 12 to 20, in 12 countries.

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13 These changes mean added pressure for regulatory authorities to develop rules and regulations for tourist submersible design, manufacture, and operations. Fortunately, regulatory frameworks developed by the Coast Guard are widely respected and often adopted as a minimal standard or an "accepted approvals throughout the world. Thus, the Coast Guard's current concern with establishing a more effective regulatory framework for tourist submersibles will be most welcome by other nations facing similar concerns. This has already happened; in late 1989 the Coast Guard and ABS assisted the government of Bermuda in formulating rules and regulations for passenger submarine operations there.