NCL Corp. plans to transfer the Pride of Aloha as of May 11, leaving only one of what had been three American-flagged cruise ships in Hawaiian waters.

The Miami-based company said the 2,002-passenger Pride of Aloha will be re-flagged and sent to Asia this summer.

NCL's Pride of Hawai'i left the Islands last week for a new assignment in Europe, where it will be renamed Norwegian Jade.

The remaining year-round ship in Hawai'i will be the Pride of America, introduced in 2005, a vessel designed and built for Hawai'i cruising.

"It's definitely going to be a huge impact," said state tourism liaison Marsha Wienert, with up to 236,000 fewer people visiting the Islands each year because of the ships' departure.

That impact will be felt more on the Neighbor Islands, where 2,000 cruise ship visitors a week spurred growth for many businesses, from farms to laundries to tour companies and other small businesses catering to the cruise-ship visitor.

Hilo tour operator Tony DeLellis said the loss of a second ship is huge for tourism directly, and the community more broadly. He runs a tour company called KapohoKine Adventures that specializes in small-group luxury tours using sport-utility vehicles and vans. His first reaction? "There's gonna be a lot of vans for sale in Hilo this summer."

He said foreign-flagged ships spend the summer in other places so, "we will see only one ship a week here in Hilo, which will be devastating.

"The effect will be chilling, and everyone will feel it in a direct way, like a tour guide losing a job, or indirect way, like the new potholes in the roads that can't be fixed because the county can't find the tax dollars to repair them," DeLellis said.

He said state and county government officials should have been doing more to support the industry. "While we give hundreds of millions of dollars away every year in tax credits to the entertainment and high-tech industries, whose actual benefit to the overall economy and job market is debatable at best, we continually try to devise more and more ways to make it impossible for the cruise industry to do business here."

SHORT NOTICE

When NCL announced it would end Hawai'i service for the Pride of Hawai'i, the company gave 10 months notice. This time, officials gave three months.

Wienert said that can be especially hard on small businesses. "They were taken off-guard," she said. "It's a very important industry."

Tourism, the state's No. 1 private industry, brings in more than $12 billion a year. And with a recent decline in visitor arrivals, industry officials have looked at the increase in cruise-ship activity as a bright spot.

The state Department of Business, Economic Development and Tourism now forecasts the state will host 266,421 cruise-ship passengers in 2008, a 47 percent decline from 501,698 in 2007. In contrast, 2007 was up 21 percent from 2006.

NCL President and CEO Colin Veitch said the company plans to keep one ship in Hawai'i, the Pride of America. For that ship, he said, the company is "committed to taking reservations through 2010."

Veitch said having three ships in Hawai'i wasn't profitable enough for NCL to justify the expense of running the American-flagged ships.

INADEQUATE RETURN

Most cruise ships fly foreign flags and hire people from developing countries who work longer hours for less pay and under more difficult conditions than Americans.

Last year, NCL said the strategy was to trim from a three-ship fleet to two ships to help stem losses. But Veitch said it was clear that the company was still not going to be sufficiently profitable with two ships.

"The cruise-ship operation that we currently have is not making an adequate return for us," Veitch said.

The company also considered stopping all its interisland cruises, he said. "But we are committed to the Hawai'i market, and we are committed to U.S.-flagged shipping, and it is obvious to us that Pride of America is doing well and we're going to support that ship," Veitch said.

COULD RECONSIDER

If business stabilizes here, he said, the company would consider bringing back Pride of Hawai'i after more than a year. He said that ship was just re-flagged on Saturday as Norwegian Jade in preparation for cruising European waters.

"Our Hawai'i business has been extraordinarily difficult, and although we have progressively established a stable operation, delivering a good product in a great destination, the overall price level in the market has been driven down, to a significant degree, by an unprecedented expansion" of competition from foreign-flag ships, Veitch said.

He supports proposed federal rules to require longer stays for foreign-flag ships in foreign ports between U.S. port visits, which the other cruise lines say would damage their business.

U.S. Sen. Daniel K. Inouye said he supports the company's reduced operation. "It is my hope that NCL will be able to sufficiently stabilize their operations into a profitable and robust one-ship interisland operation."

Inouye is backing the longer port stays, too. "Without such enforcement, U.S.-flagged ships will continue to find it challenging to fairly compete against foreign-flagged vessels that do not have to maintain equal compliance with U.S. labor, safety and environmental practices," he said.

Inouye added: "While I am disappointed to learn that NCL will withdraw the Pride of Aloha from its U.S.-flagged fleet, I respect this decision."

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.