Arison's goal is to become a one-stop cruising shop. But the high end is the hardest place to make a profit, travel industry execs say, with more crew per passenger and complicated itineraries. Still, Carnival has some major advantages over its rivals. The company is incorporated in Panama, and many of its ships are registered in Liberia. That allows Carnival to escape duties on liquor, often its biggest shipboard moneymaker.
Carnival also skips U.S. corporate income tax on most operations.
So far, the most vocal critics of foreign flagging have been congressmen from ship-building districts and some unions. But don't expect immediate change, since it would raise protests from corporations and port cities. Small wonder that Carnival is pushing like there's nothing but open water ahead. The McGraw-Hill Companies Inc. All rights reserved.