Illegal Charters

[Alaskan Sea-Duction]

Interesting write up:

https://www.workboat.com/news/passe...tm_campaign=newsletter&utm_content=newsletter

 

[MYTraveler]

Most interesting, to me, was that it is the trade association complaining that their unlicensed competition is subjecting the public to danger. That may be, but I suspect that, like most trade associations, their real concern is having to compete. Reminds me of how taxi-cab companies / associations have complained (with surprisingly little success) about the dangers to the public of their unlicensed competition from Uber. From my perspective, competition is a good thing for the consumer and the consumer ought to be able to make his/her own decision about these matters.

 

[HeadMistress]

It was the boat sharing app that caught my attention. Unless I misunderstand it, if two or more people want to be co-owners of a boat, that boat has to be an inspected vessel? That would have put my husband and me in violation of the law when we became partners in a 24' pocket cruiser before we were married.

If I read it correctly it does indeed sound like there's a whole lot of "uber whining" going on there.

However, I'd think an owner's insurance company would have a problem with with an owner of boat insured for recreational use using it to carry paying passengers.

 

[DavidM]

I think that a licensed captain, a USCG inspected vessel where required and full liability insurance is necessary to protect the public. Otherwise a guy who has only operated a bass boat on weekends can be the captain, the boat might not have working fire extinguishers and when something does go wrong, there will be no insurance to cover it.

But hey maybe this will be one of the many regulations that Trump will abolish. Just let the market take care of these problems, right!!!

David

 

[BandB]

I don't doubt that the Trade Association is bringing it up due to the "unfair" competition. However, I also agree with them. If I agree with any of the coast guard licensing and requirements then I think I have to be bothered by the illegal charters. There will be accidents and, if the insurer gets the facts, they won't be insured. There will be operators who shouldn't be running charters. The rules exist for a reason. Unless or until they're rewritten, then I support them completely. As to the online trading and renting of boats, that's not the same. In those, I just advise the owner to make sure their insurance covers the exchange and the person renting to make sure they have coverage.

As to Uber. I have very mixed feelings. In many areas, the taxi operations have been owned by some unscrupulous characters in a monopoly. Note that this is where the comparison with the illegal charters falls apart as no one has a charter monopoly. I believe alternatives to these taxi services are needed. However, I don't believe that the taxi services or drivers should be subject to one set of rules and the others to different rules. I have one area in which I strongly disapprove of Uber's stance and that is the refusal to do Criminal Background Checks. There have been several incidents that could have been avoided. I have one other concern. If you got rid of all taxi and livery rules other than licensing, insurance, and background check, I fear you're headed to such low pay for the drivers that it becomes impossible to make a living driving a taxi or for Uber.

Back to the illegal charters. Either enforce the rules or change them. Don't wait until tragedy strikes.

 

[Alaskan Sea-Duction]

The same kind of thing happened in Alaska. Commercial Fish was successful in driving many charters into bankruptcy. Many of my friends lost everything they had. Why? Commercial fish in Alaska have and still do hold to this: "I want to force the consumer to buy his fish from me, not catching it yourself!"

 

[kev_rm]

I don't think the incumbent transport industries fully contemplate the new technology enabled sharing economy.

Prices will come down. Service Quality will go up. Lots of noise in the meantime.

I, for one, will Uber over a cab 10/10 because its better, faster, and cheaper on the whole

 

[psneeld]

While I don't understand the intricacies of Uber over cabs, driving a boat with paying passengers has certain legal requirements. I always thought DOT had legal issues with carrying passengers for hire that Uber seems to circumvent.

Swapping boats is one thing, carrying for hire is totally different.....will it change? We will see.

Decades forced the DOT and USCG to have certified drivers for passenger safety...is it time to go backwards?

 

[Blissboat]

MYTraveler wrote, "Most interesting, to me, was that it is the trade association complaining that their unlicensed competition is subjecting the public to danger. That may be, but I suspect that, like most trade associations, their real concern is having to compete."

Operators of uninspected vessels who carry more than six passengers (for hire) can sometimes be a very real danger to the public, even if out of plain ignorance rather than avarice or malice. This is true even when the vessel is being captained by someone who holds a Coast Guard Operator or Master's license. Such individuals don't know what they don't know, making their business model (and the boat it's floating on) potentially a ticking bomb.

I know this because of my fifteen years in the passenger vessel industry. I started out singlehandedly captaining six-passenger charters, later running so-called "demise" charters (more than six people on an uninspected boat), and eventually managing and captaining inspected vessels carrying up to 500 passengers. I always believed that I was being cautious and responsible. I never had an accident. But I learned along my way, at each stage, and it began to dawn on me how little I had previously known, and how lucky my passengers and I had been.

Business owners in the PVA grumble among themselves about burdensome regulations, especially the Coast Guard's vessel inspection requirements. Compliance requires considerable expense and inconvenience. As a result, the public has a right to feel confident that a trip aboard a passenger vessel in the U.S. will be safe, and that in case of accident, equipment and resources are in place to avert injury or loss of life.

After jumping through all the complex, costly, at times mystifying hoops necessary to set up and maintain a legitimate passenger vessel business, and sweating out the bad times along with the good in the industry, it can be galling for a professional operator to watch someone with a private yacht load up fifteen or twenty folks for a "charter" cruise. When an accident does happen, it tends to hurt the whole industry, even though the fault might lie with someone who cut corners on having their vessel inspected and certified. As BandB observed, "The rules exist for a reason." That reason might not be obvious until you've been around the block a few times.

One of the things I learned in the boating business is that whenever someone else sees you making a few bucks, two or three other operations will pop-up trying to do the same thing, and fight you for those dollars. The public wins by having more choices and maybe lower prices. Fair enough. But competition in the passenger vessel business is already plenty tough without having to compete against people who don't play by the rules.

 

[twistedtree]

The article seems very thin on specifics. Lots of talk about illegal this and illegal that, but little to no specific examples of violations.

I'd be interested to know exactly what people are doing that's illegal. I sure didn't get it from that article. Even the guy trying to deliver the "100 yacht", which I assume meant a 100' yacht, I don't think was operating illegally.

 

[MYTraveler]

As to Uber. I have very mixed feelings. In many areas, the taxi operations have been owned by some unscrupulous characters in a monopoly. Note that this is where the comparison with the illegal charters falls apart as no one has a charter monopoly. I believe alternatives to these taxi services are needed. However, I don't believe that the taxi services or drivers should be subject to one set of rules and the others to different rules.

The comparison doesn't fall apart. In both cases, government regulation, in the guise of consumer protection, limits competition and increases costs. In the case of Taxis, the rates themselves are typically fixed by the government. That's why a medallion can be worth $1/4 million. Ridiculous. We can agree that there shouldn't be two sets of rules. My solution is get government out of it as much as possible for the benefit of the consumer. Uber is an absolutely great thing, especially for safety -- drunk driving deaths and serious injury are demonstrably down.

I have one area in which I strongly disapprove of Uber's stance and that is the refusal to do Criminal Background Checks. .

Perhaps you are unaware that their refusal is necessitated by government regulation that could give them liability. Once again, the best solution, in my opinion, is to have less governmental interference. That way, if the market wants (and is willing to pay for) background checks (and, like you, I would prefer knowing that the drivers are not criminals, especially when they are driving my daughters), Lyft will provide that if Uber doesn't. On the other hand, if market doesn't want (or won't pay extra for) background checks, who are we to insist?

Given a chance, the free market works REALLY well. Ironically, it is toughest on business owners, hugely benefits consumers, and is good for "labor" that is willing to work hard and produce. At least that is my strong belief.

 

[SoWhat]

I think that a licensed captain, a USCG inspected vessel where required and full liability insurance is necessary to protect the public. Otherwise a guy who has only operated a bass boat on weekends can be the captain, the boat might not have working fire extinguishers and when something does go wrong, there will be no insurance to cover it.

This is right out of the taxi industry playbook. We need licensed drivers, inspected cabs, and full liability insurance. Passengers will be dying in the streets and who is going to pay for their injuries?

Uber is doing just fine, people aren't dying, you can actually get a ride anytime anywhere for half the price, and taxi drivers who bolted for Uber make more income.

You can still take a taxi if you want, but stay away from those uninspected unlicensed launches next trip out to the mooring. Very dangerous.

 

[BandB]

The comparison doesn't fall apart. In both cases, government regulation, in the guise of consumer protection, limits competition and increases costs. In the case of Taxis, the rates themselves are typically fixed by the government. That's why a medallion can be worth $1/4 million. Ridiculous. We can agree that there shouldn't be two sets of rules. My solution is get government out of it as much as possible for the benefit of the consumer. Uber is an absolutely great thing, especially for safety -- drunk driving deaths and serious injury are demonstrably down.



Perhaps you are unaware that their refusal is necessitated by government regulation that could give them liability. Once again, the best solution, in my opinion, is to have less governmental interference. That way, if the market wants (and is willing to pay for) background checks (and, like you, I would prefer knowing that the drivers are not criminals, especially when they are driving my daughters), Lyft will provide that if Uber doesn't. On the other hand, if market doesn't want (or won't pay extra for) background checks, who are we to insist?

Given a chance, the free market works REALLY well. Ironically, it is toughest on business owners, hugely benefits consumers, and is good for "labor" that is willing to work hard and produce. At least that is my strong belief.

Well, I'm not a fan of unregulated drivers. They only gain liability if they agree to run the criminal background checks and fail to run them or ignore them. By not running them now, they're assuming significant liability and enough incidents publicized widely enough will damage them further.

I don't like the idea of unregulated drivers carrying passengers for hire.

There's another point too and that is taxicabs must pick you up and take you anywhere in their territory. Uber and Lyft don't have to do that. If they were to run taxicabs out of business, you soon would have no one running to some neighborhoods where people really depend on taxis.

It's a complex issue and I'm all for eliminating the medallion and franchise situation. I'd be for letting any driver who got licensed including a criminal background clearance drive for any company providing service and meeting certain standards of insurance and safety. In that situation though, I don't have an answer to insure all areas continue to get serviced.

Now, the reason we haven't used uber more is that the places we've needed transportation, they haven't been. That shows their selective market approach. I think they need to find ways to let drivers participate wherever. If two drivers in Turkey Foot want to drive, set them up somehow.

Back to the boat charter situation, there are boat owners running charters with no licenses for six or fewer but then also doing it for larger groups too. It's not a huge group doing so, but it's a dangerous group that shows a willful violation of basic boating regulations. It's not all that difficult to set it up right for six or fewer passengers and most of the boats shouldn't have more than six. I don't believe it's a widespread problem any more than rapes and killings by Uber drivers are, but it's an issue that can and will grow if completely ignored.

I agree with the sentiment psneeld and blissboat expressed.

While we're at it let's please clamp down on unsafe charter buses.

 

[FF]

IN many places like NYC cabs are expensive due to gov purchased rules.

In the 1930/s a hack license was $5.00.

The gov. stopped issuing new licenses so the price rose and rose.

Many folks thought it was their RIGHT to sell their old hack license for $750,000+.

The winner , as usual the banksters who charge interest on the loan for the license.

Figure out how much a day of the cabbies time is spent just paying interest from the bankers , to see one source of high cab fares.

 

[psneeld]

This was passed to me by someone dealing with the mega yacht end of things regularly...

"Large foreign flag yachts do a landrush business in New England the Great Lakes during the summer season by way of the "bareboat charter" fiction. There is no other way those boats can do charters in American waters and the CG knows that those charters are a fiction. It is one of the yacht industry's most flagrant abuses that is no secret to anyone involved in the industry.

Most every one of those boats carries a commercial certificate from its flag state and a second "private" or recreational certificate that is displayed when entering US waters since US law does not allow for a "commercial yacht." A yacht over 24m operating as a commercial vessel is considered by the IMO as cargo ship and is limited to 12 passengers unless the flag state allows for a "passenger yacht" status that so far very few but the largest yachts comply.

Some flag states like Marshall Islands have bypassed the pleasure/commercial firewall by allowing a certain number of days charter before requiring that vessel to hold a commercial certificate.

The reason it exists is because the owners have enough clout that the CG ignores the situation. The industry is safe enough that accidents are very rare and even less bad publicity is attached to the business. The entire business in American waters is a loophole industry, a fiction, and the CG knows full well it is. "

 

[BandB]

This was passed to me by someone dealing with the mega yacht end of things regularly...

"Large foreign flag yachts do a landrush business in New England the Great Lakes during the summer season by way of the "bareboat charter" fiction. There is no other way those boats can do charters in American waters and the CG knows that those charters are a fiction. It is one of the yacht industry's most flagrant abuses that is no secret to anyone involved in the industry.

Most every one of those boats carries a commercial certificate from its flag state and a second "private" or recreational certificate that is displayed when entering US waters since US law does not allow for a "commercial yacht." A yacht over 24m operating as a commercial vessel is considered by the IMO as cargo ship and is limited to 12 passengers unless the flag state allows for a "passenger yacht" status that so far very few but the largest yachts comply.

Some flag states like Marshall Islands have bypassed the pleasure/commercial firewall by allowing a certain number of days charter before requiring that vessel to hold a commercial certificate.

The reason it exists is because the owners have enough clout that the CG ignores the situation. The industry is safe enough that accidents are very rare and even less bad publicity is attached to the business. The entire business in American waters is a loophole industry, a fiction, and the CG knows full well it is. "

Do you have a source to attribute that to?

 

[psneeld]

I won't post who.... but I deem it reliable enough and while my own USCG background finds parts of it hard to believe.....I certainly didn't know every nook and cranny in the USCG and often was amazed the pick and choose attitude of some policies and the reasons behind them.

Also, like most short, general posts on a topic of pretty wide and complicated variations, take it for what it is...
.

 

[BandB]

I won't post who.... but I deem it reliable enough and while my own USCG background finds parts of it hard to believe.....I certainly didn't know every nook and cranny in the USCG and often was amazed the pick and choose attitude of some policies and the reasons behind them.

Also, like most short, general posts on a topic of pretty wide and complicated variations, take it for what it is...
.

Well, the biggest boats operating legally but circumventing a lot of US laws in doing so are the Cruise Lines.

 

[psneeld]

When enough money is on the table...

 

[dhays]

Given a chance, the free market works REALLY well. Ironically, it is toughest on business owners, hugely benefits consumers, and is good for "labor" that is willing to work hard and produce. At least that is my strong belief.

As a small business owner (and I mean a true small business, a dozen employees and gross receipts under $2 million), I really don't like the regulations that I have to follow. I get hit with not only the normal business regulations but also the state and federal regulations and requirements surrounding Medicare and Medicaid. Add to that the state and federal regulations from professional licensing, drug prescribing, etc... it is a challenge. Lots of primary care practices are selling out to large hospital based systems since they can't handle the overhead related to regulatory compliance.

Despite that, I am firmly convinced that regulation is important and necessary. The free market has proven itself to fail miserably when it comes to self regulation. I am glad that marine operators have to meet the stringent requirements of the USCG. It makes the marine environment safer for all concerned. It would be unfortunate if charter operators were able to circumvent that resulting in unfair competition and reduced safety.

 

[Ski in NC]

I think it is false to equate regulatory compliance to safety.

An operator could follow every rule and regulation on a boat that conforms to every requirement and still be unsafe.

An operator could ignore every rule and regulation but still be safe.

And when accidents happen, adding more rules and regulations does not necessarily improve things.

Seeking zero risk through additional rules does not attain the goal. And the downside of myriad rules is real.

Some rules are necessary, agreed. But there needs to be an absolutely clear benefit established.

 

[MYTraveler]

I am glad that marine operators have to meet the stringent requirements of the USCG. It makes the marine environment safer for all concerned. It would be unfortunate if charter operators were able to circumvent that resulting in unfair competition and reduced safety.

Other than externalities / free rider issues, I can't think of an example where free markets have failed miserably where the failure wasn't caused by regulation in the first place. Conversely, it is hard to find price control or barrier to entry regulations that actually do any good at all. It wasn't that long ago that airline ticket prices were controlled. It was the airlines themselves that successfully argued that if competition were allowed to drive prices down, airlines wouldn't invest adequately in maintenance and safety. When pricing was deregulated, there were lots of doomsday predictions. Needless to say, experience has demonstrated that safety hasn't suffered, consumers have benefited tremendously, and the airline industry is far less profitable than it once was.

 

[Gdavid]

It is definitely a complex and interesting subject. Like others have opined, it is only fair that everyone is subject to the same rules. Staying compliant with the multitude of requirements for safety, inspection currency, credentials, insurance, drug testing and licensing is not small effort and allowing others to operate outside of the rules rewards the rule breakers and puts them at an economic advantage even if they are keeping their boats just as safe and themselves just as capable.


In my state and others, charter fishing is subject to guide licensing requirements which is a limited entry program. Similar to cab licensing, the licenses are sold for thousands, they are also used to regulate commercial fishing. I have mixed feelings about the practice because it truly prevents a free market at the same time it does provide a degree of protection to the guys who have dedicated their life to the profession. In the early 2000's when the economy was bustling and disposable income drove demand for entertainment including charters, everyone wanted to get into the game and licenses were in very high demand. Recreational fishermen became part time charter captains (became CG licensed properly insured, etc) and part time captains quit their regular job to fish full time. When the economy hit the skids there was oversupply of the service and the demand when through the floor (deck), part time guys could continue at a break even basis (for many it just offset the cost of their hobby) and many captains that did not have other skills were in a hard place. I'm not sure how I feel about the whole issue. On one hand, if a job is so enjoyable that people are willing do practically for nothing why should there be open competition. Fortunately for many of my friends in the business, the most dedicated retained the most customers and pulled through.


This business includes a mix of inspected (over six passengers, inland) or and uninspected vessels (six passenger), the level of modifications required to meet the inspected vessel requirements vary dramatically boat to boat and it is virtually impossible in some cases. I don't believe that the average boater is aware of the distinction for commercial passenger vessels, the term "inspected" sounds close to a simple CG inspection of recreational vessels.

 

[MYTraveler]

I have mixed feelings about the practice because it truly prevents a free market at the same time it does provide a degree of protection to the guys who have dedicated their life to the profession.

It would be great if we could help some people without hurting others. Unfortunately, the protection provided by limited entry licensing comes at the expense of the consumer. In my opinion, the government should not be in the business of helping one group at the expense of another, regardless of how much we might all want to help any particular group.

At least when regulatory favoritism is expressed at the state level, the disadvantaged consumers have a greater voice in the matter, whether by seeking a law change or otherwise. When it is done at the federal level, it takes an act of Congress, literally, to effect change, and it isn't as easy to vote with your feet by traveling to the next state over to hire a fishing guide.

 

[Alaskan Sea-Duction]

Great discussion.....

 

[FF]

"I am glad that marine operators have to meet the stringent requirements of the USCG."

RIGHT!

Like putting the rudder 25-35 ft in from the stern to measure under 100T and hire cheap help.

 

[Gdavid]

It would be great if we could help some people without hurting others. Unfortunately, the protection provided by limited entry licensing comes at the expense of the consumer. In my opinion, the government should not be in the business of helping one group at the expense of another, regardless of how much we might all want to help any particular group.

At least when regulatory favoritism is expressed at the state level, the disadvantaged consumers have a greater voice in the matter, whether by seeking a law change or otherwise. When it is done at the federal level, it takes an act of Congress, literally, to effect change, and it isn't as easy to vote with your feet by traveling to the next state over to hire a fishing guide.

Agreed. The road to hell and bad legislation is paved with good intentions and emotion.

 

[dhays]

Other than externalities / free rider issues, I can't think of an example where free markets have failed miserably where the failure wasn't caused by regulation in the first place.

Just off the top of my head here are some areas where the free market made some folks quite wealthy but failed from a societal point of view.
- The oil company monopolies in the early part of the last century.
- Working conditions and worker abuses during the industrial revolution.
- Health care insurance industry.
- Civil rights (ie red-lining etc...)
- Environmental impacts from industry (I grew up playing in arsenic and heavy metal contaminated soil from the free market smelting industry)
- Loss of fishing stocks
- banking and financial collapses in the last century and the beginning of this century.

While it may be true that if an airline had a lot of accidents that eventually the market would correct by folks not flying on those airlines. However, how many lives would be an acceptable loss before the market made the correction?

Free markets are a great concept that I basically agree with, however one should never be blinded to the very real, and very bad effects of free market excesses.

 

[dhays]

I think it is false to equate regulatory compliance to safety.

I agree that no amount of regulation can make any industry perfectly safe, but you aren't arguing that some regulation improves safety are you?

This is separate from the individual risk tolerance issue, ie seatbelts, motorcycle helmets, and pfds. There are always those that argue that if a driver wants to risk his own life by not wearing a seatbelt, a biker not wearing a helmet, or a boat not carrying a PFD that is their own business. But what about a cab not making seatbelts available, or a boat operator not providing PFDs for their passesnger/guests?

 

[BandB]

Just off the top of my head here are some areas where the free market made some folks quite wealthy but failed from a societal point of view.
- The oil company monopolies in the early part of the last century.
- Working conditions and worker abuses during the industrial revolution.
- Health care insurance industry.
- Civil rights (ie red-lining etc...)
- Environmental impacts from industry (I grew up playing in arsenic and heavy metal contaminated soil from the free market smelting industry)
- Loss of fishing stocks
- banking and financial collapses in the last century and the beginning of this century.

While it may be true that if an airline had a lot of accidents that eventually the market would correct by folks not flying on those airlines. However, how many lives would be an acceptable loss before the market made the correction?

Free markets are a great concept that I basically agree with, however one should never be blinded to the very real, and very bad effects of free market excesses.

Great post. Complete freedom for everyone to do as they want leads some to very much infringe on the rights and the well being of others.

I think all the illegal charterers should be required to have huge signs as you enter their boats reading:

You are about to get on an illegal charter boat.

I'm not licensed as a captain in any way.

The boat has not been checked by the coast guard and is not registered. No safety inspection of any time has been conducted.

I have no business license to operate this.

I'm not intending to report this income on my tax return if I can avoid doing so.

Because of my doing this illegally, the boat and charter are not in any way insured. If you get hurt or die, you can sue me but since I have no assets you can't collect anything.

Because I don't have a captain's license, you have no way of knowing my criminal history or whether I'm a regular user of drugs.

Proceed at your own risk.

Welcome aboard.