THE CABOTAGE ABOLISHMENT IN THE GREEK CRUISE MARKET: AN

INITIAL ASSESSMENT vis--vis HOMEPORT OPERATIONS

George K. VAGGELAS
Department of Shipping, Trade and Transport, University of the Aegean, Greece
2a Korai Str, Chios, 82100, Greece
g.vaggelas@stt.aegean.gr
Evangelia STEFANIDAKI
Department of Shipping, Trade and Transport, University of the Aegean, Greece
2a Korai Str, Chios, 82100, Greece
estefanidaki@stt.aegean.gr

Abstract
Greece, with significant tourism potential experiences cruise benefits for many years,
but only recently focused on policy measures that could increase cruise activity. For
many years Greece maintained cabotage rules for cruise ships despite the fact that the
European Commission voted EC Regulation 3577/92 for the abolishment of cabotage
restrictions. Nevertheless Greece maintained cabotage rules for cruise ships flying
non-EU flags. In 2010 the Greek State proceeded into the abolishment of cabotage
rules for non EU-flagged cruise ships, aiming mainly to increase homeport operations
in Greek ports. Five years after the abolishment of cabotage rules and during this
period, Greek cruise showed some signs of development.
The paper examines the impact of the liberalization of the Greek cruise market with
an eye on homeport operations. In doing so, it examines the evolution of homeport
operations in Greek ports, five years after the abolishment of cabotage rules. Apart
from comparing the relevant data, the paper is seeking for experts opinions regarding
on how policy interventions have generated a more favorable and business friendly
environment.
Key words: Cruise; Cabotage; Homeports;

THE CABOTAGE ABOLISHMENT IN THE GREEK CRUISE MARKET: AN

INITIAL ASSESSMENT vis--vis HOMEPORT OPERATIONS

1.
INTRODUCTION
Cruise is a dynamic shipping and tourism sector experiencing a continuous growth the
last decades while it is considered to have a considerable economic impact for the
port-cities. It is this economic impact that motivates the ports and the port cities
towards the development of the appropriate policies and strategies in order to take
advance of the economic benefits and the subsequent creation of employment.
According to the Cruise Lines International Association (CLIA, 2014) the global
cruise industry contributed $52.31 billion in direct cruise sector expenditures during
2013 at destinations and source markets, while the total global output of the sector
(direct, indirect and induced impact) reached $117.15 billion and the total
employment required for this output was 891,009 employees. A similar report from
CLIA Europe estimated the total output of the sector to be 39.4 billion while the
cruise sector maintained 339,417 jobs in Europe. Based on empirical data from Cruise
lines associations (see for example CLIA, 2014) and from ports as well as on relevant
academic research (see for example Lekakou et al, 2011; Lekakou and Stefanidaki,
2012), the economic impact of cruise activity is increasing for a destination when a
port is acting as a homeport for cruise ships (i.e. acting as the starting or ending point
of a cruise). It is therefore reasonable the effort of many cruise ports to become
homeports for cruise ships in order to increase the economic impact for the port itself
as well as for the port-city.
The Mediterranean is among the top cruise destination in the world as it is ranked in
the second place behind the Caribbean (CLIA, 2015) while Greece is the third most
popular destination in the Med with 4.6 million passenger visits in 2013 (CLIA
Europe, 2014). Despite its high ranking, Greece hasnt succeed to materialize its
attractiveness into increased revenues as the country is ranked in the 7th place as
regards the cruise industry direct expenditures with 574 million.
Back in 2010 and at the beginning of the implementation of an austerity program
aiming to encounter the economic crisis, the Greek government posed tourism as well
as cruise among the sectors that can assist the Greek economy with increased
revenues and foreign exchange. As a result Greek ports started to invest in promotion
activities in order to gain recognition among the cruise companies, even in cases
where this was almost impossible as not every port can facilitate cruise traffic due to
restrictions in port infrastructures and superstructures but also due to restrictions in
the land transport networks and even more due to the limited attractiveness of the
port-city and its hinterland as a cruise destination. At the same time the Greek
government decided to proceed with changes in the regulatory framework in a first
step to increase the home-porting activity in the country and thus gain more revenues
from the cruise companies and the cruise passengers. Five years later and after an
additional reform of the regulatory framework in 2012, the home-porting activity is
still questionable.

The paper analyzes the home-porting activity in Greece in order to conclude if the
regulatory reforms had a positive impact in the Greek ports. In doing so, the paper
uses statistic data from Greek cruise ports that presents a home-porting activity the
last few years. Also via a field research to the major cruise stakeholders in Greece the
paper is seeking the view of the market on this issue and identifies the reason behind
the limited home-porting activity in Greece.
Following the introductory section, the paper presents the evolution of the regulatory
framework since 2010 (section 2) as well as the methodological framework applied
(section 3). Section 4 discusses the results arise from the analysis of the statistical data
from the Greek homeports, while section 5 presents the outcomes from the interviews
with the cruise stakeholders and section 6 concludes.

2.
THE GREEK CRUISE REGULATORY REFORM
Cabotage regime is synonymous to protectionism and it has been widely adopted from
the majority of maritime nations in their effort to preserve their national fleets, to
ensure seafarers employment and serve national defend and safety (Ademuni-Odeke,
1991). Protectionism in the shipping and trade sectors is not a new phenomenon
(Ademuni-Odeke, 1991; Lekakou, 2007) and has been used in various periods, by
several countries.
In most countries and for many years, the cruise sector was governed by the national
maritime legislation according to which cruise ships not flying national flag were not
allowed to develop and to require the same activity as the cruise ships flying the
national flag. In Greece the regulatory framework followed the same rules. The
evolution of cruise legislative framework in Greece can be divided into the following
three periods:
Period A: prior to 1999 where the cabotage restrictions were in force
Period B: 1999 - 2010 where the EC Regulation 3577/1992 applied and
Period C
a: 2010-August 2012 where the National Law 3872/2010 applied and
b: 2012- present with the application of the National Law 4072/2012
During the first period the market operated under a cabotage regime, meaning that
ships flying non-Greek flags could not use a Greek port for home-porting operations.
In the second period, Greece fully implemented the Regulation 3577/92 of the
Council of the EU regarding the abolishment of any kind of restrictions in the
maritime transport services inside the EU. Greece due to its multi-island geography
was excluded from the implementation of the Regulation till 2004 due to reasons of
economic and social cohesion. Nevertheless, the cruise industry has been liberalized
for cruise ships flying an EU Member State flag since 1999, whilst restrictions were
in force only for non-EU flagged cruise ships, something that excluded a significant
part of the global cruise fleet from starting homeport operations in Greece.
In 2010, and due to the increase observed in the cruise traffic in Greece, the Greek
government voted the National Law 3872/2010 which provides to non-European
flagged cruise ships privileges similar to those of national or European fleet
(Stefanidaki and Lekakou, 2012). The objective of the law is to maximize the
economic benefits of cruise calls to local communities, by allowing to all ships

irrespective of their flag to start homeport operations from Greek ports. Nonetheless,
this regime comprised of certain requirements for the companies, questioning its
effectiveness. Specifically, the main requirements of the 3872/2010 included:
The minimum capacity of cruise ship is forty-nine passengers
The port of embarkation must be the same with the port of disembarkation
Cruise program should have a minimum duration of forty eight hours.
The cruise ship should stay at the home port for a minimum of eight hours
Despite the fact that no relevant preconditions exist in other countries, these
requirements are not far away from the routines and practices of the cruise industry.
The main criticism about the new law concerned the obligation of cruise companies to
sign a Contract of Agreement with the Greek State. Another point of the new regime
raising concerns is the employment conditions for the Greek seafarers. Despite the
fact that this condition was optional and was connected with financial initiative, the
industry raised certain objections about its feasibility for a number of reasons.
Specifically, the corresponding Ministerial Decision refer that in the case that a cruise
company employ Greek seafarers corresponding to 1% of the total number of crew
members (this concerns only deck, engine and general duties staff), then it was
offered a fee reduction by 20%. Apart from this incentive, the law also regulates
issues of social security and exempts the company from the obligation of social
security contribution.
The regulatory reform did not have the expected results, since almost none of the
cruise companies signed a contract of agreement with the Greek state (it is stressed
that there were two companies which signed the contract due to the fact that they had
planned a limited number of cruise itineraries starting form Piraeus).
Moreover, regional cruise business partners believed that the new regime is not
contributing to the further development of the sector (Stefanidaki and Lekakou,
2012). Based on the evaluation of the regime from the stakeholders this framework
could have only a limited impact or no impact at all, while it was widely accepted that
the Contract obligation had a negative impact in selecting Piraeus as a home-port. The
objections of the national cruise stakeholders and the lack of correspondence from the
international industry, led to the revision of the Law 3872/2010 and its replacement
two years later by Law 4072/2012. The new Law abolished the requirements of Law
3872/2010, thus fully liberating the Greek cruise market, although some limited
requirements (for example the limited duration of the cruise itinerary and the limited
passenger capacity of the cruise ship)

3. METHODOLOGY
For the purpose of the research, a methodological framework has been designed and
applied. Apart from the desk review for the collection of the necessary statistical port
data, the paper applied a field research methodology and more specifically the
interviews with cruise business stakeholders, in order to evaluate the current state of
markets liberalization. Face to face interviews has been selected as an appropriate
method in order to investigate how cruise stakeholders perceive the regulatory
framework and how this has affected their business. Experts judgment is a widely
recommended method for systematic evaluation (Nevo, 1985) and is often used in
field research (Rush and Roy, 2001).The interviews have been recorded and a content

analysis has been conducted focusing on the commonalities and differences in the
participants answers.
In total five interviews were conducted with some of the most important business
stakeholders of the cruise industry in Greece. The profile of participants is presented
in table 1.
Table 1: Participants profile
Participants profile
Cruise Lines Agents
Cruise company (established in
Greece)
Union of Greek Cruise Ship Owners
& Associate Members
Maritime Administration

No of participants
2 (more than 60% of the Greek cruise
market passengers traffic)
1
1
1

The semi-structured interviews based on a series of questions aiming at exploiting the

evaluation of the current legislative framework in Greece from the respondents, how
this framework affected the homeport activity in Greece as well as the initiatives that
Greece should undertake in order to develop home-porting.

4.
HOMEPORTING ACTIVITY IN THE PRE- AND POSTLIBERALIZATION ERA
Greece is an important cruise destination in the Mediterranean Sea. Each year Greece
welcomes more than 5.000.000 cruise passengers in countrys ports. The following
shows the cruise passengers traffic at the major Greek cruise ports for the period
2010-2014.
Table 2: Cruise passengers traffic at major Greek cruise ports for 2010-2014
Port
2010
2011
2012
2013
2014
% 20102014
1.145.402 1.485.828 1.198.047 1.302.581 1.055.556
Piraeus
-7,84
775.512
938.291
838.875
778.057
742.553
Santorini
-4,25
736.861
819.943
749.892
763.966
584.879
Katakolo
-20,63
663.371
782.365
610.207
587.501
567.511
Mykonos
-14,45
569.400
594.228
655.764
744.673
672.368
Corfu
18,08
565.786
588.171
472.308
409.991
311.182
Rhodes
-45,00
305.000
221.5620 215.700
270.020
242.951
Heraklion
-20,34
151.864
176.212
112.587
113.339
109.429
Patmos
-27,94
82.812
87.171
120.739
135.659
88.032
Kefalonia
6,30
66.779
49.188
30.868
23.732
26.050
Nafplio
-60,99
26.252
23.473
41.171
64.756
42.040
Kos
60,14
21.455
72,796
11.926
20.227
57.825
Volos
169,52
11.509
158.118
129.087
124.205
33.304
Chania
189,37
11.519
8.014
14.585
19.720
Thessaloniki 16.029
23,03
Source: Hellenic Ports Association

Many Greek cruise ports experienced a decrease in cruise traffic the last five years,
although the cruise traffic increased in some peripheral ports, something that can be
explained by the fact that some cruise companies are seeking for new destinations in
the region. 2013 was a good year for the Greek cruise as 5.661.889 passengers visited
the Greek cruise ports. This peak was mainly due to the turbulence in many countries
in Southeast Mediterranean and North Africa something that forced cruise companies
to cancel itineraries and divert their cruise ships in Greece and Turkey.
The major homeport in Greece is Piraeus while home-porting activities have been
facilitated the last few years by few other ports like Heraklion, Corfu, Lavrio and
Rhodes. In the past home-porting activities facilitated also in the port of Thessaloniki.
Table 3 shows the home-porting activities of the Greek ports for the period 20072014.
Table 3: Homeport passengers at Greek ports for 2007-2014
Port
Piraeus
Heraklion Corfu
Thessaloniki
2007 cruise passengers
986.279
234.641
384.553
31.897
2007 homeport passengers
417.811
119.697
n.a.
24.746
% of home-porting
42,36%
51,01%
n.a.
77,58%
2008 cruise passengers
1.159.590
293.073
447.774
47.879
2008 homeport passengers
512.597
133.735
n.a.
22.776
% of home-porting
44,21%
45,63%
n.a.
47,57%
2009 cruise passengers
1.221.633
317.478
494.881
38.472
2009 homeport passengers
415.260
167.119
51.259
27.507
% of home-porting
33,99%
52,64%
10,36%
71,50%
2010 cruise passengers
1.145.402
282.463
569.400
16.029
2010 homeport passengers
426.147
45.945
55.330
5.048
% of home-porting
37,21%
16,27%
9,72%
31,49%
2011 cruise passengers
1.485.828
224.571
594.228
11.519
2011 homeport passengers
454.284
6.756
53.909
40
% of home-porting
30,57%
3,01%
9,07%
0,35%
2012 cruise passengers
1.198.047
215.700
655.764
8.014
2012 homeport passengers
329.168
47.594
64.165
7
% of home-porting
27,48%
22,06%
9,78%
0,09%
2013 cruise passengers
1.302.581
270.020
744.673
14.585
2013 homeport passengers
308.705
26.000
30.000
6
% of home-porting
23,70%
9,63%
4,03%
0,04%
2014 cruise passengers
1.055.556
242.951
672.368
19.720
2014 homeport passengers
256.196
23.925
71.881
161
% of home-porting
24,27%
9,85%
10,69
0,82%
Sources:
1) Medruice Statistic Report (2011, 2013, 2015)
2) Webpages of port authorities
3) Hellenic Ports Association
n.a. = not available

From the above table it is evident that there is a continuous decrease in home-porting
throughput in the major Greek cruise homeports for the period 2007-2014. Piraeus
which is the largest homeport in Greece lost 38,68% of the homeport cruise traffic.
Same is the situation for Heraklion which lost 80,01% of homeport cruise passengers.

The port of Thessaloniki despite the fact that it is not a major cruise port in Greece, it
presented a significant home-porting activity during the period 2007-2009. Since
2011 the port is not using for the embarkation or disembarkation of cruise passengers.
The port of Corfu has a dynamic homeport activity although no safe outcomes can be
drawn due to the lack of data for homeport traffic in 2007 and 2008. In general, the
major homeports in Greece, despite the partial abolishment of cabotage rules in
2010 and the fully liberalization of the Greek cruise market in 2012, they havent
managed to be benefitted by an increase in homeport passengers throughput. Figure 1
shows the homeport throughput for the four major Greek cruise homeports for the
period 2007-2014. Even without the data for the port of Corfu for the period 20072008, there is a clear decreasing trend in home-porting activity, something that makes
questionable the expected benefits from the cruise cabotage abolishment.
Figure 1: Evolution of home-porting activity in four major Greek ports for
2007-2014
800000
669108

700000
600000
500000

562254

661145
532470
514989

400000

460934
388711

300000

376163

200000
100000
0
2007

2008

2009

2010

2011

2012

2013

2014

5.
CRUISE STAKEHOLDERS SPEAK
In order to further validate the findings that the abolishment of cabotage rules in the
cruise sector didnt managed to bring the expected growth in home-porting activities
in the Greek cruise ports, we addressed five significant cruise stakeholders. Through
face to face interviews with the use of predefined questions the respondents gave their
view on the reasons behind this failure.
The first question aimed at defining if the new liberalized regulatory framework has
generated a more favorable environment for the cruise companies. The participants
had an almost common view on this issue. Cruise agents believe that the new
framework although it liberalized the cruise market but on the contrary this happened
only in legislative level and not in market-base level, meaning that the regulation
didnt managed to respond to the market needs. The cruise company representative
suggested that the legislative improvements have not changed substantially the
business conditions, suggesting that the liberalization has been a typical process rather
than an essential one. Moreover it was commented that the actual liberalization of the
market was conducted years earlier when European law 3577/92 equated EU flags
with the Greek one. The same respondent highlighted the fact that since then no
considerable changes have been observed in attracting foreign cruise companies for

home-porting. On the other hand the other two participants coming from the Union of
Greek Cruise Shipowners and the Maritime administration considers that the
legislative reform generates more favorable conditions due to the elimination of all
obstacles included in the previous legislative situation (e.g. obligation of signing letter
of agreement etc), thus increasing the potential of cruise activity growth.
The participants were also asked to comment whether the new legislative regime
provide any kind of initiatives for the attraction of cruise ships to the Greek registry.
All respondents agreed that the new framework does not provide any kind of
motivation in order to enhance the attractiveness of the Greek flag. As it was
commented by one participant on the contrary the new regime is a disincentive,
because a cruise ship flying the Greek flag has multiple obligations such as minimum
crew requirements, social security obligation, red tape etc. Under the new regime a
cruise ship flying foreign flag can develop the exact same activity as a Greek one
without having the same obligations. These conditions undermine the competitiveness
of the Greek cruise ship [.] Right after the new regime came into force, all cruise
ships flying the Greek flag left from the national registry. It is stressed that at the end
of the 1970s, there were almost 32 cruise ships flying the Greek flag, which were
decreased to 18 ships in 2000 (Diakomihalis, 2006).
The major motivation behind the liberalization of the Greek cruise market had been
the multiple benefits that the countrys economy could gain from home porting. In the
context of assessing the efficiency of the legislative reform, interviewees were asked
to evaluate the effect of the new law compared with the current home-porting activity
in the Greek ports. All participants agreed that despite the new regulatory framewok
can ensure the minimum conditions for starting home-porting operations; however the
selection of a homeport is by far a more complex process, requiring a multi-criteria
analysis. Proximity to source markets, affordable and regular air, road and train
connections, adequate infrastructures, security and stability are some of the factors
affecting home ports selection (see also Lekakou et al., 2009). Moreover it was
commented that the neighboring countries (and Greeces competitors in cruise
market) applying similar legislative regimes and as such the attraction of homeport
operations depends on the structure and the characteristics of the regional market.
As regards the actual impacts of the new legislation in the volume of home-porting
calls, all the interviewees agreed that no significant changes were recorded in the
volumes of cruise calls after the implication of the new law. More specifically, it was
referred that only a Greek-based company is using Piraeus for home-porting in regular
basis, while there are some foreign cruise companies which are using the port
occasionally. One of the participants noted that from the port of Piraeus, only a
limited number of cruise passengers are embarking and/or disembarking a cruise ship,
while other Mediterranean cruise homeports such as Civitavecchia and Barcelona
recorded 1.5 million and 900.000 home port passengers respectively.
The lack of port infrastructures and superstructures was highlighted by all
interviewees as an important condition for the further development of the cruise
activity in general and for home-porting activities in particular. In this context,
respondents were asked to provide their views on the current status of the cruise port
infrastructures, as well as on the existing provisions, on overcoming infrastructural
limitations. All the respondents mentioned that there are some basic infrastructures

that can serve the cruise activity, however more actions and investments are required
in order to address cruise industrys development e.g. cruise ships gigantism.
Moreover, it was commented by a participant that the necessary improvements is a
subject of each governments political will, due to the limited participation of the
private sector in investing in port infrastructures. On the opposite, another respondent
mentioned that Unfortunately, the renovation program, with Piraeus and Heraklion
as exception, is proceeding very slow.[.] what is needed is the encouragement of the
private sector, having as example the case of the neighboring Turkey, which assigned
to large cruise companies the construction of port infrastructures [..] (Istanbul,
Izmir, Kousandasi) through multi-year concession agreements.
To that extend, it was suggested that the only Greek ports that could develop homeporting activities are limited, including Piraeus, Heraklion followed by Corfu, Rhodes
and Thessaloniki. These ports apart from satisfying a minimum level in infrastructure
requirements to serve cruise ships also satisfy another crucial condition, which is the
existence of an international airport. In such a scenario multiple businesses could be
benefited and multiple positive effects could be generated for the local economy and
society.
During the last years a trend emerged is this of interporting, where passengers can
embark from various ports of call during the cruise itinerary. In this context,
participants were asked to comment this practice, and further to evaluate its
perspective. They comment that this a trend taking placing in Europe during the last
years and more specifically, this practice is applied by Italian cruise companies which
offer pre and post cruise programs. In this way companies increase the variety of the
provided services something that also benefits peripheral destinations.
Concluding in the additional reasons for which home-porting in Greece is not
appropriately developed, participants identified the following factors:
a. Lack of a concrete cruise policy that would provide certain incentives to the
cruise companies. Additionally, due to the involvement of multiple state
agencies, ministries etc. into the arrangement of the various cruise issues it
was suggested the establishment of a Cruise Committee that can coordinate
the necessary activities, consisting of public servants and cruise market
representatives.
b. Infrastructural improvements that can address the requirements of the new
generation of cruise ships.
c. High port dues in relation to the services provided at each port (these concerns
predominately the main Greek cruise ports) in comparison with the related
dues in major European cruise ports
d. Lack of systematized promotion of Greece as a cruise destination
e. Port congestion to well established cruise destinations. More specifically in
the case of Piraeus port it was mentioned that traffic problems limit the
economic impact of cruise to the city of Piraeus due to the fact that passengers
available time ashore is limited dramatically.

6.
CONCLUSIONS
Five years after the first attempt for a partial abolishment of cabotage rules in the
Greek cruise market and three years after its full liberalization, Greece has not
managed to attract cruise companies for establishing homeport operations in Greek
ports. As shown from the analysis of the major Greek cruise homeports throughput
data, home porting is continuously decreasing. It seems that only the liberalization of
the market is not enough for Greece in becoming a major homeport hub in the
Mediterranean.
There several other reasons that shaping the attractiveness of a cruise port as a
homeport for a cruise company, although the regulatory framework is one of them.
The existence of an international airport nearby the cruise port, the cruise ports tariff
policy and several other factors can affect a homeports attractiveness. One might
argue that even if a cruise port undertake all the necessary initiatives in order to
become a homeport this doesnt mean that it will manage to do so, or at least on a
permanent basis. As Dowling (2006) noted, nowadays cruiseships are the destination
point for cruise passengers and the ports of call and their surrounding touristic areas is
of secondary importance. This is also the outcome of the study of Rodrigue and
Notteboom (2013) who demonstrated that cruise shipping is mainly about itineraries,
not destinations.
Greece needs to take further actions, apart from the legislative framework, in order to
increase countrys attractiveness for cruise companies in order to establish homeport
operations, especially if we take into account the extremely competitive environment
in the region, with Italian and Turkish ports being major cruise hubs. The upgrade of
the existing and the development of new port infrastructures is an issue that should be
thoroughly examined by the government and taking into account the scarcity of public
funding, the exploitation of investments from the private sector might be a solution.

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