Costa Allegra
A still image taken from a video footage shows the Costa Allegra cruise ship being towed by French tuna boat Trevignon in the Indian Ocean February 28, 2012. The crippled cruise ship owned by the company whose giant liner was wrecked off Italy last month is being towed to the main island in the Seychelles, its owners said Tuesday. An engine room fire on the Costa Allegra knocked out the ship's main power supply in the Indian Ocean Monday, leaving it adrift with more than a thousand people on board in waters vulnerable to pirate attacks. REUTERS

Costa Crociere was only just beginning to pick up the pieces after the Costa Concordia cruise ship sinking when the Costa Allegra fire once again tarnished the luxury brand's drowning image.

On Tuesday afternoon, nearly 1,000 passengers remained stranded in the pirate-infested waters of the Indian Ocean some 200 miles from the Seychelles capital Port Victoria. According to Costa, they will likely remain so until Thursday.

The 28,597-ton ship left the port of Diego Suarez in Madagascar on Saturday and was due to arrive in Mahe, Seychelles on Tuesday before the fire struck. Firefighters and fire suppression systems extinguished the blaze before anyone was injured, but the ship has been without propulsion since the fire took place at around 4:39 a.m. E.T. Monday.

Commander Cosimo Nicastro of the Italian coast guard said that it took the crew several hours to extinguish the fire. Costa Cruises, owned by Florida-based Carnival Corp., further explained the situation in a statement:

The shipboard fire-extinguishing system and procedures were promptly activated and the special fire-fighting squads intervened to extinguish the fire, the company said. As a precaution, the general emergency alarm was given and all passengers and crew members not engaged in the management of the emergency reached the muster stations with the relevant safety equipment.

Inspections on the state of the engine room are on-going, Costa said, adding that Allegra received its regularly scheduled maintenance in dry dock in October 2011.

The Towing Begins

On Tuesday, a French fishing vessel began towing the powerless Italian cruise ship past the nearby island of Alphonse to Port Victoria 200 miles away where it is expected to arrive on Thursday. Earlier plans to disembark on the smaller-but-nearer Desroches Island have been abandoned, according to a Costa statement. The facilities were deemed inadequate for so many people.

On Tuesday afternoon, the Italian coast guard said the vessel had no air-conditioning or cooking facilities and an emergency generator powering the radio could fail at any minute. Batteries are being used to keep essential machinery going.

Helicopters will ferry food and flashlights to the passengers and crew Tuesday. Onboard are 135 Italians, 127 French, 97 Austrians, 90 Swiss, 38 Germans, 31 British, and eight Americans among others. Four of the passengers are children ages three or younger. Costa said it is liaising with passengers' families via their emergency contact numbers.

The Costa Allegra was on a month-long tour of the Indian Ocean, the Red Sea, and the Mediterranean. After leaving Mauritius, the ship went to Madagascar and was due to head to Seychelles, Oman, Egypt, and Jordan before the voyage ended in Savona, Italy next month.

The company insists rising concerns about pirates have been over exaggerated. Though the ship is at the southern end of seas that are vulnerable to attacks by Somali pirates, attacks have decreased in the past year as security improved. The Costa Allegra has nine armed guards on board and more are stationed on the French fishing vessel.

Somali pirates in the area have never seized a cruise ship.

Rough Seas Ahead for the Cruise Ship Industry

The Costa Allegra fire comes just weeks after the Costa Concordia ran aground off the Italian island of Giglio forcing the evacuation of 4,200 passengers. Many complained at the time of long delays and a lack of organization in the evacuation process.

Thirty-two perished and the Concordia's captain, Francesco Schettino, has been accused of manslaughter, causing a shipwreck, and abandoning ship before all those aboard were evacuated. He denies any wrongdoing.

Last month, Carnival Corp. estimated that the Costa Concordia cruise ship sinking would lower net income by $115 million to $175 million in fiscal 2012. Fleet-wide booking volumes, excluding Costa, declined in the mid teens'' following the disaster through Jan. 25, bottoming out Jan. 16, Carnival said.

In January, Carnival announced a review of safety and emergency response procedures across its entire fleet.

Statistically, cruising remains one of the safest vacation options, which may account for why few travelers canceled existing trips in the wake of the Costa Concordia disaster.

Whether opinions will remain optimistic this time around remains to be seen.

Upon news of the Allegra incident, shares in Carnival fell by nearly two percent on the New York Stock Exchange. Shares dropped a further 1.44 percent in early trading in New York on Tuesday.

The Miami-based company owns nine cruise ship brands including the Cunard Line, Holland America, Princess, and Costa Crociere. Italian-based Costa is a major component, operating 15 ships and carrying 2.14 million passengers in 2010, the latest year for which figures are available. Its turnover that year was $3.8 billion with 19,000 employed.

The notoriously sensational Italian newspapers reported rumors Tuesday that the Costa Crociere brand itself could be eliminated at a Carnival board meeting next month.

The Nightmare Returns, read one headline, while another proclaimed It's a Curse.

For its part, Costa has vehemently detested comparisons with the Costa Concordia incident saying it cannot be compared.

While nine people are under investigation for the Costa Concordia tragedy, officials have ruled out the possibility of arson on the Costa Allegra.

Current cruise industry troubles come in the wake of a major industry-wide boom over the past decade that saw over 16 million passengers in 2011, according to the Cruise Lines International Association.

Perhaps the biggest concern now is whether these incidents will tarnish cruising's image. Many question whether the ships have grown too big to handle. Others argue the industry is far less regulated than, say, air travel, and are calling for better training.

Earlier this month, cruise operators like Royal Caribbean and Celebrity began offering large discounts and promotions in order to bump up sales. Analysts believe these deep discounts are keeping sales strong and operators afloat.

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