Safety investments and operating conditions: determinants of accident passenger-vessel damage cost.

• Author: Talley, Wayne K.

1. Introduction

   Econometric transportation safety research heretofore has focused on the likelihood of the occurrence of "safety related events" (event probability), e.g., investigating determinants of accident rates.(1) However, the risk of travel to the passenger (i.e., the probability of sustaining injury or death) not only has the aspect of event probability but also the aspect of severity conditional probability - the severity of the event given that it has occurred.(2) Hence, an alternative (to event probability) for investigating the risk of travel is to focus on the severity of "safety related events." Since the severity of a "safety related event" is conditioned upon the occurrence of the event, the event and severity conditional probabilities of "safety related events" are expected to have common determinants.

   Phillips and Talley [17] focus on the severity of air accidents and incidents by investigating determinants of their aircraft damage severity.(3) The study reports aircraft damage data as a discrete ranking, consisting of four classifications (no damage, minor damage, substantial damage and aircraft destroyed). This paper contributes to the econometric transportation safety literature by also focusing on the severity of "safety related events" and investigating determinants of this severity. It differs from Phillips and Talley [17] by: 1) measuring damage severity in damage cost (i.e., as a continuous unit of measurement), 2) providing estimates of accident marginal damage costs (with respect to given determinants), and 3) providing estimates of accident incremental damage risks (with respect to given determinants). Further, the paper investigates the severity of "safety related events" heretofore not addressed in the econometric transportation safety literature - commercial passenger-vessel accidents. Our investigation of the severity of these accidents is timely given the rising concern for the safety of commercial passenger-vessel service. Detailed data (provided by the Coast Guard) on individual commercial passenger-vessel accidents are utilized in our investigation.

   The remainder of the paper is structured as follows: Section II presents a discussion of United States (U.S.) commercial passenger-vessel service and safety. Section III presents a model of accident passenger-vessel damage cost. Data are discussed in section IV. Tobit estimation results are detailed in section V, followed by a discussion of vessel damage cost and risk estimates in section VI. Conclusions are presented in section VII.

2. U.S. Commercial Passenger-Vessel Service and Safety

   U.S. flag passenger vessels include sightseeing excursion, coastal overnight cruise, dinner cruise and ferry vessels and are classified by the Coast Guard into small and large vessel categories. The former are less than 100 gross tons in size and certified with: coastwise routes; ocean routes; lakes, bays, and sounds routes; and Great Lakes/river routes. Large passenger vessels are 100 or more gross tons in size; the majority are ferry vessels.

   In 1988, approximately 5,000 U.S. and 81 foreign flag commercial passenger vessels operated from U.S. ports. Ferry vessels carried more than 50 million passengers; the remaining vessels carried an estimated 6.75 million passengers [12, 1 and 17]. In Seattle, ferry vessels range in size from approximately 500 to 3,200 gross tons and carry 18 million passengers annually; New York City ferries carry approximately 20 million passengers annually. More than half of the world's fleet of large foreign flag passenger vessels operate from Florida in the Bahamas, Caribbean, and cruise-to-nowhere trades and many fly so-called "flags of convenience" of Liberia, Panama and the Bahamas.(4) The ports of Miami and Fort Lauderdale are the world's largest and second largest cruise vessel ports, respectively [15]. Foreign flag passenger vessels operating from U.S. ports comprise between 80 to 85 percent of the world fleet measuring over 5,000 gross tons [12, 21].(5)

   In 1991, approximately 4 million passengers boarded cruise vessels in U.S. ports; this number is expected to reach 7 to 10 million by the year 2000 [13, 1]. In 1990, 17 new or "substantially converted" passenger vessels entered the U.S. cruise market, followed by 7 new vessels in 1991 and 13 new vessels in 1992 [7, 3]. With the infusion of new vessels, the average age of vessels operating in the U.S. cruise trade has decreased, thereby increasing the overall safety level of the fleet, since new vessels are required to meet more stringent safety standards than older vessels.

   In 1983, U.S. flag commercial passenger vessels operating in U.S. waters were involved in 216 accidents (of which 10 were total vessel losses); by 1989, the number had increased to 343 (of which 21 were total vessel losses). The 1983 accidents resulted in one fatality and 15 injuries; the 1989 accidents resulted in 8 fatalities and 44 injuries.(6) In 1983, none of the vessel accidents investigated by the National Transportation Safety Board (NTSB) involved a foreign flag commercial passenger vessel; in 1989, the NTSB investigated two foreign flag vessel accidents - one resulted in no fatalities and injuries, whereas the other resulted in 3 fatalities and one injury [13, 3]. The rising number of passenger-vessel accidents, fatalities and injuries along with the expected growth in passengers have generated concern for the safety of U.S. commercial passenger-vessel service.

   The NTSB [12] study of the safety of commercial passenger vessels operating from U.S. ports expressed the following safety concerns: 1) insufficient licensing of crew and operators, 2) vessel instability and 3) insufficient fire protection. Roll-on roll-off ferry vessels have giant holes that allow for the loading (roll on) and the unloading (roll off) of automobiles and other cargoes. These giant holes preclude vertical watertight bulkheads that are standard features on most commercial vessels; if water gets in and causes a pronounced list, the vessel will capsize and sink [2]. If their loading doors are breached, they can sink without warning. Approximately sixty percent of roll-on roll-off ferry vessel accidents sink within ten minutes [2]. Ferry vessels are also subject to capsizing from pronounced lists caused by strong winds. Concern for the instability of ferries prompted the British Department of Transport in 1992 to submit proposals to the International Maritime Organization (IMO) for establishing tougher international standards to improve the stability of damaged ferries.(7)

   In 1992, the IMO, in response to the 1989 NTSB study [12] and the urging of the Coast Guard, adopted SOLAS (Safety of Life at Sea) amendments that will...