Summary (Wikipedia) The Costa Concordia entered service for Costa Cruises in July 2006 as the largest ship

built in Italy at the time, measuring 114,137 GT, 290.2 metres (952 ft) long, and costing 450 million (US$569 million). On the first leg of a planned 6-port cruise, the Italian cruise ship Costa Concordia partially sank on January 13, 2012 after hitting a reef off the Italian coast and running aground at Giglio Island, requiring the evacuation of the 4,250 people on board. Seventeen people are known dead; 64 others were injured, and 15 are missing. The ships Captain, Francesco Schettino, had deviated from the ship's computerprogrammed route to treat people on Giglio Island to the spectacle of a close sail-past or near-shore salute. After the evacuation Schettino was arrested on preliminary charges of multiple manslaughter in connection with causing a shipwreck, failing to assist passengers, and failing to be the last to have abandoned the wreck. By tonnage, Concordia is the largest passenger ship to have sunk, and industry analysts believe the vessel is a constructive total loss. Implications of Accident on Company and Industry Losses based on asset write-off are estimated at US$500 million. This further means a loss of current and potential revenue from reduced capacity, estimated at US$95 million for fiscal year 2012 alone. Bookings for Carnival's fleet (excluding Costa), was down by the mid-teens as a percentage in the 12 days following the accident. And with a 49% share of the world-wide cruise industry accruing to Carnivals liners, failure to deftly mitigate the fallout from the accident could cancel hard-won industry gains and retard further growth due to cancellations of bookings, and the shelving of plans to incorporate cruises into vacation planning. In addition, a crisis of this magnitude that dampens passengers desire to cruise over the long-term could have a negative ripple effect not just on the cruise industry, but on the U.S. economy as well as internationally, with respect to employment in the billion dollar ship-building industry. Crisis Communications Management The behemoth challenge posed by the Concordia accident to the reputation and viability of the parent company Carnival Cruise Lines is one of crisis communication management. The primary goal of corporate public relations is the protection of the companys name, brand, image, profits and future financial performance in the medium to long term. But in times of crisis, corporate communication management aims to manage, contain, and control a crisis situation to limit the subsequent and potential wide ranging fallout. The central issue becomes whether or not the company is doing the right thing in the manner in which it shows care and compassion for its passengers who just suffered a near life and death experience. While standard public relations practices might have dictated how Carnival should react to the

ongoing disaster, the court of public opinion becomes critical on many levels. For Carnival, this is the perfect storm that could entrench significant, and insurmountable negative perception, and the companys crisis management efficacy will ultimately impact how current and potential customers will view the company, which will impact its long-term viability. As the Concordia disaster continues to unfold, plenty is at stake based on the companys crisis management, not just for the parent company Carnival, but for the entire cruise industry at large. In its response, Carnival must coordinate multiple activities simultaneously, with the objective of crafting a message that accomplishes the following: Shape a positive public perception of the companys management of the crisis/situation. Mitigate the future financial impact on the company based on public perception this is often aimed at minimizing the financial blow as much as is possible. In the case of Concordia, it would involve preserving reservations. A massive cancellation of bookings would be a strong signal of material negative public perception of the company. Reassure the public that this type of disaster will not recur this would minimize the potential negative consumer perception of the incident and reduce the length of the near-term rebound

Problem/Opportunity Given the publics reaction to the crisis so far, and Carnivals mitigation efforts to date, how will loyal customers view the company and its services in the medium to long term? As a publicly traded entity, will shareholders remain confident in the outlook for their investments, and can the company sustain itself during a downturn in stock prices and shrinking revenues? Toyota/Carnival Comparison Carnivals missteps and mismanaged opportunities, as well as the things done well are evaluated by comparison to the responses of Toyota to its recent product quality travails. The essential arguments are put forth in the context of leadership or the lack thereof in a crisis. The Face of the Crisis as the disaster unfolded, crew members who were randomly interviewed conveyed a scene of mass hysteria. In addition, there was a paucity of press releases /announcements from Costa/Carnival officials, or live press conferences by Carnival CEO, Micky Arison immediately following the accident. This is similar to the Toyota situation, where instead of demonstrating leadership, CEO Akio Toyoda dispatched a surrogate to offer public apologies. To make amends, and in a departure from Toyota,

Carnival hired Burson-Marsteller, one of the worlds leading public relations firms with an expertise in crisis management. By doing so, the company set an expectation level to the media the situation would be handled expertly and in a way that neither Carnival, nor its officials were capable of. This contrast with Toyota which failed to acquire timely outside counsel and relied on insiders who did not welcome criticism. Get the World off Your Shoulders/Dig Deep for the Root Causes (Responsibility/Blame/Response) The immediate answers to who was at fault and what caused the accident often have a direct impact on public perception. When the Italian authorities pointed to the ships Captain as the likely cause of the human error of the disaster Carnival officials received a credible and logical pass and immediately set out to craft their messaging. In other words, Carnival and the crisis management team were able to suggest that the accident was not part of a systemic problem with Costa or Carnival cruise ships, but it was singularly the responsibility of the bad actions and poor judgment of one man. This apparent certainty of negligence and concomitant culpability on the part of the Captain, have served to mitigate the damages and fallout to Carnival and to the cruise industry at large. Prompt acceptance of vicarious responsibility was a key component of Johnson & Johnsons (J&Js) resolution of the Tylenol crisis in the mid-1980s. In contrast to the J&J and Carnival cases, Toyotas initial blame-game sought to shift responsibility from the root cause - faulty accelerators to the symptom- loose floor mats. If Carnival suffered reputational harm it would not have been as a result of the accident itself, but to the chaos that ensued in its aftermath. And to address this failure, Carnival promptly announced the undertaking of an emergency audit of safety and response procedure with a view to effecting corrective measures. In its response, Toyota was inept in deploying its best engineers to identify the principal causes of the problems reported. Facing Reality - One issue that arose following the accident was a disparity between the messages articulated in the companys press releases compared to the actions and deeds of the company. For example, news reports from rescued passengers charged that Carnival was short on assistance, while press reports reiterated the companys commitment to doing everything to help passengers and crew. This is similar to Toyota, as the company did not face the reality that it was possible to produce defective vehicles given its sterling reputation for quality. Get Ready for the Long Haul On the whole the public seems to have accepted, or to be in agreement that: the Captain was responsible, and that the accident was an isolated incident of human error. Carnivals Facebook page is filled with mostly sympathies toward those killed and support of Carnival in the way the

company has handled the situation so far. In addition, the companys shareholders have shown their support by not dumping Carnival stocks. However, despite declining revenues, the company must bolster training and all safety procedures even where no weaknesses exist, as any minor incident on board a Carnival ship would likely be subject to intense media and public scrutiny. The audit of safety procedures undertaken by the company will contribute towards this effort. Never Waste a Good Crisis Carnival does have an opportunity to benefit from the crisis and implement fundamental changes, especially because the cause of the disaster was human error and not negligent company policies. Firstly, the company could impart a no tolerance approach to maneuvers of the kind attempted by Captain Schettino. The company could divulge systems and safety improvements to restore and reinforce customer confidence. Employees must also be made to feel that their safety is paramount, so they can perform their tasks effectively. Youre in the Spotlight: follow True North demonstrative leadership is essential in a crisis, and so there was some debate about whether Carnivals CEO Micky Arison should have flown to Italy to handle the crisis. Similar to Toyotas CEO, Arison delegated public relations responsibilities to Pier Luigi Foschi, CEO of Carnivals Italian unit (Wall Street Journal 2012). In so doing, Arison missed an opportunity to go on the offensive, personally show compassion and reassure customers of his commitment not just to satisfying their leisure needs, but also to ensuring their safety. Conclusion Thus far, Carnival seemed to have received more favorable than negative coverage from the media, and has experienced no real customer outrage. The company seems free from jeopardy in the short term based on measures discussed above, but, reports from the company about cancellations will be important in the short term, as well as any exculpatory or incriminating revelations from future investigations. Reactions to the disaster may remain mixed as to how well Carnival did (is doing), but it would seem that their initial crisis communications goals have been achieved. But the crisis is far from over, as the ship remains partially
submerged and passengers are still missing. More characters and storylines will emerge as the story unfolds, and the cruise industry may become subject to closer examination by high-profile committees, investigations and reports that are yet to follow. In the final analysis, corrective or improved safety measures will protect the interest of all stakeholders, and buoy the cruise industry in the medium to long term.

Recommendations

The following model espoused by Public Relations expert Jeff Mustard is considered instructive to the company as an immediate template to guide and effect an urgent and compassionate response in the future.

Arrange to place the guests at hotels. Length of stay at hotel should be predicated on passengers ability to make return travel arrangements (limit perhaps of a 2 3 day window to return). Cost of all return travel to be paid for by Carnival. Provide each passenger with a room and food credit/voucher at a predetermined amount. A clothing voucher to be provided people often evacuate ships with nothing. The passengers of family and loved ones who die in an incident, those family members should stay at a hotel until such time as the families and Carnival see fit.