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Rules of the Road: Commercial or private, that is the question

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Rules of the Road: by Capt. Jake Desvergers

As we push through another busy boat show season, we must acknowledge that this industry of ours, focused solely on the pursuit of pleasure, is a multibillion-dollar quest. Many aspects affect an owner’s choice in a yacht. Aside from the purely cosmetic and recreational issues, a large portion of a yacht’s existence depends upon its operational plans. Included in that framework is the yacht’s intended use.

One option that is always discussed with captains, brokers, documentation agents, attorneys and all others associated with our industry: Should the yacht be commercially certified? Unless an owner has the intention to charter the yacht, the prevalent answer is usually a thunderous, “no, private only.” Why is this? Let’s take a look at some of the more popular responses and clarify the points.

Too expensive
Certainly, expenses and fees are at the top of everyone’s list. Let us remember that most yacht owners did not achieve their success by being foolish. This is especially true when it comes to finances. Running a yacht, either private or commercial, is not cheap. For a charter yacht, there are additional costs involved in safety equipment, required third-party inspections, registration and legal fees. However, solely considering the amount of tax that is levied on the value of a private yacht, plus the future taxes on her fuel, those costs are almost immediately recouped. In some cases, the first day of a charter and/or the savings at her first fueling will recoup those costs. The inherent increased resale value for a commercially certified yacht is also a positive factor.

Owner has no intention of chartering

Having a yacht certified for commercial operations does not obligate an owner to charter the yacht. When, where and if an owner so decides is completely at the owner’s discretion. Having a yacht meet the standards of commercial certification is a statement to the level of safety implemented on board. It is also a tremendous positive when the time comes for her resale. Compare it to used car sales. Does one have a higher level of confidence when purchasing a certified, pre-owned vehicle than the same car you saw down the road at someone’s house? Unlike a private yacht, commercial yachts are inspected annually. This promotes continual improvement and assures a consistent standard. Commercial certification provides a third-party, objective view of the condition of the yacht.

Too much paperwork
This is the most popular response and quite surprising. Running a yacht is a business. No company today can be operated without some type of management system or operating procedures. Otherwise, it is not functioning correctly. However, too much administration can be an indication of micromanagement or inexperience. If a captain and crew are being inundated with paperwork, then something is wrong. A simple and professional administrative system, when implemented properly, will save any yacht a considerable amount of money. Operating a charter yacht does not create paperwork disproportionate to its advantages.

Manning
Depending upon the flag of registry, this can be an issue. If the yacht operates under a national flag, such as the United States, cabotage laws require that the yacht is manned with U.S. citizens and no more than 25 percent legal residents. In contrast, open registries allow for crew from certain countries on the IMO-approved STCW Code “white list.” This permits a more international crew. Remember that certification discussed here is different from qualification. Licenses, certificates and the standards enforced by the STCW Code are just that, an internationally recognized minimum standard. I place emphasis on the word “minimum.” Officer licenses and crew training certificates are not a guarantee of quality. Quality comes with experience. Personnel certification on a charter yacht is a must, but why would an owner utilize someone that has not met a minimum standard?

Many people can attest that achieving charter certification for a yacht is a difficult process. Some will opine that maintaining the certification is an even higher task. Commercially certifying a yacht has traditionally been a taboo subject for all but the largest of yachts seeking to charter. Dispelling the misconceptions, however, is imperative for elevating the quality standard within our industry to the next level.

Capt. Jake DesVergers is chief surveyor for International Yacht Bureau (www.yachtbureau.org). Comments are welcome below.

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