The Watermelon Ship is an airship built by Sir Cumference, and was used by Pac and his friends when they wanted to take their possibly first vacation that summer. Only for the ship to get captured by the Ghost Pirates who mistakenly believed it to be the Great White Cow, Mooby Dick. The Watermelon Ship is equipped with GPS, Autopilot, and seems to make for a comfy place to cruise, as evidenced by the hammock Pac was laying in and the seating.
It fell down from a very far height far above PacWorld in space. It is unknown how they got back in it, it is possible that Sir C fixed it, because they somehow are back on the Watermelon Ship and, thanks to Pac jinxing the plan of going to Pacopolis Beach, Cylindria decides to just throw the party on the Watermelon Ship in the end.