Carnival to reduce Alaska fleet

mercedes · March 26, 2009

On an earnings conference call today, Carnival Corp. Chairman Micky Arison sent a strong message to officials in Alaska (where both advance bookings and ticket prices are down significantly): We don't like your $50 head tax and we're pulling ships.

With competitor Royal Caribbean reducing capacity in 2010 (they are pulling Serenade of the Seas), Arison said "I want to make it clear that we intend to do the same thing in 2010."

“We will very soon announce a reduction in our capacity in 2010,” Arison said. He added that additional capacity could be reduced in 2011. Carnival Corp. is the clear market leader in Alaska with 15 ships (seven each for Holland America and Princess and one for Carnival Cruise Lines) in the market this year and an extensive land-based operation for cruisetours that includes hotels, trains and buses (which Arison said would be impacted as well). He did not give details on what would be cut.

"It should now be very evident to everyone that the initiative that passed a couple of years ago (in 2006) is having a very significant impact on tourism to Alaska. The growth stopped immediately after the initiative passed. And today the $50 (per passenger) tax is a significant price to pay in a situation of a very sensitive consumer environment," Arison said.

He continued, "I would venture to guess that the economic losses, including job losses in Alaska, will be greater than the revenue generated from the taxes imposed. The saddest thing is that we've been unable to find anybody willing to deal with the unintended consequences of this ill-conceived initiative and the impact on the Alaska economy."

Arison added that the economic impact will also be felt in western Canada, Vancouver in particular. Carnival has already announced the Carnival Spirit will be based in Seattle in 2010, rather than Whittier (Alaska) and Vancouver, where it is home-ported this year.

UPDATE, WEDNESDAY, 12:30 PM EST: A spokeswoman confirmed that Princess Cruises will remove one ship from its fleet, which is actually eight ships this year (so there would be seven in 2010). Princess will have one less ship on the Gulf of Alaska route - they aren't saying what ship is going yet, or where it's being moved. But capacity will be reduced about 16%, the spokeswoman said.

We are awaiting word from Holland America, which also has eight ships in Alaska this year.