Carnival-owned cruise lines likely to pull more ships from Alaska

[mercedes]

Carnival Corp. Chairman and CEO Micky Arison told Wall Street analysts today that the company is likely to pull more ships out of Alaska over the coming year due to the rising cost of doing business in the state.

The parent company of Carnival, Princess and Holland America already has announced plans to reduce capacity in Alaska significantly for 2010, as has Royal Caribbean and Norwegian Cruise Line, but Arison says further reductions to begin in 2011 now are under discussion.

"It is likely we are going to do more of (the capacity cutting) in '11," he said during a conference call to discuss third quarter earnings. "The amount of cost that they've put on to the industry during this short season is astronomical, and it will continue to negatively affect Alaska."

Arison and other Carnival executives said it was becoming increasingly difficult to make money in Alaska due to growing fees, taxes and regulations imposed on cruise companies by the state, and they said that other destinations such as Europe now hold more appeal for their ships.

"The brand will decide to put the ship where there is the best return and the most profitable returns," Arison told analysts. "They have to put it in the context that they already have seven ships in Europe or they already have two ships in Australia, but they will model it out, and if it pays to pull a ship from Alaska and put it in Europe or ... the Far East they will do that."

Arison noted that Alaska is a summer destination, and there are plenty of alternatives during the summer. "You're talking the peak July and August period where we can make a lot of money on a lot of different itineraries, and (because of rising fees and taxes) we can't make a lot of money in Alaska."

The comments come just a few days after an association that represents the nine major lines sailing in Alaska filed a lawsuit challenging the state's recently added $50 tax on vacationers arriving on large cruise ship.

Arison said a recent decision by the Disney Cruise Line to send a ship to Alaska for the first time in 2011 was an outlier event, and he didn't expect Disney to stick around for long.

"Disney has historically cherry-picked markets. It may do this one year and not come back for three, four or five years," Arison noted. "The basic Alaska business will be declining. You may get Disney, Crystal or maybe even a Seabourn" for a season, he said, but on the whole ships will be pulling out due to the rising cost of doing business and the falling return.

The Yachts of Seabourn is owned by Carnival Corp.

[lindasuelucas]

now i might never get to alaska...

[DebbieandJerry]

I can't blame Carnival. I live closer to the westcoast and Alaska is still out of my price range! It is not an easy cruise to fly in/out of. And, because you have a limited number of weeks in which you can cruise that area, the cruise lines can demand top dollar.

I have a friend that flys to Anchorage and puts together her own Alaskan vacation. She tells me that what she spends in hotels and food alone is astronomical!

[hazelson]

It's sad but it looks like the State of Alaska is going to loose out because of its need for higher fees.  I can't imagine the ports will do well without the cruise ships.