Anchorage Daily News
 

2 more cruise ships to be pulled from Alaska waters in 2011
REDEPLOYED: Carnival threatens more cutbacks if 2006 voter-approved taxes and regulations aren't changed.

By ELIZABETH BLUEMINK
ebluemink@adn.com

(12/10/09 17:02:57)

With Alaska already facing big cuts in cruise-ship visits next summer, the state's two largest operators announced plans Wednesday to remove even more ships in 2011.

Holland America Lines and Princess Cruises said that they will redeploy one ship each from Alaska to Europe in 2011.

The two operators are among six cruise lines that plan to either cancel or reroute ships to Alaska next year, reducing the number of cruise visitors by more than 100,000.

The owner of the two lines, Carnival Corp., has been one of the harshest critics of the increased taxation and regulation of the cruise industry approved by Alaska voters in 2006.

During a Carnival investor meeting last spring, the company's chief executive, Micky Arison, railed against the voter-approved law, which created a passenger levy and other taxes, blaming it for the lack of growth in Alaska's cruise industry in the past two years and for turning away budget-conscious travelers during this year's recession.

If no changes are made to the law, Carnival will keep reducing its capacity in Alaska "until we find an equilibrium," Arison told the investors.

Many of the state's tourism industry leaders have joined the cruise lines in asking state officials and the public to roll back the 3-year-old law, saying the cruise-industry cutbacks will hurt every community -- from Ketchikan to Fairbanks -- that relies on tourism dollars.

But the cruise industry's critics, including the sponsors of the law, say the companies aren't being straight with Alaskans: They note that the cruise lines pass on the cost of the new taxes and fees to the passengers, and that so far, Alaska hasn't experienced a big decline in visitation.

HURT FEELINGS

The big cruise lines that have operated in Alaska for years don't feel welcome here anymore, said Mark Eliason, president of USTravel, an Anchorage-based travel agency.

But there is also a larger context to their cutbacks, he said.

The cruise lines are expanding their capacity -- building ever-bigger ships-- and their destinations around the world are proliferating, he said.

"There is a lot of new cruise capacity that's looking for a home. It's a huge market with a lot of moving pieces," Eliason said.

That leads to more options for consumers too, he said.

"You have to look at the total cost of a trip. A lot of people look at it and say -- Europe for the same price as Alaska? There's just a lot more to choose from now," he said.

THE CUTS

The 2011 reduced sailings translate to a loss of 19,500 cruise passengers, on top of the loss of up to 140,000 passengers next year, said Ron Peck, president of the Alaska Travel Industry Association.

The recent decisions by Disney Cruise Line and Crystal Cruises to initiate new sailings to Alaska in 2011 will partly offset those losses, he said.

At its peak, the cruise industry brought roughly 1 million passengers to Alaska each year. The travel association projects that Alaska will see 860,000 cruise passengers next year.

Next summer, Princess, Holland America, Carnival, Royal Caribbean, Norwegian Cruise Line and the small-ship operator Cruise West all plan to cut their Alaska sailings.

Here are the specifics on the 2011 cuts:

• Holland America will pull its 1,270-passenger Ryndam and redeploy it to Europe. It typically sailed seven-night, one-way trips between Vancouver, British Columbia and Seward, with stops in Southeast Alaska.

• Princess will pull the 710-passenger Royal Princess, which has sailed 14-day round trips between Seattle and Alaska ports. It is the only large cruise ship that stops in Kodiak, and the only Princess ship that docked in Seward, company officials said. It will also redeploy to Europe.

FINANCIAL PICTURE

Without providing actual numbers as backup, Holland America and Princess said Wednesday that their analyses show that they can generate a greater return by moving the ships elsewhere.

A case in point: two Princess ships that do not operate in Alaska that are the same size as the Royal Princess generate a better return, said Bruce Bustamante, the company's Alaska vice president for community and public affairs.

He said it's unclear if reducing the number of ships in Alaska will mean Princess can charge higher prices here. Last year, amid the global recession, Carnival-owned cruise lines sold cruise tickets to Alaska and other destinations at steep discounts.

So far this year, Carnival has reported a decline in revenue and earnings per share to its investors compared with last year, though it is carrying slightly more passengers worldwide.

Overall, cruise visitation to Alaska was down 2 percent from May to August this year compared with last year, according to state officials.

Carnival has come under some criticism from Wall Street for continuing to grow its fleet of large ships. Last week, Goldman Sachs cruise-industry analyst Steven Kent said that the continued growth of the Carnival fleet will hold back ticket pricing, and that, "coupled with higher energy prices, should limit earnings growth."


Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

 


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