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Oil Hits 12 Month High Will Fuel Surcharges Return in 2010?

Written by T.I. Cruiser on October 15, 2009 · 1 Comment

Yesterday evening while reading the newspaper I noticed that the price of a barrel of oil had surpassed 75 dollars per barrel. What this means is we are once again heading into the territory where the cruise lines start getting nervous about how much moolah it takes to fill up the tank. If you can remember back to early 2008, you know the price of a barrel of oil was skyrocketing and the cruise industry decided they weren’t going to foot the bill. So, they decided to pass the buck to the passengers in the form of a fuel surcharge. These fuel surcharges cost anywhere from 5 to 8.50 per day per person. The fuel surcharges were also capped at 70 dollars for most sailings. The decision was final and there was no getting around it. However, the surcharges were short lived because as we approached 2009 all of the fuel charges were eliminated.

Could the Fuel Surcharge Make a Comeback?

When the price of a barrel of oil plunged the cruise lines were very fast to respond by suspending the charges, but they weren’t eliminated. Knowing that its impossible to predict the future, the cruise lines left the door open for the return of the fuel surcharge. Most of the lines set a price at which they had the right to re-institute the surcharge. Norwegian Cruise Line and Royal Caribbean Cruises (parent company of Royal Caribbean, Celebrity and Azamara) set their trigger price at 65 dollars per barrel while Carnival Corporation (parent company of Holland America, Princess, Carnival, Cunard, Costa, and Seabourn ) set their trigger price a little higher at 70 dollars per barrel. As of Wednesday the price of a barrel of oil sits at 75 dollars per barrel. In other words, if the price of oils stays at these levels the fuel surcharge can be re-instituted at any time.

The reality is with the current levels of unemployment, (for many people) the money to spend on travel and leisure does not exist resulting in a soft travel and tourism sector. As you all know a soft travel and tourism sector combined with higher costs usually equals us getting screwed. While no cruise lines have publicly talked about fuel surcharges, supposedly the economy is on the upswing. The combination of that upswing and the higher price of oil will cause the price of real fuel to increase. If that increase happens I do expect the surcharge to return, especially with the level of unemployment which exists.

How the Cruise Lines Feel About Fuel Surcharges

Written by T.I. Cruiser on July 1, 2009 · Leave a Comment

Yesterday, I started talking about cruise line fuel surcharges. Today I wanted to touch on what the cruise lines are saying in the midst of the once again rising costs of fuel. At the time when the cruise lines decided the price of oil had returned to a level that was acceptable they did away with the furl surcharge. However, they did leave the door open by stating if the price of oil reached certain levels they may re-institute them. Lately the price of oil has surpassed the “green light” prices but as of now fuel surcharges have not been re-established.

Recently Chairman and CEO for Carnival Corp., Mickey Arison issued a statement concerning fuel surcharges. Here is what he said:

“At the time we suspended fuel supplements for our six North American brands, we reserved the right to reinstate them if the price of light sweet crude oil, according to the NYMEX, should increase above $70 per barrel. While we have now exceeded that threshold, in light of the economic crisis and resulting consumer weakness, we presently have no plans to institute a fuel supplement. We will continue to monitor the situation in the markets and review our position as the situation warrants.”

Personally I would like to applaud Carnival for looking at the current economic environment from the cruisers point of view. Many times, decisions such as these are made without giving much thought to the consumers economic status (especially when considering that avid cruisers are an addictive bunch). Being sensitive to the position of their customers shows me once again why Carnival is clearly the leader in the cruise industry.

While other cruise lines have not yet issued official statements on how they plan to handle the rising costs of fuel here is a reminder of what their policies are in regards to implementing fuel surcharges:

Royal Caribbean – Royal Caribbean just like the other cruise lines are closely monitoring the rising costs of oil and have stated in the past, they reserve the right to reinstate fuel supplement charges if the price of West Texas Intermediate fuel exceeds $65 per barrel, on the quarterly milestone dates. The most recent milestone date was June 17, 2009, which covers sailings occurring from July 1, 2009 through September 30, 2009; fuel surcharges have not been re-established. The following milestone date is September 17, 2009 at which time the price will determine whether passengers departing on cruises between October 1 and December 31, 2009 will be impacted.

Norwegian Cruise Line – NCL reserves the right to reinstate the fuel supplement for their guests if the price of light sweet crude oil according to the NYMEX increases above the $65 per barrel threshold. Just like Royal Caribbean the most recent milestone date was June 17, 2009, which would affect sailings occurring from July 1, 2009 through September 30, 2009 and no surcharges have been re0established. The following milestone date is September 17, 2009 at which time the price will determine whether passengers departing on cruises between October 1 and December 31, 2009 will be impacted.

For those of us with cruises departing before October 1 this is obviously great news. Hopefully, this good fortune continues into the future. If I had to guess I would bet that as long as Carnival maintains their socially responsible position the pressure will be on the other cruise lines to follow their lead. That isn’ t to say that at some point one of the other cruise lines won’t break ranks but it does put a certain amount of pressure on them to hold off as long as possible.

Will Fuel Surcharges Be Returning Anytime Soon?

Written by T.I. Cruiser on June 30, 2009 · Leave a Comment

One of the most unpleasant cruise patron experiences in recent history, was the brief period in time where we had to pay for the ship’s fuel. I’m sure that some of you have not so fond memories of what I’m talking about, fuel surcharges. For those of you who missed out on all of them fun, it happened last year. Fuel prices were at an all time high and profit margins were at a low. So, instead of eating further into their profits the cruise lines decided to pass the buck, to us. They instituted a fuel surcharge which ranged in price from cruise line to cruise line but amounted to approximately 8 dollars per day per person. It wasn’t a huge amount but even still the whole idea of having to pay for your fuel struck me as (to put it mildly) insane.

Many of us thought the fuel surcharge was here to stay, but luckily when the price oil returned to a more palatable level the cruise lines did the right thing and stopped passing on the costs to us. While they did leave open the chance that fuel surcharges would return, so far they have not. Some cruise lines set magic numbers anywhere between 65 and 70 dollars a barrel that if exceeded gives them the right to re-institute the surcharge. For a while the price of oil stayed relatively low, but nothing lasts forever. Recently the price of crude has crept up dangerously close to those magic numbers and the time has once again come to wonder whether or not cruise lines will bring back the fuel surcharge.

Tomorrow we will take a look at what the cruise lines say about the fuel surcharge and whether or not they are planning to re-implement them.