Tuesday, April 01, 2008
Carnival Caves on Fees, Avoids Lawsuit?
Carnival Corporation caved on its plan to retroactively charge people for fuel surcharges today, according to USA Today. This move saves the company a lot of future trouble and allows them to back out gracefully of a bad faith $40 million windfall the company had basically extorted out of their consumers.
Here's the back story. On November 7, Carnival announced a $5 per passenger per day fuel surcharge to cover the rising cost of fuel. This is a common way for travel providers to hide a fare increase without having to share the increased fare with travel agents who are often paid commission. What made this particular fuel surcharge so awful, was that Carnival applied the fee retroactively. If the traveler has yet to sail, but has a cabin booked, extra charges of up to $140 per cabin applied. The only exception was for people who were already paid in full by the day before the announcement was made. Thousands of travelers lost, Carnival Corporation won to the tune of $40 million. Royal Caribbean soon followed, reaping $21 million of their own.
Other cruise lines jumped on the surcharge bandwagon, but did so for new bookings only. (Disney Cruise Line is the only major cruise provider not to charge a fuel surcharge.) The move, as you imagine, was not only highly unpopular, but also borderline illegal. After multiple complaints, both Carnival Corporation and Royal Caribbean were being investigated for unfair business practices with the Florida Attorney General.
Royal Caribbean quickly backed off as the investigations started to happen, refunding all retroactive charges. (Fuel surcharges booked after the November start date still apply.) However, Carnival hung tough until today, more confident that the terms of their Contract of Carriage would allow their surcharges to stand. Or maybe they were more confident in the large political donations given to Governor Charlie Crist's campaign in 2006, while he was Attorney General.
It turns out, Carnival approached the then Attorney General about this proposed Fuel Surcharge and got the thumbs up from the Crist machine. Two weeks later, two Carnival subsidiaries - Princess and Holland America Line - sent a check to the Florida Republican party for $125,000 according to the Orlando Sentinel.
Once this came out, rumors had been swirling in the industry that Carnival was about to cave, and today they did - now avoiding both a class-action lawsuit from angry travelers, but also potential pursuit of some real serious action by the Florida Attorney General. But is this story over? Or will it start sticking to Florida's Governor? Stranger things have happened.
Here's the back story. On November 7, Carnival announced a $5 per passenger per day fuel surcharge to cover the rising cost of fuel. This is a common way for travel providers to hide a fare increase without having to share the increased fare with travel agents who are often paid commission. What made this particular fuel surcharge so awful, was that Carnival applied the fee retroactively. If the traveler has yet to sail, but has a cabin booked, extra charges of up to $140 per cabin applied. The only exception was for people who were already paid in full by the day before the announcement was made. Thousands of travelers lost, Carnival Corporation won to the tune of $40 million. Royal Caribbean soon followed, reaping $21 million of their own.
Other cruise lines jumped on the surcharge bandwagon, but did so for new bookings only. (Disney Cruise Line is the only major cruise provider not to charge a fuel surcharge.) The move, as you imagine, was not only highly unpopular, but also borderline illegal. After multiple complaints, both Carnival Corporation and Royal Caribbean were being investigated for unfair business practices with the Florida Attorney General.
Royal Caribbean quickly backed off as the investigations started to happen, refunding all retroactive charges. (Fuel surcharges booked after the November start date still apply.) However, Carnival hung tough until today, more confident that the terms of their Contract of Carriage would allow their surcharges to stand. Or maybe they were more confident in the large political donations given to Governor Charlie Crist's campaign in 2006, while he was Attorney General.
It turns out, Carnival approached the then Attorney General about this proposed Fuel Surcharge and got the thumbs up from the Crist machine. Two weeks later, two Carnival subsidiaries - Princess and Holland America Line - sent a check to the Florida Republican party for $125,000 according to the Orlando Sentinel.
Once this came out, rumors had been swirling in the industry that Carnival was about to cave, and today they did - now avoiding both a class-action lawsuit from angry travelers, but also potential pursuit of some real serious action by the Florida Attorney General. But is this story over? Or will it start sticking to Florida's Governor? Stranger things have happened.
Labels: carnival, cruises, florida, holland america line, princess, royal caribbean, travel
Roger, 11:23 AM
3 Comments:
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Anonymous, at April 10, 2008 8:40 AM
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This post has been removed by a blog administrator.
