Tuesday, June 17, 2008
How did my cruise end up costing so much?
Ever wonder how that cruise at $999 a person suddenly ends up costing you closer to 1100 dollars per person? Part of the explanation has to do with taxes of course, but a growing reason is the dreaded fuel surcharge - a relatively recent appearance on most cruises' price lists. One which Royal Caribbean and its affiliated cruise lines "enhanced" today to as much as $15 per person per day.
In November, the relatively high price of oil led the major cruise lines to start charging fuel surcharges for their cruises. The surcharges were reasonable, to start. $5.00 per passenger per day for the first and second passenger was the standard across most cruise lines. Third and Fourth passengers didn't pay the additional charge. The only major exception was the cash-strapped Norwegian Cruise Lines which started at 7 dollars, and a two dollar per day charge for the third and fourth passenger.
The cruise lines are saying that it's because of high fuel prices and there's no doubt that this is a contributing factor to rising costs. But it's also a little shameless. For many cruise lines, especially from the Carnival lines, the pricing on cruises have remained roughly the same for 20 years when you adjust for inflation. Rather than actually raising rates, they've opted to raise fees for the most part instead.
There are two main reasons for a surcharge rather than a rate increase. First, most cruises are booked through Travel Agencies who get paid commission on the reservations. A surcharge is generally not something that compensates a sales agent. This means that any money the cruise line can generate from a fuel surcharge would go directly and wholly to the bottom line.
The second reason? A fuel surcharge is a surcharge to the fare. Cruise lines are now tacking on fees that range as high as 10% of the cruise fare per person without having to advertise a higher price. Yet, the pricing is higher by a significant amount.
And today, for good measure, Royal Caribbean announced that it would be increasing its fuel surcharges again effective June 30. On Royal Caribbean and Celebrity, the per day surcharge rate increases from eight to ten dollars per passenger. Third and fourth passengers will now pay a five dollar per day surcharge, up from three dollars. Their new niche cruiseline, Azamara Cruises, doesn't charge surcharges for third and fourth passengers on their sailings, but will charge a $15 per person per day, which is a doubling of their previous eight dollar a day surcharge.
In November, the relatively high price of oil led the major cruise lines to start charging fuel surcharges for their cruises. The surcharges were reasonable, to start. $5.00 per passenger per day for the first and second passenger was the standard across most cruise lines. Third and Fourth passengers didn't pay the additional charge. The only major exception was the cash-strapped Norwegian Cruise Lines which started at 7 dollars, and a two dollar per day charge for the third and fourth passenger.
The cruise lines are saying that it's because of high fuel prices and there's no doubt that this is a contributing factor to rising costs. But it's also a little shameless. For many cruise lines, especially from the Carnival lines, the pricing on cruises have remained roughly the same for 20 years when you adjust for inflation. Rather than actually raising rates, they've opted to raise fees for the most part instead.
There are two main reasons for a surcharge rather than a rate increase. First, most cruises are booked through Travel Agencies who get paid commission on the reservations. A surcharge is generally not something that compensates a sales agent. This means that any money the cruise line can generate from a fuel surcharge would go directly and wholly to the bottom line.
The second reason? A fuel surcharge is a surcharge to the fare. Cruise lines are now tacking on fees that range as high as 10% of the cruise fare per person without having to advertise a higher price. Yet, the pricing is higher by a significant amount.
And today, for good measure, Royal Caribbean announced that it would be increasing its fuel surcharges again effective June 30. On Royal Caribbean and Celebrity, the per day surcharge rate increases from eight to ten dollars per passenger. Third and fourth passengers will now pay a five dollar per day surcharge, up from three dollars. Their new niche cruiseline, Azamara Cruises, doesn't charge surcharges for third and fourth passengers on their sailings, but will charge a $15 per person per day, which is a doubling of their previous eight dollar a day surcharge.
Labels: azamara, celebrity cruises, cruises, royal caribbean
Roger, 12:56 PM
