Significant Cruise Business Activity Might Be a Year Away
The cruise industry continues to face significant obstacles to resuming service a year after it was forced to suspend operations as the coronavirus grew into a global pandemic. Despite the promise of the vaccines and the welcome news this week that the number of cases of the virus is in decline across the United States, forecasts are that it might be at least a year before the industry has restored a meaningful portion of its operations.
Speaking before a state committee on transportation, Michael Rubin, the vice president of governmental affairs for the Florida Ports Council said that the cruise lines are still working to meet a list of “onerous requirements” put forth under the framework to restore cruising from the Centers for Disease Control and Prevention. Rubin forecast that some cruise ships might return on a limited basis, with capacity restricted to half capacity in the summer of 2021, but that it could be a year or more until Florida’s cruise industry was restored.
“I’m not sure we’ll have significant cruise operations until perhaps next year and even beyond that,” Rubin said according to a report in the Miami Herald. “Some of the smaller luxury liners may not be operating till further than that, until there’s actual vaccines available around the world. We are concerned. We’re hopeful that they’ll allow them to operate at least half capacity here, maybe in April, maybe in June. Hopefully, before that timeframe, because this is really, really troubling.”
Hopes had been high in November after the CDC released its framework. It is a complicated process, requiring the cruise lines to demonstrate adherence to testing, quarantine, isolation, and social distancing requirements, re-equipping their ships and enhancing facilities, and building plans as they certify their ships. The second phase would see the cruise lines run simulated voyages to demonstrate to the CDC that they had plans in place and were following the restrictions. Then, once the CDC reviews all the information, cruises could resume under additional restrictions including limits to 7-days or less, testing for passengers and crew for the virus, and limited capacity.
More than 250,00 people reportedly applied to Royal Caribbean International to act as testers as part of trial cruises called for under the CDC framework. None of the cruise lines, however, have progressed to that point. While the latest speculation said that some test cruises might start by May, Carnival Corporation President and CEO Arnold Donald speaking on an investor call in January said the company was in regular contact with the CDC but waiting for additional guidance.
Analyst Robin Farley wrote in a recent report that she estimated it would take six weeks for a ship in warm lay up to get back in service while getting a cruise ship that has been in cold lay up back in service could take closer to 16 weeks. Among the challenges the cruise lines face is crewing the ships after they sent the hotel staff home last summer. The cost of the restoration, Farley estimates would likely be $4 to $6 million for a ship in warm lay up and as much as $8 to $10 million if the ship needs to go into drydock.
Rubin told the legislators that he believes limited cruise operations would restart with restrictions ranging from capacity to health and safety protocols such as masks, and that it was critical to Florida’s economy and the financial performance of Florida’s ports. He estimated that 60 percent of cruise activity occurs in Florida
The Florida Ports Council, which was among the organization signing this week’s letters to the U.S. Congress and President Biden calling for ports to be part of the COVID relief package, says that the pandemic has cost Florida $22 billion in economic activity. They estimate that Florida lost $775 million in tax revenue and 170,000 jobs were impacted. For example, Port Canaveral, which is the world’s second-largest cruise port last week revised its 2020-2021 budget increasing its operating loss to more than $43 million based on an expectation that overnight cruises would not resume before July 2021.
While the cruise industry has continued to delay the restart of North America cruise operations, and yesterday Canada banned cruises till 2022, the lines remain hopeful that they can continue to build on the early restorations of large ship operations from Germany, Italy, Greece, the Canary Islands and in Asia. MSC Cruises this week announced it is now targeting restarting cruises to Greece at the end of April, delayed from February, while Germany’s Hapag-Lloyd Cruises announced plans for its European cruises also resuming in April.
While there is pent-up demand for cruises among loyal travelers, the cruise industry executives continue to say that the travel restrictions and progress in the fight against COVID-19 will dictate the timeline for the resumption of service.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.