Cruising 2002: year-end review: passengers enjoy smooth sailing from homeland ports, while eyeing overseas travel for next year - Industry Overview

Cruise Travel, Jan-Feb, 2003 by Theodore W. Scull

The cruising industry had a tough year financially, as low fares kept profits depressed, but passengers began to return in very healthy numbers, though not across all regions. Overall, the 23-member Cruise Lines International Association, the industry's trade and marketing group, expects the figure to be a record 7.4 million North Americans taking cruises by the end of 2002, up almost four percent over 2001.

Distant cruising itineraries suffered the most as Americans either did not want to fly or simply did not want to leave home in case of another terrorist attack. The recession and the severe downturn in the stock market beginning in July and August did not help. Some ships that would normally make spring crossings to the Mediterranean or Northern Europe stayed in North America, sailing from homeland ports, some new to the cruising scene. The prime cruising regions, the Caribbean and Alaska, became even more crowded. A few ships remained laid up. The Middle East, including Egypt and Israel, and Turkey remained shunned by most lines, and Suez cruise transits dropped to nearly nil. Trouble between India and Pakistan caused cancellations at Bombay (Mumbai).

The Port of New York has received a big boost with additional ships trading to New England, Canada, and Bermuda; plus, for the first time in many years, this summer Caribbean sailings are scheduled by Carnival and Norwegian cruise lines. Boston, Philadelphia, and Baltimore have also benefited as East Coast homeland ports, while 2002 became a banner year for the number of sailings scheduled from North American ports. Everywhere, however, passengers are booking closer in to the sailing date.

The westward around-the-world cruise has now become quite problematic and may be an endangered species. Once a ship has cleared Singapore, which way should she be routed? Suez may not be an option, and the long transit across the Indian Ocean then around Africa via the Cape of Good Hope is much less attractive, especially if offered two years running. Circle Pacific cruises provide one answer for the January to April period, but that is not a true world cruise, although often billed as such. Around South America is gaining in popularity, and a couple of megaships are sailing to Antarctica once or twice, but not debarking passengers there.

The battle for P&O Princess Cruises continued throughout the year. The merger between Royal Caribbean Cruises Ltd. and P&O Princess passed the regulatory hurdles on both sides of the Atlantic as the monopoly factor, given the small size of the cruise industry within the much larger travel market, did not loom so important. That verdict only increased Carnival Corporation's chances, and soon it also passed muster with the Federal Trade Commission.

Then the P&O Board announced that Carnival's was the superior offer, and after the dual London and New York stock market listing was worked out, the board recommended the merger. P&O then paid RCCL the agreed-to breakup fee of $62.5 million.

The final decision is up to the P&O Princess shareholders, but it looks like a done deal with the merger taking place in the first quarter of 2003. Carnival, the world's largest cruise conglomerate, will, with the addition of the P&O Princess fleet (including subsidiaries Swan Hellenic, Aida, and A'Rosa), grow from 55 ships and 90,000 berths to 82 ships and 135,000 berths. Carnival, with 74 percent of the combined company, and P&O Princess, with 26 percent, will retain separate identities, which means that Princess Cruises and Holland America Line will continue to compete in the Alaska market, and Cunard Line and P&O Cruises in the British market.

A spate of new ship orders has pretty much dried up, with a couple of, exceptions. Some newbuild options were postponed or even let lapse, but many hulls under construction are being completed and delivered at an accelerated pace.

One 85,000-gross-register-ton vessel planned for Holland America will now be finished for Cunard and its growing British market and is likely to replace the veteran Caronia (1973), now positioned year-round in Southampton. The new Atlantic liner Queen Mary 2 had the first steel cut in early 2002 and her keel laid on July 4th, recalling the date in 1840 when the first Cunarder, Britannia, set out from Liverpool to the New World. The hull will be floated out in February 2003. Cunard's web site, www.cunard. com, details the newbuilding, and reservations are already being taken for 2004.

Captain Ronald Warwick, presently commanding the Queen Elizabeth 2, has been appointed designated captain for the new Queen Mary 2. His father, William Warwick, had been captain of both the first Queen Mary and Queen Elizabeth, and the Queen Elizabeth 2 when new in 1969. As a farewell to the Queen Elizabeth 2's role as a trans-Atlantic liner, she and the Queen Mary 2 will sail in tandem from New York to Southampton on April 25, 2004.

Holland America Line accepted the former Seabourn Sun, built as the Royal Viking Sun, into the fleet in May as the Prinsendam. The ship's public spaces were redesigned to offer HAL trademarks such as the Ocean Bar, Explorers Lounge, and a stunning Odyssey Restaurant. The ship, however, played catch-up with cabin and plumbing renovations for the balance of the year. The line's 53,872-grt Westerdam, built as Home Lines' Homeric in 1986 and later enlarged, was transferred from Holland America Line to Costa Cruises last spring and renamed CostaEuropa--not CostaHomerica as originally planned. At the end of the year, the 1,848-passenger Zuiderdam, constructed at Italian shipyard Fincantieri, was delivered and began cruising from Florida.