Saturday, October 25, 2014

Cruise lines change course to cut fuel

September 8, 2008 ·

Cruise lines change course to cut fuel

When the 1,020-foot Explorer of the Seas cruises through North Atlantic waters next year, it’ll spend more time off the coast of New England and less time near Canadian shores, and it’s not because of better vistas.

Royal Caribbean International and other cruise lines have begun charting a new course in search of routes that eat up less fuel. Already one of the industry’s biggest costs, record fuel prices have cut heavily into the bottom line.

The impact of shifting itineraries will certainly have implications beyond the bottom line of cruise operators, creating winners and losers in port towns all along the way.

When cruise ships pull into Maine’s Bar Harbor, passengers spend an average of $105 each while ashore, according to a 2002 University of Maine study.

Explorer of the Seas can carry more than 3,000 passengers.

A ship even half that size could mean nearly $160,000 per visit. That means big money in Portland, which expects more than 30 visits next year from ships that can carry between 1,000 and 3,000 passengers.

While Portland stands to reap big rewards from the itinerary changes, port cities along Canada’s Atlantic coast could be on the losing end.

Canada’s Atlantic ports saw a 33 percent jump in cruise ship visits between 2000 and 2007, according to the Atlantic Canada Cruise Association.

“It’s disappointing to be losing a bit of business, but we realize that cruise lines have to make decisions based on best-business practices,” said Betty MacMillan, vice chairwoman of Atlantic Canada Cruise Association and business development manager of the port of Saint John, New Brunswick.

Royal Caribbean International changed the fall itinerary for the Explorer of the Seas along its northern route next year, shortening the distance between ports. Rather than sail from New Jersey to Quebec City and back, the ship will add stops in New England and go no farther than Halifax, Nova Scotia.

Fuel consumption was the primary reason, said Vice President Diana Block.

“You have to look at where the biggest benefit is financially with the least impact on the guests,” she said.

Annual fuel bills for cruise lines can add up to hundreds of millions of dollars and their ships can gobble up tens of thousands of gallons of fuel on any given cruise. The price of intermediate fuel oil, which most cruise ships use, has risen in tandem with crude oil.

Many cruise lines have added fuel surcharges to passenger bills, but energy costs continue to cut into profits and squeeze margins.