Cruise lines fear another lost summer

PORT CANAVERAL, Fla. – Terminal Tres, a cavernous $ 155 million structure built for Carnival Cruises, is decked out in the company’s signature blue paint, hundreds of beechwood seats, and a sleek VIP lounge with all-new table lamps. that the sales tags still hang from some.

It’s empty, near wide empty parking lots and idle shuttle bus fleets. Sparsely populated hotels and restaurants surround what was once the world’s second-busiest cruise port. Abandoned dockworkers get by on a combination of low-paid odd jobs and government help.

“I never thought I’d be standing in a food line for hours,” said James Cox, a 50-year-old doorman, who used to make $ 27 an hour discussing passengers and their luggage. “Just the degradation of that. You say to yourself, ‘Wow, I’m really at this point.’ “

Like the rest of the maritime tourism industry, Port Canaveral was suspended at the start of the coronavirus pandemic. A year later, as other parts of the economy come back to life, the U.S. cruise industry eagerly awaits Washington’s go-ahead to sail again, and worries a second summer season is about to be lost. .

The launch pad of the newly built Terminal 3 in Port Canaveral.

The interior of the newly built Terminal 3 launch pad.

Other countries, including Singapore, Italy and the United Kingdom, have authorized cruises or have set a clear deadline to set sail. Nearly 400,000 passengers have sailed since some countries began allowing cruises in July 2020, according to the industry trade group.

But to get started in the US, the cruise industry needs direction from the Centers for Disease Control and Prevention.

The CDC lifted its no-sail order in October and replaced it with a conditional set of rules; Industry officials say the 40 pages of rules are indecipherable or impractical, as a measure that requires cruise lines to conduct “simulated trips” with volunteer passengers.

“I refer to it as the ‘impossible to navigate order’ because no business could operate profitably,” said Capt. John Murray, Port Canaveral CEO.

The CDC said guidance is coming soon. “Future orders and technical instructions will address additional activities to help cruise lines prepare for and return to passenger operations in a way that mitigates the risk of Covid-19 among passengers and crew members,” said the spokesman Jason McDonald in a statement, declining to comment further.

The closure of cruise lines during the pandemic has had far-reaching economic consequences for US ports. In this video, WSJ reporter Julie Bykowicz visits the once-bustling Port Canaveral cruise terminal to find out what’s next for the industry.

A White House spokesman did not respond to a request for comment.

The order was written before the vaccines were approved, and the CDC has not said whether it will revise the guide to incorporate vaccinated crew and passengers.

Without direction from the CDC, cruise lines cannot begin the months-long process of implementing security measures and calling thousands of workers from around the world, industry officials said.

Washington’s hesitation may partly reflect the cruise industry’s troubles at the start of the pandemic.

Cruise lines continued to sail despite known risks from the coronavirus, an investigation by The Wall Street Journal found. The ports denied entry to ships with passengers sick with Covid-19 and the giant ships were trapped at sea.

As the rollout of Covid-19 vaccines in the US accelerates, President Biden predicts a return to normal by July. Theme parks, casinos, airlines and hotels operate with restrictions and security measures, and the cruise industry says it can do the same.


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“I hate to speculate, but I think the CDC looks at it and feels like, ‘Is this a risk we really should take?’ ”Said Brian Salerno, senior vice president for global maritime policy for the International Association of Cruise Lines, the cruise industry’s premier trade group. “Having a marginalized industry like this, based on bad perception, is asking a lot.”

Competitors are taking advantage of the void. Hong Kong-based Genting Cruise Lines said in a March 12 financial filing that Crystal Serenity would begin sailing from the Bahamas in July, disembarking in the Americas, but bypassing the jurisdiction of the US and the CDC. . A week later, Royal Caribbean Group said it would ship its own cruise from Nassau in June, similarly avoiding US ports.

Alaska-bound cruises face an additional hurdle. Most of these ships have a foreign flag, so they would have to call in Canada, because US law prohibits such ships from carrying passengers between US ports. The problem: Canada has banned cruises until February 2022.

About 60% of all visitors to Alaska arrived by cruise ship in 2019, according to an October Federal Maritime Commission report.

Alaska Republican Senators Dan Sullivan and Lisa Murkowski called on the Canadian government to reconsider its ban and introduced legislation to allow Alaska-bound cruises to bypass Canada. Either plan relies on the CDC allowing cruise ships to resume.

“The CDC, the best scientists in the world. What they are not designed to do is to be a regulator of tourism in the United States. They’re not good at it, ”Sullivan said in an interview. Despite his office’s almost daily approach to the agency, he said, “they have no answers.”

The pandemic wiped out, at least temporarily, what was a growing industry. In 2019, about 14 million cruise ship passengers departed the US, generating a record $ 55.5 billion for the US economy and supporting more than 436,000 US jobs.

The Industry’s “Big 3”: Carnival Global Cruise Line Operators Corp.

CCL 2.44%

, Royal Caribbean and Norwegian Cruise Line Holdings Limited.

NCLH 2.59%

“He took major financial blows.”

With revenue deeply depressed over the course of 2020, companies raised cash with huge bond and equity issues, according to industry analysts and corporate filings. The big three have told investors they have enough cash on hand to make it into the 2022 cruise season.

They have also slashed expenses, laid off workers, and in some cases sold older, less efficient ships, which are not as profitable to operate.

Even standing still is expensive. Carnival Corp. told investors in February that it expected to spend an average of $ 600 million in cash a month just to keep the ships under maintenance, maintain corporate operations and invest in preparations to return to sea.

“There has been an extraordinary amount of lending over the last year in the industry,” said Melissa Long, Standard & Poor’s director that covers the cruise industry.

The trade group and cruise lines spent $ 4.4 million on federal lobbyists last year, the largest such investment in the industry since 2008, the beginning of the latest recession, according to lobbying records.

Carnival Corp. CEO Arnold Donald told investors in January that the company and its rivals are in “constant communication” with federal officials, including the CDC, about the reopening process.

Cruise-related businesses, including ports, say they have been trying to draw Washington’s attention to their plight for the past year, putting pressure on lawmakers and administration officials.

Unions representing dockworkers on both coasts say workers have lost hundreds of thousands of hours since the pandemic struck.

In Port Canaveral, Phil Charlton, who has worked in the industry since 1985, has taken a part-time flower delivery job along with his wife, Olivia, also a port employee. Bob Baugher, owner of hotels and transit buses in the area, said his businesses lost $ 16 million in revenue last year.

Nearly 5 million passengers passed through Port Canaveral in 2019, making it second only to Miami in terms of cruise activity. Many US ports are a mix of cruise ships and cargo, but here the cruise side typically accounts for around 80% of revenue.

Now ships without passengers arrive at the terminal several times a month for supplies and maintenance. None of the skeleton crew can disembark. On a recent afternoon in March, Disney DIS -0.59%

Fantasy played a few brooding tunes from “When You Wish Upon a Star” as they passed Port Canaveral’s Jetty Park.

Mike Horan is monitoring cruise-related Facebook pages for any signs that his moribund ferry business may revive soon.

“That’s our port,” he recently wrote on his Facebook page, sharing a photo of a docked ghost ship. “Cruise ships are just decorations now.”

Write to Julie Bykowicz at [email protected] and Ted Mann at [email protected]

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