Cruise’s “day after tomorrow” has arrived

Following warning shots fired by Carnival brands Cunard and Princess cruises about the difficulty of doing business in Australia, the industry lost its "home-grown cruise line" this week; it had been a long time coming, MYLES STEDMAN concludes.

It’s not that we didn’t know, and it’s not that we didn’t care, we were just powerless to act.

The local cruise industry took maybe its deepest strike ever yesterday, when its “home-grown cruise line”, P&O Cruises Australia, announced it is being retired next year.

The brand with 92-year-old roots in Australia is set to be integrated into the larger Carnival Cruise Line marque in March, which will see the P&O name disappear from our shores.

Josh Weinstein, Chief Executive Officer of parent company Carnival Corporation, made no bones as to why the decision had been made.

“P&O Cruises Australia is a storied brand with an amazing team, and we are extremely proud of everything we have accomplished together in Australia and the broader region,” he said.

“However, given the strategic reality of the South Pacific’s small population and significantly higher operating and regulatory costs, we’re adjusting our approach to give us the efficiencies we need to continue delivering an incredible cruise experience year-round to our guests in the region.”

It’s hard to hear your own faults seconded to your face; it’s even harder when you were trying your best to solve them, but did not have the governmental ear or political sway to do so in time.

Like a frustrated partner struggling to save a marriage, nut-cutting time had arrived, and Carnival Corp could wait no longer for Australia’s governments, port authorities, and various other cruise stakeholders to solve its increasingly growing list of problems: lacking infrastructure, high fees, and a weak currency.

The first shots were fired across the bow of Australia’s cruise industry in November, when both Cunard Line and Princess Cruises pulled back their presence in the country.

Cunard will cruise its final local program in 2024/25, before it repositions Queen Elizabeth to Alaska during the Australian summer.

Meanwhile, Princess’ more pointed change of plans saw it blame a “significant” and “unexpected” increase in fees and charges from Ports Victoria as its reason to skip town on Melbourne.

Tourism & Transport Forum Chief Executive Officer Margy Osmond at the time expressed her “deep disappointment” at the move, and insisted the government urgently collaborate with Victoria’s cruise lines to secure the future of the sector in the state.

“The loss of Princess Cruises and Cunard from Victoria’s cruise sector is a major blow to the state’s tourism industry,” she said.

“These brands have been instrumental in attracting visitors and generating economic benefits for the state…we must address cruise ship operators concerns and ensure they have the support needed to prevent further erosion of the cruise industry.”

The call seemingly fell on deaf ears – or was somehow not urgent enough – as just over six months later, Carnival Corp announced the ex-Melbourne Pacific Explorer will exit the Carnival Corp fleet in February.

Carnival Cruise Line President Christine Duffy told travelBulletin the decision to dissolve P&O Australia assures the best opportunity for Carnival Corp to continue sailing Down Under year-round – the feather in the company’s local program.

Duffy said the “difficult” decision was not made lightly, however the environment in which Carnival Corp operates in Down Under meant continuing to run P&O Australia was “not sustainable” – highlighting the local cruise industry’s fears more broadly than they ever have been.

After all, if the multi-billion-dollar Carnival Corp can’t afford to operate a standalone Australian brand, what does that say about how hard it is to do business in our cruise-loving nation?

“We want to build on that history and heritage as we move forward by bringing new innovations and experiences over time…that’s just not possible in the backdrop that we operate here in Australia,” Duffy said.

“We have challenges with cost across the board, fuel costs are up, currency is down, and across the supply chain, ports are increasing prices.

“We were certainly hoping costs may come down over time, but we’re not seeing evidence of that, and so we believe that this is the best way for us to…be more efficient, to leverage the scale the Carnival Cruise Line brand has.

Duffy’s dissertation also referenced regulatory challenges in Australia as hampering the company’s ability to easily do business in our country.

“More regulation creates more risk and more cost, and so those are those are big headwinds for us, and it also creates a lot of uncertainty for the operation in the future,” she added.

On the other hand, Cruise Lines International Association Managing Director Joel Katz, ever the optimist, said the organisation was hoping the circumstance will wind up as a net gain for Australia.

“We look forward to the transition leading to new opportunities and continued success for the industry, as Carnival Cruise Line commits to building its brand in Australia,” he said.

However, Australia’s seniormost cruise executive did not miss the chance to highlight the crux of the issue.

“This news highlights the high cost and regulatory uncertainty in our region [and] shines the spotlight on the issues that CLIA and our cruise lines have been highlighting to government.

“Australasia is one of the most expensive regions for cruise operations, mainly due to strict government regulations around coastal trading and biosecurity.

“These rules create high costs and operational challenges, creating obstacles for cruise lines to expand itineraries.”

Perhaps Katz’s voice shouldn’t have fallen on deaf ears back in November, when he warned the success of the cruise industry is not guaranteed without close partnerships between ports, governments and cruise lines.

“To sustain and foster cruising’s presence in Australia, there needs to be better alignment and rationalisation of fees, taxes and other costs, to make us competitive with other countries,” he said post the double-exit from Melbourne.

“Without strong commitments from governments and careful planning for the long-term future, these benefits risk being lost.”

Almost a year later, and we are still watching those benefits being lost.

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