The fuel supplement, which applies to the first and second guests in a stateroom and will not exceed $70 per person per voyage, is effective on all bookings for voyages departing on or after Feb. 1, 2008 on the following Carnival Corporation & plc brands - Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America Line, Princess Cruises, and The Yachts of Seabourn.

According to Carnival Corporation & plc Chairman and CEO Micky Arison, the recent spike in fuel prices has dramatically impacted the company's operating costs, thus necessitating the supplement. The price the company pays for fuel has increased 140 percent over the last three years, with a 50 percent increase occurring in just the last seven months.

"Earlier this year, we implemented a supplement for our European brands. We had hoped to avoid a similar supplement for our North American brands but with the price of oil approaching $100 a barrel this is no longer possible. The implementation of the fuel supplement beginning February 1 for our North American brands will result in consumers paying approximately one-third of our year-over-year fuel cost increases over the first six months of the fiscal year," he said.

Arison added that the company had been considering a supplement for some time but held off as long as it could. "We are hopeful fuel prices will someday return to a level that will enable us to eliminate this supplement. Until then, we believe that guests sailing on our North American brands will understand the dilemma that soaring fuel prices has caused for our company and industry and that a fuel supplement was needed to enable us to continue offering the high quality cruises our guests have come to expect," Arison explained.

The fuel supplement of $5 per person per day will be applied to all new and existing bookings for cruises on or after February 1, 2008. For existing reservations, travel agents will receive $10 per booking in administrative compensation for notifying their clients of the new fuel supplement and collecting the additional funds. Carnival Corporation & plc brands will provide additional information on the fuel supplement via their respective Web sites, as well as through various marketing and collateral materials.

Oceania Cruises announced that it is also implementing a fuel surcharge of $7 per guest per day for all reservations that are not paid in full by December 1, 2007. The surcharge applies to all currently published sailings through April 2009.

"At the time that we set our current pricing, oil was trading at approximately $60 per barrel and it is now quickly approaching $100 per barrel. This is the first time we have implemented a surcharge and I hope our guests will understand the root cause of this necessary action,” stated Bob Binder, President of Oceania Cruises.

The fuel supplement of $7 per guest per day is effective on December 1, 2007 for all new reservations and existing reservations that have not applied final payment. Guests choosing to pay in full prior to December 1, 2007 will be exempt from this surcharge.

Sorce: Cruise News

[ 11-13-2007: Message edited by: joe at travelpage ]

I recall few decades back UK holidays with flights all had an almost automatic fuel surcharge for a few years. This would be maybe £30-40 per person.

One of the UK newspapers(?) did the maths and calculated the rise in price of fuel in that period and multiplied it by the number of seats on aircraft of various types. The total extra cost of fuel was significantly lower than the surcharge per persion on all common aircraft types. In short it amounted to profiteering.

The UK travel operators had a clause in thier terms and conditions which stated that they did not need to give passengers a refund when fuel prices dropped.

[ 11-13-2007: Message edited by: Malcolm @ cruisepage ]

With the price of diesel fuel for my own car now at a record £ 1.08p a litre in Luton, Bedfordshire, UK, it is only to be expected that cruise companies will add a surcharge for the fuel they use.

The main question is do the cruising companies have an agreed contract price, arranged in advance, for the supply of fuel from certain companies at their ports of call.

I know when I worked for P&O and Princess Cruises we only re-fueled at certain ports, which was not all that we called at on a voyage or cruise, but was the same supplier at that port !

This sounds like the cruise companies are after making more profits with the rise in the price of oil.

The problem is should I complain about the surcharges as I was a share holder in P&O Cruises which are now changed to Carnival shares !

As I like an arguement, I think I will complain !

Perhaps this is because we pay in a currency that has inflated against the US$ over the last year?

"Earlier this year, we implemented a supplement for our European brands. We had hoped to avoid a similar supplement for our North American brands but........."

quote:

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Are you jesting Tom? It's because we have already been paying it since earlier in the year, at least in the case of Carnical, from their press release:-
"Earlier this year, we implemented a supplement for our European brands. We had hoped to avoid a similar supplement for our North American brands but........."

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Ah - I wasn't aware of that. Would that be true of RCI as well?

So if you pay in full by the end of this month you are not subject to the fee. But if you have only made partial payments you get hit with the full fee.

Seems odd that they are paying the agents the $12 fee to collect the fuel surcharge when they could easily add it to the next payment they were going to collect anyway.

quote:

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Originally posted by Neil Whitmore ( Bob ):
Hi Pam

This sounds like the cruise companies are after making more profits with the rise in the price of oil.

Neil ( Bob )

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quote:

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I hope the situation won't become similar to what already exists in the cargo shipping industry.
The official freight fee to ship a container from Europe to China may be as low as 25 €, but the fuel surcharge for the same container reaches 400 € !

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That I didn't know.

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Originally posted by Tom Burke:

That I didn't know.

Pascal, do you work in cargo shipping?

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quote:

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Originally posted by Sutho:
The idea of a fuel surcharge is stupid. They ought to just increase the fares in the brochures so that their "all inclusive" fares can cover the fuel costs when they go up.

Passengers dont want to know what percentage of their fare is going to food, entertainment, entertainer fees, crew, fuel etc. Nobody wants to know and nobody cares.

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So Sutho, you would prefer that when a cruise line plots their pricing and fuel is $280 per metric ton, they should plot that pricing model for fuel costs in excess of $450 per metric ton?

Tim

[ 11-28-2007: Message edited by: joe at travelpage ]

quote:

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Originally posted by Tim in 'Lauderdale:

So Sutho, you would prefer that when a cruise line plots their pricing and fuel is $280 per metric ton, they should plot that pricing model for fuel costs in excess of $450 per metric ton?

That's a simply brilliant train of thought.

Tim

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That is just exagerating and not understanding my point.

In the original fare no one wants to know what percentage is going for fuel.

Cruise itineraries are not sold so far in advance that a intelligant company cannot predict what the fuel will be. They are running a cruise business and are supposedly smart and intelligent people who account for every dollar. It is more likely than not that they will have contracts in advance and know exactly how much fuel will be when the cruise is published.

Fuel prices here in Australia are really no different to what they were this time last year. They fluctuate throughout the week.

If the cruise is not fully booked when the price for fuel increases, then all they have to do is increase the fares for the rest of the people.

They say that in their terms and conditions "their bible" first in best dressed. (that they have the right to change fares and come up with special offers etc)

I dont believe in charging more to a passenger who has already signed a contractual agreement for a cruise with a cruise company. That is wrong. Like I said Cruise lines are smart enough to have a fairly accurate idea the cruise would set them back when they publish the itinerary and fares. If not then they would not be publishing fares and itineraries so far in advance.

No multimillion dollar company would be stupid enough to pulish a cruise fare a year in advance that they knowingly could not afford to make a profit on and then have to change the fares or add surcharges. That is poor business practice, they know that, and they risk losing business doing so.

I have seen the other posts above, and from what other people have written it looks more than likely cruise lines will know how much fuel will cost when the cruise goes on sale. Like I said it is poor business practice to do so without knowing.

[ 11-25-2007: Message edited by: Sutho ]

quote:

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Originally posted by Sutho:

Cruise itineraries are not sold so far in advance that a intelligant company cannot predict what the fuel will be. They are running a cruise business and are supposedly smart and intelligent people who account for every dollar. It is more likely than not that they will have contracts in advance and know exactly how much fuel will be when the cruise is published.

Fuel prices here in Australia are really no different to what they were this time last year. They fluctuate throughout the week.

If the cruise is not fully booked when the price for fuel increases, then all they have to do is increase the fares for the rest of the people.

They say that in their terms and conditions "their bible" first in best dressed. (that they have the right to change fares and come up with special offers etc)

I dont believe in charging more to a passenger who has already signed a contractual agreement for a cruise with a cruise company. That is wrong. Like I said Cruise lines are smart enough to have a fairly accurate idea the cruise would set them back when they publish the itinerary and fares. If not then they would not be publishing fares and itineraries so far in advance.

No multimillion dollar company would be stupid enough to pulish a cruise fare a year in advance that they knowingly could not afford to make a profit on and then have to change the fares or add surcharges. That is poor business practice, they know that, and they risk losing business doing so.

I have seen the other posts above, and from what other people have written it looks more than likely cruise lines will know how much fuel will cost when the cruise goes on sale. Like I said it is poor business practice to do so without knowing.

[ 11-25-2007: Message edited by: Sutho ]

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Sutho,

For your edification, cruise lines typically set itineraries and pricing an average of 12-18 months in advance. And when doing so, they must estimate an increase in fuel costs, nce again, basing on past numbers and percentages, and set budgets accordingly.

BTW - the price of gas at the pump, whether it be in Australia or the U.S. has no correlation with the price of marine fuel.

Tim

[ 11-26-2007: Message edited by: joe at travelpage ]

I understand that airlines buy their fuel like a futures contract: the price for a period of time is at a pre-negotiated level. If the cost of fuel goes up, they make a profit, if it goes down they lose. When the contract is over a new contract and terms is negotiated.

Do the cruise lines do the same?

quote:

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Originally posted by Tim in 'Lauderdale:

Sutho,

For your edification, cruise lines typically set itineraries and pricing an average of 12-18 months in advance. And when doing so, they must estimate an increase in fuel costs, nce again, basing on past numbers and percentages, and set budgets accordingly.

BTW - the price of gas at the pump, whether it be in Australia or the U.S. has no correlation with the price of marine fuel.

Tim

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quote:

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Originally posted by desirod7:
Tim,

I understand that airlines buy their fuel like a futures contract: the price for a period of time is at a pre-negotiated level. If the cost of fuel goes up, they make a profit, if it goes down they lose. When the contract is over a new contract and terms is negotiated.

Do the cruise lines do the same?

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It's called "hedging", and yes airlines do it quite often but it certainly doesn't protect them 100% against fuel increases. Also, only a portion of the fuel costs are hedged and it's not always a guarantee of the best price. Southwest is the most "hedged" airline of all the majors. Many airlines could not hedge fuel for quite some time due to their poor credit ratings. Airlines pass on fuel increases as well, in the way of fare increases. As Tim pointed out, companies project the the fuel budget a year or more in advance. When fuel increases go beyond what was budgeted then a decision has to be made about how to recoup the excess costs. Sometimes that means passing it on to the passengers but certainly not always.

Cruise lines (not all) also hedge, but it's my understand to a lesser extent. They also use a different type of fuel which I believe is much less expensive than jet fuel.

quote:

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Originally posted by desirod7:
Tim,

I understand that airlines buy their fuel like a futures contract: the price for a period of time is at a pre-negotiated level. If the cost of fuel goes up, they make a profit, if it goes down they lose. When the contract is over a new contract and terms is negotiated.

Do the cruise lines do the same?

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While it's true that airlines used to hedge fuel, most of them don't anymore. It's a volatile market and it ties up tens of millions of operating cash which most airlines do not have an excess of.

Southwest is one of the few that does hedge fuel and reaped the benefits to more than $50 million in fuel cost savings.

Cruise lines don't hedge fuel either. Part and parcel to the above in terms of tying up cash but no one wants to hedge when costs skyrocket and when they drop, they tend to stabilize for a while which makes it tough to justify a hedge that can cost anywhere from $25-450 million dollars, depending on the size of a fleet.

quote:

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Originally posted by Tim in 'Lauderdale:

Cruise lines don't hedge fuel either.

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I read in Cruise Industry News that a few large cruise lines do hedge a very small portion of their fuel costs, but as you mention it's really not cost effective for the most part.

I know nothing about the ins and outs of fuel hedging, but I did used to deal with forward currency purchases all the time. It was very much down to the status of the company concerned whether any up front security for the contract was required. Often nothing, sometimes a debenture would cover. I don't ever recall anyone having to tie up cashflow, that would indeed be quite an undertaking and not feasible for many companies which may lead to overdrafts being utilised eroding any benefit of the fwd contract. But for many when fixed currency requirements are known in advance this is the way to go. So I wonder why it is so different for cruise lines, the huge sums involved? What about for other types of shipping?

How much [in US$] does it cost to bunker on each occasion, say for a full load something the size of a Radiance class vessel on a 7 nighter & how much for a 747 across the pond? Just curious to compare, I have no clue.