Carnival Brands Eliminate Fuel Supplement!

In the best news yet in the ongoing saga of fuel supplements, Carnival Corporation announced today that they will be suspending (eliminating) fuel supplements for all of their North American brands (Carnival, Costa, Cunard, Holland America, Princess and Seabourn) starting with sailings departing on or after December 17, 2008. No complicated formula of watching the West Texas Intermediate Crude for 20 consecutive days beginning 25 days prior to sailing, not even the quarterly formula of the other major brands. It's just gone, vamoosed, outta here!

For those who have already paid their final payment and are sailing on or after December 17, the fuel supplement will be refunded in the form of onboard credit on your cruise (do be sure to check your account to verify it shows up). For those who have not yet paid final payment, the amount will be removed from your booking.

From the Carnival press release:

“As the price of oil has dropped to $46 per barrel, it has now reached a level where we are able to suspend the fuel supplement,” said Bill Harber, director of marketing for Carnival Corporation & plc. Harber cautioned that the fuel supplement could be re-instated if oil prices increase
significantly.

The company reserves the right to re-instate the fuel supplement for all guests at up to $9
per person per day (except Seabourn, which would be up to $15 per person per day) should the price of light sweet crude oil according to the NYMEX (New York Mercantile Exchange Index) increase above $70 per barrel.

“It is our hope that fuel prices have stabilized and will remain at a more rational level. The complete suspension of the fuel supplement makes the inherent value of a cruise even greater and that is increasingly important in the selection of a vacation in the current economic climate,” Harber added.

The next logical question is if other brands will follow suit Of course, Disney has already suspended their fuel supplements, which may have precipitated this announcement by Carnival. I think it's possible other brands will make similar announcements, though their quarterly assessment of fuel prices is a much more sensible formula than what the Carnival brands had set up, and I'm not sure that the Royal Caribbean International brands, at least, will do so.

At least we have this for now, and it's great news!

Carnival Reveals Fuel Supplement Reduction/Removal Plan

Carnival has revealed their plans for removing and/or incorporating fuel supplements in the future, setting out specific guidelines for refunding of existing supplements, and incorporating future supplements into fares. Because the plan is pretty complicated, I'm going to put the release to the industry here in its entirety for your reading pleasure:

Over the past few months as fuel prices have declined, we have had many questions about our fuel supplement. While fuel prices today remain very volatile, we have given this careful consideration and I am pleased to update you on some new and important information regarding the fuel supplement for Carnival Corporation & plc brands.

Six of our brands, Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America Line, Princess Cruises and The Yachts of Seabourn have announced that effective October 31, 2008, the existing fuel supplement will be eliminated for all new bookings on 2010 departures. At the same time, a price increase on 2010 sailings will become effective.

Additionally, the company has established specific guidelines under which the current fuel supplement may be reimbursed to consumers for 2008 and 2009 voyages. For 2008 and 2009 departures, if the price of light sweet crude oil according to the NYMEX (New York Mercantile Exchange Index) is $70 per barrel or less at the 2:30 p.m. close of business as reported by Reuters on each of the 25 consecutive trading days ending five trading days prior to the guest’s
cruise departure date, the fuel supplement will be refunded in the form of a shipboard credit.
Guests who book a 2010 cruise prior to Oct. 31, 2008, will still be charged the current fuel supplement but will also be eligible for a refund of the fuel supplement in accordance with the same fuel price conditions that are being implemented for current 2008 and 2009 departures.

We are implementing these initiatives due to recent trends in declining fuel prices in an effort to migrate away from charging a separate fuel supplement. If fuel prices stabilize below $70 a barrel, we will be able to effectively eliminate the fuel supplement. However, there is still a risk that fuel prices could move higher which would require us to maintain or reinstate a fuel supplement but we are hopeful that the goal of eliminating the fuel supplement can be achieved.

What does this really mean? Don't even think of looking for a rebate on cruises already booked unless, just before your sailing, crude pricing is below $70/barrel for the month prior to your cruise. And if that happens, be pro-active on your cruise to ensure you get the promised onboard credit. So if fuel drops to $70 a barrel or less for 25 days in December, 2008, but your cruise isn't until May, 2009, your fuel supplement will remain on your booking. However, if the fuel supplement is $70 or less for 25 consecutive days in April, start paying close attention for your May sailing - you may be eligible for an onboard credit refund.

Second, for new 2010 bookings starting October 31, fuel supplements will be incorporated into the price of your booking not a separate line item. This means likely they will not be taken out, even if fuel price is reduced in the future.

Thinking about booking one of the Carnival brands for a 2010 sailing? Do it prior to October 31! Otherwise, no chance of getting any type of fuel supplement refund, and you will see a price increase across the board on November 1.

Finally, watch for other lines to come out with plans of their own to incorporate fuel supplements into their pricing and/or how they would remove or refund them in the future.

Confusing? You bet. If you have questions, let me know. I'll be keeping on top of these to be sure