NCL Outlines End to Fuel Supplement

Surprising only in how long they took to announce this, NCL today outlined their process for eliminating fuel supplements on future bookings.

The thumbnail is this. For 2010 sailings booked on or after November 10, 2008, there will be no supplement.

For those booked prior to November 10, 2008, for sailings departing in 2009, the fuel supplement will be refunded via an onboard credit based on a specific formula. They've decided to use a formula similar to RCI's announced plan of basing fuel supplement on already-booked sailings on the price of West Texas Intermediate Crude on a particular date prior to each quarter. Thank you, NCL, for making this a bit easier! The table is below.

But basically what this means is this: If you're sailing for example in February, 2009, whether or not your fuel supplement will be refunded will be decided on December 18, 2008, when the price of West Texas Intermediate Crude will be evaluated. If the closing price below $65, you'll have a refund. Sailing in second quarter 2009? Then your date to watch is March 18, 2009 (by the way, these are the same dates RCI used for Royal Caribbean, Celebrity and Azamara). And so on and so forth.

Any questions on your particular sailing? That's what I'm here for - just give me a call.

If you're the type who likes to read the full formula, here it is:

The current fuel supplement will no longer apply to bookings made on or after November 10, 2008 for sailings that depart on or after January 1, 2010.

For guests booked prior to November 10, 2008 for sailings that depart on or after January 1, 2010, the company has established the following guidelines for the refund of fuel supplements paid:
The criteria for refund will be determined on a quarterly basis. Should the closing price on the NYMEX (New York Mercantile Exchange) of West Texas Intermediate fuel be below $65 per barrel two weeks prior to the beginning of the calendar quarter (dates specified below), the company will refund fuel supplements paid in the form of an on-board credit.

For guests booked on sailings that depart in 2009 (on or after January 1, 2009 and that depart on or before December 31, 2009), regardless of booking date, the company has established the following guidelines for the refund of fuel supplements paid:

The criteria for refund will be determined on a quarterly basis. Should the closing price on the NYMEX (New York Mercantile Exchange) of West Texas Intermediate fuel be below $65 per barrel two weeks prior to the beginning of the calendar quarter (dates specified below), the company will refund fuel supplements paid in the form of an on-board credit.

The dates on which the price of West Texas Intermediate fuel will be measured and the quarters during which refunds could apply are:

Fuel Price Determination Date Quarter of Possible Fuel Supplement Refunds
December 18, 2008 First Quarter 2009
March 18, 2009 Second Quarter 2009
June 17, 2009 Third Quarter 2009
September 17, 2009 Fourth Quarter 2009
December 18, 2009 First Quarter 2010
March 18, 2010 Second Quarter 2010
June 17, 2010 Third Quarter 2010
September 17, 2010 Fourth Quarter 2010
December 17, 2010 First Quarter 2011

Determination of what quarter a sailing is in will be based solely on the sailing date. The entire cruise will be considered to be part of the quarter that the sailing date originates in.

Royal Caribbean, Celebrity & Azamara Eliminate Fuel Supplements

Royal Caribbean, Celebrity and Azamara have announced the elimination of fuel supplements for bookings made on or after November 10, 2008 for sailings January 1, 2010 or beyond. This is the easy part, and doesn't take a Wall Street magnate to understand.

For those currently booked for 2009 or 2010, they have created a formula for whether or not you will receive an onboard credit for your fuel supplements. The good news is it's thankfully less convoluted than Carnival's formula, the bad news is it's still up to the markets to determine your refund.

So here's your reading comprehension test for the day. If you understand the following paragraph, you deserve a vacation... on Royal Caribbean, Celebrity or Azamara, of course.

If you're currently booked on a 2009 or 2010 sailing, they will evaluate and potentially adjust the fuel supplement quarterly, calculated based on the price per barrel of West Texas Crude (good for them for using a US supply), at closing on the New York Mercantile Exchange two weeks prior to the beginning of each quarter. If the price is $65 or less per barrel, then an onboard credit will be given to all applicable bookings the following quarter.

So, for example, if you are traveling in the first quarter of 2009, your "fuel price determination date" will be December 18, 2008. Second quarter 2009's "fuel price determination date" is March 18, 2009. And so on. And if the price on that date is $65 or less, all applicable bookings the following quarter will receive an onboard credit.

Of course, they do reserve the right to reinstate fuel supplements at a future date if market conditions warrant.

Next up, we'll see what formula NCL comes up with to remove or lessen their fuel supplements... I'm much more optimistic in seeing that than I am in the US airlines removing theirs...

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

Charging for Steak in the Dining Room?

If you're a subscriber to Cruise Critic, you've probably at least heard mention this past week about a new charge Royal Caribbean is testing onboard its Freedom of the Seas and Majesty of the Seas for "organic Chops steak" in its main restaurants. No, not the specialty restaurants; the main restaurant. This is the first experiment of this kind for premium charges in the main restaurant, and is causing a flurry of posts.

The line defends the move, stating they are testing whether people would prefer to pay extra for a premium, organic product, without leaving the regular dining room. The steak in question is a 10-ounce New York strip steak for $14.95. This is an additional offering on the menu, not replacing a current menu item, and the 7-ounce Sirloin remain on the complimentary menu during this test. They say it's a premium steak, and are emphasizing the fact that it's organic.

Thought it was time to put in my $.02 on this. I think it's a huge mistake. While I understand the cruise lines' desire to enhance revenue, this is the beginning of a very slippery slope toward more charges in the "free" dining. I encourage all my clients to resist this trend.

If you're booked on these ships, do NOT order this steak, and make sure you tell the line on your end-of-cruise survey that you don't like the concept, even if you're sailing on a Royal Caribbean ship which doesn't offer this test program. I do still strongly encourage you to make use of the premium restaurants for a higher-end experience, and have no problem with the charge for those. When you consider that Chops Grille onboard only charges $25 for the entire meal, the $14.95 for just one steak just isn't a good deal, especially when you know that, instead of being truly cooked to order, it will be part of the production line of the regular kitchen.

I don't see any way that it is costing $14.95 above and beyond their regular costs for Royal Caribbean to procure and prepare an "organic" steak, and saying this is the way for them to test the demand for more organic products onboard is misleading. I hope you will join me in discouraging this practice of a surcharge in their main restaurants, and instead encourage Royal Caribbean to find other avenues for those wishing to have organic food onboard.

NCL Increases Fuel Supplements

Seemingly determined to maintain their status as having the highest fuel supplements in the industry, NCL today announced they would be raising their fuel supplement for new bookings as of June 20. The new daily supplement will be $11/person per day for the first and second passengers in a cabin, and $5/person per day for any additional passengers in the same cabin. Unlike other lines, NCL doesn't place a per-sailing maximum on the supplement.

The only mainstream lines yet to be heard from this week are the two RCI brands - Celebrity and Royal Caribbean. Anyone starting a pool on when they'll chime in?

Another Fuel Supplement Increase

Carnival Corporation today announced a further increase in the fuel supplements for their brands. Starting with bookings made on June 12, the supplement will increase to $9 per person per day for the first two passengers in a cabin, up from $7/person per day, to a maximum of $126 per person per sailing. For additional passengers, the supplement is doubling to $4 per person per day, up to a maximum of $56/person per sailing.

This increase will be applicable to their 6 brands which are widely marketed in the US: Carnival, Princess, Holland America, Yachts of Seabourn, Costa and Cunard.

Disney Implements Fuel Supplement

The last holdout among the "major" lines in the fuel supplement debate has been Disney Cruise Lines. Unfortunately, today they announced they no longer have a choice and economies of fuel have made it necessary for them to implement fuel surcharges for bookings made on or after May 28.

The surcharge will be $8/passenger per day for the first and second passengers in a cabin, with a maximum of $112 per passenger per voyage, and $3/passenger per day for additional passengers in the same cabin, with a maximum of $42 per passenger per voyage.

I commend Disney for holding out as long as they did, and understand their need to go ahead and add the surcharge. Unfortunately, I think these surcharges are here to stay for the foreseeable future.

More Fuel Supplement Hikes

Following on the hikes announced by Carnival Corporation, Royal Caribbean International and Norwegian Cruise Lines have both posted increases of their own.

Royal Caribbean International (Azamara, Celebrity and Royal Caribbean Cruise Lines) announced that, effective for booking made starting May 1, 2008, the supplement will increase to $8/person per day, with a maximum of $112/person per cruise for the first and second passengers in the cabin. Third and fourth passengers will be assessed $3/person per day, with a maximum of $24/person per sailing.

Norwegian Cruise Lines will be raising their fuel supplement to $9/person per day for the first and second passengers in the cabin, with a supplement of $4/person per day for the third and fourth in the same cabin. Their increase is also effective for bookings made starting on May 1, 2008. One thing to note with NCL is that they don't have a per person maximum.

I'm a bit surprised by the NCL increase. While fuel costs have gone up dramatically since the supplements were originally announced in November and December, I thought part of the rationale behind the Carnival Corp. and RCI increases were the losses they suffered when they had to credit back supplements for sailings booked prior to their November announcements of the surcharge. However, NCL never had that issue, as they didn't make their supplements retroactive. However, their supplement did go up less per person, so perhaps that's how it all adds up together to make their respective balance sheets happy.

Expect to see further increases if the price of fuel continues to rise.