The Benchmark Date that Wasn't

My calendar reminded me that today, December 18, was set to be a huge benchmark date for cruisers sailing in the first quarter of 2009. It was the date many of the cruise lines had set to determine the price of crude oil and whether or not cruisers would receive a refund on their fuel supplements for their sailings from January through March, 2009. If all had gone as originally announced, there likely would have been a huge spike in searches for closing pricing on West Texas Intermediate Crude which would have puzzled analysts at Google.

Of course, the date was made a bit moot a few weeks back when the cruise lines announced the suspension of the fuel supplement, and plans to refund already-paid supplements in the form of onboard credits to cruisers. What was overlooked in some of the fine print was that Royal Caribbean's brands (RCCL, Celebrity and Azamara) would still be looking at the price of West Texas Intermediate Crude on the previously-announced quarterly dates (December 18, 2008, March 18, 2009, etc.) to determine whether or not they may re-implement the fuel supplements if the price went over $65/bbl. While Carnival Corporation's brands are the only major brands not using the quarterly system, they also reserve the right to re-implement if the price goes over $70/bbl.

If you're wondering, the closing price today was right around $36. So cruisers - you're safe for now!

And Another One Gone...

Forgive me while a song from my high school days plays in my head... And another one gone and another one gone, another one bites the dust...

Next up in the fuel supplement removal sweepstakes is... NCL!

Announcing late today, NCL has removed their extremely high (and unforgiving no-cap) fuel supplement for all 2009 and beyond sailings. Like Carnival Corporation earlier today, if you're already within final payment, your refund will come in the form of an onboard credit. (And like Carnival brands, you need to make sure onboard that you receive it).

For those passengers booked for 2009 or 2010, but not within final payment yet, your supplement will be removed from your booking.

From the press release:

"Global fuel prices have dropped to a level where we can now suspend the fuel supplement, making an NCL Freestyle Cruising vacation an even greater value,” said Andy Stuart, NCL’s executive vice president, global sales and passenger services.

NCL will continue to closely monitor global fuel prices to assess whether a reinstatement
of the fuel supplement will be necessary in the future. The company reserves the right to re-instate the fuel supplement for all guests should the price of light sweet crude oil according to the NYMEX (New York Mercantile Exchange Index) increase above $65 per barrel.

And now a message in the form of another song from my high school years dedicated to Royal Caribbean International's brands... The Heat is On...

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.

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