Fuel Supplement is History... For Now

Yielding to pressure from consumers, travel agencies and their competitors, Royal Caribbean International announced late today that fuel supplements will be suspended on all their US brands (Royal Caribbean, Celebrity and Azamara) for all sailings January 1, 2009 and beyond. New bookings made starting Monday, December 8 will not be assessed the supplement, and for those already booked for 2009 and 2010, those who have already paid the supplement will be refunded in the form of an onboard credit, and those yet to pay final will have the supplement removed from their invoices.

Similar to the announcements made yesterday by the other major companies, there is a bit of a caveat in the release:

The company reserves the right to reinstate fuel supplement charges if the price of West Texas
Intermediate fuel exceeded $65 per barrel, on the quarterly milestone dates mentioned in the
company’s October 24, 2008, press release.

That is very telling. In talking with cruise lines today about both new and existing bookings, several reps were clearly coached with a new script which indicates they do reserve the right to reinstate the supplement, even on bookings where it has been removed or was never implemented in the first place. That means that a supplement could have been on a booking, removed, and if fuel goes high enough ($65-70/barrel depending on cruise line), added back on again.

Personally, my guess is that the Florida Attorney General won't stand for it being replaced on a booking which was created without it or from which it was removed, and will force the cruise lines back into negotiations should it become relevant. But for a true ruling on that, only time and West Texas Intermediate (or Sweet Crude) prices will tell.

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!