One of the few sectors of the travel industry which were particularly hit hard by the COVID-19 and have extremely limited hopes of revival in foreseeable future is the Cruise sector. Actually, the whole chaos of the pandemic started in a very bad omen for cruise sector when Carnival’s Diamond Princess Cruise ship becoming the earliest hotspots for the disease outside China. Therefore, it was indeed very brave of Carnival Corporation, when it announced on Friday that it was planning to resume operations. But this would be in phased manner. Cruise company also plans to reduce its fleet by 13 ships, bringing 9% reduction in its current capacity.
Industry insiders however say that against all odds cruise companies were expected to return sooner than later. World’s biggest cruise company Carnival is spending $1bn a month to just maintain its fleet. Such phenomenal costs are tough to bear. It has been months since all cruise operations across the world were suspended after onset of the pandemic. Cruise ships were marooned in harbours in what is known as “warm lay-up”, where systems are kept running to make sure that none seize up. More than 60,000 crew members remain stranded aboard ships looking towards an uncertain future.
Just to remind, Japanese authorities quarantined Diamond Princess off the coast of Yokohama. According to Johns Hopkins University data, 13 of the 712 people on board who were infected died. At the time it made up the single biggest cluster of cases outside China. Its sister ship the Grand Princess was later held off Oakland, California, with 78 passengers testing positive for the virus, while other ships, such as the Holland America Line’s Westerdam, were forced to bounce between ports as country after country refused to let potentially infected ships reach land.
To survive through the pandemic, cruise operators have raised billions through various means, even pledging ships and private islands. Carnival alone, raised over $10 billion through a series of financing transactions since voyages were paused, enough to withstand another full year in a zero-revenue scenario, Chief Executive Officer Arnold Donald said on a conference call. The world’s largest cruise operator said it has reduced capital expenditures by more than $5 billion over the next 18 months and raised a couple more billions to navigate through the virus outbreak.
As it restarts voyages, the company expects future capacity to be moderated, while some ships could be removed and new deliveries would be delayed, Carnival added. Donald said that, “Even when we return to full-scale operations, we don’t expect to return to the same staffing requirements as we are addressing our work streams to work in a more efficient manner.”
Company expects only five of the nine ships originally scheduled for delivery to be delivered. Company had already announced that it intends to accelerate the removal of ships which were previously expected to be sold over the ensuing years. So far, the company sold one ship – Costa Victoria – during June 2020 and has agreements for the disposal of five ships and preliminary agreements for an additional three ships, all of which are expected to leave the fleet in the next 90 days. These agreements are in addition to the sale of four ships which were already announced. The company currently expects only five of its nine new ships which were originally scheduled to enter service in 2020 and 2021, to be delivered by the end of next year. In addition, the company also expects later deliveries of ships originally scheduled for 2022 and 2023.
Early this week, Carnival had said it would resume voyages run by its German cruise line AIDA next month. AIDA will resume guest cruise operations from ports in Germany beginning August 2020 with three of its ships. AIDAperla will be the first to set sail on August 5, 2020, from Hamburg, followed by AIDAmar from Rostock-Warnemünde on August 12, 2020 and AIDAblu from Kiel on August 16, 2020. The first cruises will take place with an adjusted passenger capacity and without calling at other ports.
AIDA will introduce additional safety and protective measures which will include pre-boarding health questionnaires and temperature checks for both guests and crew, physical distancing guidelines, routing systems on arrival, departure and onboard, increased mitigation and sanitation efforts in all cabins and public areas, as well as closely managing capacities at onboard experiences. These enhanced measures have been developed with advice from medical experts and align with the current guidance from the World Health Organization (WHO) and the German Robert Koch Institute (RKI), as well as other governmental and health authorities.
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