Cruise company to move ship out of Alaska waters

Norwegian Cruise Line blames state legislation for decision

Posted: Tuesday, April 28, 2009

ANCHORAGE - A second cruise ship line has said it will shift a vessel destined for Alaska waters in 2010 to another location.

Brian Wallace / Juneau Empire File
Brian Wallace / Juneau Empire File

Miami-based Norwegian Cruise Line announced Monday its Norwegian Sun will operate in more profitable European waters in summer 2010. Company officials blamed Alaska's $50 passenger fee for the decision.

"After carefully weighing the rising costs of deploying three ships in Alaska and taking into account the recently enacted legislation, in particular the $50 head tax, we felt it was necessary to redeploy Norwegian Sun," said Kevin Sheehan, Norwegian Cruise Line's chief executive officer, in a statement. "Alaska is an incredible destination, but we are clearly seeing the impact of these changes in 2009, emphasized even more by this challenging economic environment."

Norwegian Cruise Line joins Royal Caribbean Cruises Ltd. in shifting a ship from Alaska waters for summer 2010. Royal Caribbean officials in January said they would move the Serenade of the Seas to another market. Regional Vice President Don Habeger, of Juneau, said the economics for the vessel were better elsewhere. He also said the 2006 ballot measure exacerbated the issue.

Carnival Corp., which owns Holland America Line and Princess Cruises, has also threatened to "pull capacity" out of Alaska.

The $50 passenger fee was approved by Alaska voters in August 2006. Sponsors of an initiative said the industry, with an estimated $50 million a year in revenues, should pay its fair share. The money must be spent on improving ports and harbors and other visitor services.

Cruise companies spent more than $2 million fighting the initiative. Opponents said the measure would hurt Alaska's tourism and warned that stiff competition from other cruise destinations would push visitors elsewhere.

The measure also taxed gambling proceeds, required cruise lines to pay corporate income taxes and required pollution discharge permits for the ship wastewater, a requirement recently modified by the Alaska Legislature. A bill passed this year but not yet signed into allow would allow waivers through 2015 unless technology is available for vessels to meet standards.

The Norwegian Sun can carry 1,936-passengers and a crew of about 900. The vessel in 2010 was scheduled to make 10 northbound and 10 southbound seven-day trips between Vancouver, British Columbia, and Whittier, Alaska, with stops in Ketchikan, Juneau, Skagway and either Sitka or Icy Strait Point.

The new deployment calls for a a 15-day trans-Atlantic voyage followed by 11 12-day Baltic capitals cruises.

Royal Caribbean's Serenade of the Sun is scheduled for 20 Alaska trips this year. It can carry up to 2,100 passengers and a crew of 870.

Ron Peck, president of Alaska Travel Industry Association, a trade and marketing group based in Anchorage, called the decision by Norwegian Cruise Line "unfortunate." Cruise passengers spend an average of $934 in Alaska, he said. His quick estimate of the number of lost berths was 120,000 to 130,000.

Dave Kasser of the Anchorage Convention and Visitors Bureau calls cruises "Alaska starter kits" because first-time visitors on ships often return with family and friends. Norwegian's planned cruises with the Norwegian Sun would have been its first across the Gulf of Alaska and the bureau had just spent time training the company's agents on what Anchorage had to offer, he said.

Gershon Cohen of Haines, one sponsor of the 2006 initiative, said the ship shift likely is more about profits than the head tax.

"They're redeploying ships in Europe because the American economy is falling apart and the middle class in America are not buying as many cruises and not spending as much money on board the ship as they have in the past," Cohen said. "It has nothing to do with the $50 head tax."

Cruise lines themselves had no problem adding a fuel surcharge to passengers' tickets in the last couple of years, he said. Many cruise visitors responding to surveys said they were willing to pay the tax once they realized the money would be used to monitor the industry, which had been guilty of illegal dumping, and to pay for local infrastructure, Cohen said.

Cruise companies, he said, could afford that cost.

"What they're saying is, we don't want to charge our passengers the $50. We'd rather have Alaska communities rebuild and maintain the infrastructure out of local property taxes," he said. "Well, I'm sorry, that's a cost of doing business. The people want to come up here, they have to realize, they're having that impact on us, and that's an impact they should pay for."

Peck said the head tax is affecting Alaskans who sell services and products.

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