Carnival sees strong Alaska summer

Carnival's Princess and Holland America lines make it the largest cruise firm in Alaska market

Posted: June 25, 2011 - 10:33pm

Michael Penn / Juneau Empire

Cruise ships line Juneau harbor Wednesday. Carnival Corp., Alaska’s largest cruise line, reports business in Alaska is booming.

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By Pat Forgey

JUNEAU EMPIRE

With the summer cruise season just begun, early indications from the state’s largest cruise line are for an “exceptional” year.
Carnival Corp., which operates Carnival, Princess and Holland America ships, reported stronger profits for the year’s second quarter last week, and credited its Alaska operations.
For the quarter ended May 31, including the start of the company’s profitable Alaska cruise season, Carnival’s revenue rose 11 percent to $3.6 billion,
More importantly, the company’s top executives said that rising demand and prices for Alaska cruises played a strong role in the company’s profits, and that the bookings for the remainder of the summer cruise season look good as well.
Carnival Chairman and CEO Micky Arison told industry analysts last week that a “very, very strong Alaska season” was helping the company.
The Alaska strength, he said, was important because profits were down for Mediterranean and North Africa cruises due to political turmoil there.
The strong demand in Alaska allowed the company to increase prices more than expected, he said.
Carnival’s Howard Frank, its chief operating officer, said that while the Mediterranean was down and the Caribbean was steady, Alaska was “much better” than predicted.
The other cruise lines serving Alaska have yet to report results.
Carnival doesn’t break out Alaska profits in the financial results it released last week, but most of the company’s profits typically come in the summer months when it is operating in Alaska. This year, Carnival expects to have about a quarter of its North American capacity operating in Alaska.
So far this year, that business is looking very good, Frank said.
“Pricing for Alaska itineraries is running significantly higher than last year,” he said.
One industry analyst, Assia Georgieva of Infinity Research, called the Alaska season “exceptional.”
Georgieva wondered whether it “was pent-up demand after several years of very high head taxes.”
In response to the voter-adopted $50 cruise ship head tax, Carnival was among cruise companies pulling ships out of Alaska.
Arison said that reduced capacity in Alaska helped the company raise prices. Alaska’s safety in comparison to the Mediterranean turmoil might also help as well, he said.
“Alaska becomes a very positive alternative,” he said.
“Alaska winds up benefitting from the negative issues,” Arison said.
In addition, rising oil prices have made airfares to Europe more expensive than transportation to Alaska departure ports, such as Seattle, Wash., or Vancouver, B.C.
Voters adopted the head tax in 2006, over the strong objections of the cruise ship industry.
Cruise ship passengers to Alaska peaked at more than one million a year in 2008 and 2009, but declined to less than 900,000 in the years since as ships were pulled from Alaska.
The Legislature partially rolled back the initiative at the urging of Gov. Sean Parnell.
Chip Thoma, president of Responsible Cruising for Alaska, which sponsored the head tax initiative, said Alaska’s taxes are competitive with or lower than most other destinations on a per-day or per-port basis.