- The conflict in Iran has led to rapidly increasing oil prices across the world, making cruise prices vulnerable.
- Australia is particularly vulnerable due to a lack of reserves and greater distances.
- At a time when the cost of living pressures continue to creep up, will Aussies be priced out of their holidays?
Qantas this week flagged fortnightly airfare price reviews as the world began to factor in a prolonged period of conflict in the Middle East. That’s how quickly our national carrier believes the consequences of the war will impact prices.
And experts interviewed by Cruise Passenger say special pricing and deals will be among the first to be hit by price rises, as cruise lines move to protect their businesses.
Oil prices have shot up more than 35% since the United States and Israel began the war in Iran and while it’s only early days, the longer that the conflict goes on, the more likely you are to feel it in your cruise fare.
These changes will be felt across the entire travel industry, and Qantas’ decision is just the start of companies moving to protect themselves against the price shocks. Rising flight prices will result in higher prices in packaged holidays for Aussies, which include both cruises and flights. These rises are likely to be noticed sooner as the effect on flight prices is more immediate.
Over the short term, many cruise lines, including in Australia, will be able to maintain their fares. This is because they lock in their oil pricing through contracts, meaning they’ll only pay a fixed price for a set period of time. However, these contracts don’t last forever, and rises can also come from increased quotes from suppliers, higher shore costs and more.
Analysts have warned that Carnival and its other cruise lines could be hit the hardest by the price rises. This is because many other cruise lines hedge against fuel prices, including the lines of Royal Caribbean Group and Norwegian Cruise Line Holdings, but Carnival does not.
If fuel prices continue to spiral out of control, it would appear Carnival would have no option other than to pass on many of the extra costs to the customer.
The first to go will be deals. The second will be packages that wrap air and land together.
Crusie Passenger has spoken to many in the industry, and there is only one overwhelming message on how to beat what’s almost certainly coming: Book now.
Why Australia is vulnerable
Australians are concerned about Carnival’s position as it is Australia’s low-cost cruise carrier, with around 600,000 Aussies expected to get on a Carnival ship this year. They have a fleet of four ships in Australia, and a rise in prices would be a significant hit to what is many Australians ‘ favourite holiday.
In total, 1.3 million Aussies cruised in 2024, the vast majority of those cruising across Carnival, Royal Caribbean, Celebrity Cruises and Princess Cruises, with the economic benefits of cruising often being a key driver for Aussies.
Australian cruise prices are already particularly vulnerable to price rises, simply because cruising in Australia uses a lot of fuel, especially compared to other cruise destinations around the world.
The first reason for this is that for cruise lines that rotate their ships between the USA and Australia, this is an extremely long distance and requires burning through a lot of fuel. For example, from Miami, it’s almost twice the nautical miles to sail to Sydney as it would to be Italy, or other European cruise homeports. To move a ship from the Caribbean to Alaska or California is even closer and cheaper than Europe.
Furthermore, a ship in California or the Caribbean doesn’t have to travel far to its destinations. From Miami its only around 50 nautical miles to The Bahamas and from Los Angeles to Ensenada it’s about 150 nautical miles. Comparing this to Australia, itineraries tend to burn through a lot more fuel. Sydney to New Caledonia is over 1000 nautical miles and Sydney to Auckland is also over 1000 nautical miles.
Between the repositioning costs and the significantly larger gaps between ports, the reality of cruising in Australia is that it requires a lot more fuel. As the price of oil rises, this leaves Australia a lot more vulnerable to cruise lines pulling out of Australia as they look to adjust to the changing climate.
Cruise lines generally make their deployment at least three years in advance, meaning that cruise lines already have most of their deployments for the next few years locked in, but if prices spiral too far, cruise lines could look to pull out of planned trips to Australia as they seek to cut costs.
At this point it’s an evolving situation, but if fuel prices aren’t stabilised within the next one to two months, the Australian cruise industry and government should be in close coordination with cruise lines to discuss stop-gap solutions to stop cruise lines pulling out of their Australian summer seasons.
So, what should you do?
If you’re planning a cruise at any time over the next two years, the best advice is that you should book right away!
Once you lock in your price, you won’t have to worry about price rises for your cruise and you can just relax.
Therefore, if you’re planning on cruising anyway, you might as well give yourself the peace of mind and book now.
You can look for cruise deals that only require a small deposit or check with a travel agent for any promotions, if that would make booking easier, and make sure to get travel insurance as soon as you start putting down deposits.
Furthermore, if you’re planning on cruising internationally, it’s also a good idea to snap up your flights as soon as possible.
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