The body representing ship owners is preparing to mount a major cruise industry campaign to persuade governments in the region to bring down costs and relax regulations.
The move comes after Cruise Passenger revealed that the number of ships, cabins, and suites being offered to Australian cruisers in our own waters is heading for a cut of 30 per cent, despite record demand.
Lines are heading for waters where there is more certainty and less regulation – the Caribbean and Europe.
It’s bad news for the Australian economy. Home-ported cruise ships contribute $5 billion in goods, services, employment, food, wine, and produce – as well as spending in ports by local and overseas passengers.
Today, we reveal just how high port charges are and why they are helping deter vessels coming to Australia.
But it costs huge sums to homeport ships in Australia – port charges are triple those of popular rivals. Important regulations like an exemption from the Coastal Trading Act, which has been rolled over since 2019 on an annual basis, add a level of uncertainty.
Removals of the exemption would mean massive cost increases – but Minister Catherine King’s office declined to tell Cruise Passenger whether it would be renewed this year, maintaining it was “still under consideration”.
Cruise Lines International Managing Director Joel Katz wrote this week: “High operating costs and inconsistent regulations deter new ship deployments and strain existing operations.
“Recent announcements suggest that while 2024-25 capacity in our market will be similar to the 2023/24 season, future reductions are likely due.”
Katz maintains CLIA and cruise lines are advocating federal governments across Australia and New Zealand for more supportive policies.
“These include calls for competitive cost structures and streamlined regulations that balance safety and environmental protection with industry needs.”
Katz urged travel agents to write to state and federal MPs and speak to local media to advocate for the cruise industry campaign
“By joining forces we can push for the necessary regulatory certainty and ensure we remain a top choice for cruise lines.”
Down Under docking dilemmas: The background for the cruise industry campaign
Despite a surge in demand for cruises from Australia, several major cruise lines are scaling back their presence, among them Virgin Voyages, Cunard, Royal Caribbean, and Princess Cruises. Why?
Cost Concerns: Operating cruise ships is expensive, and Australia presents unique challenges. The distance from major cruise hubs adds to repositioning costs. Additionally, the Australian dollar’s value compared to other currencies can make profit margins tighter.
Virgin Voyages cited the ongoing conflict in the Red Sea as the reason for their complete withdrawal. However, industry analysts believe operational cost concerns likely played a role too, especially for a new line trying to establish itself.
Cunard’s decision to pull out their flagship Queen Elizabeth aligns with these cost pressures.
Shifting Strategies: Cruise lines deploy their ships strategically to maximise profitability. Royal Caribbean, for instance, is replacing Quantum of the Seas with Voyager of the Seas. While both are large ships, Voyager caters to a slightly different demographic and may be a better fit for the Australian market. Princess Cruises is also undergoing a reshuffle, with some ships being replaced by newer, more efficient vessels.
Demand Doesn’t Equal Profitability: While there’s a clear desire for cruises from Australia, it may not be enough for every ship. Cruise lines need to ensure enough passengers are booking at premium prices to justify deployment.
The Future of Cruising Down Under: This reduction doesn’t necessarily signal a permanent retreat. Cruise lines are known for adjusting deployments based on market trends. As the Australian cruise industry matures and the economic climate changes, we might see a return of these large ships.
In the meantime, Australian cruisers will still have a good selection of ships and itineraries to choose from. The industry is constantly evolving, and these changes could pave the way for more specialised cruises catering to specific interests.
So, while the number of mega-ships might be decreasing, the future of Australian cruising could be full of exciting possibilities.
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