The Price of the $50 Head Tax in Alaska for Cruise Passengers

THE BEAR ROARS BACK!

When a citizen backed initiative passed by a large measure in 2006, it's backers thought they would see a windfall profit from all the cruise passengers coming to visit the great land. It may be a classic case of cutting of your nose to spite your face.

Carnival Corp. is the latest cruise company planning to cut deployment in Alaska in 2010 because of the state's $50 cruise passenger head tax. During an earnings conference call recently, Micky Arison, chairman of Carnival Corp., parent of Carnival, Holland America and Princess cruise lines, said the head tax is having a very significant impact on tourism to Alaska. In light of the worldwide economic downturn, the $50 add to the price tag of an Alaska cruise is a "significant price" for passengers to pay in the current price-sensitive environment according to Arison. He hinted that further reductions in Alaska were possible in 2011 if business did not improve.

Carnival already announced that the Carnival Spirit would be based in Seattle in 2010, instead of Whittier and Vancouver, where it is homeported this year. Blaming the $50 head tax, Carnival competitor Royal Caribbean earlier announced it was pulling its Serenade of the Seas from its Alaska program in 2010 for a loss of 42,000 passengers.

The changes announced thus far mean that roughly 100,000 fewer cruise passengers will visit South-central Alaska in 2010, a 25% reduction in cruise passengers.

Princess Cruises reduced its Alaska deployment by one ship and Holland America Line will offer fewer, but longer sailings in the region, in 2010. Princess said it will sail seven ships in Alaska in 2010, versus eight this summer, by reducing the number of vessels deployed on the Gulf of Alaska route between Vancouver and Whittier from four to three. The Star Princess will leave Alaska altogether, decreasing the line’s total capacity there by 16%, or almost 48,000 passengers, and reducing its Gulf of Alaska capacity by almost 29%. Princess has not yet revealed where the Star Princess is going.

Holland America will introduce 14-day Alaska cruises in 2010 with the 1,380-passenger Amsterdam sailing roundtrip from Seattle, and making calls in less-trodden Alaskan cruise ports such as Anchorage, Homer and Kodiak. The new itinerary reduces the cruise line’s overall 2010 Alaska deployment by 10 sailings, or about 11,000 passengers, HAL said, as the 10 14-day sailings replace 20 7-day sailings between Vancouver and Seward, Alaska. The 14-day cruises depart roundtrip from Seattle from May 17 to Sept. 6, 2010, and bring to four the number of Alaska itineraries HAL is offering in 2010. That equates to a loss of 15,000 visitors to South-central Alaska, compared with 2009 capacity.