The cruise industry is suing the state of Alaska. The issue is a $50 head tax the state imposed on incoming cruise passengers. The nine major cruise lines who comprise the Alaska Cruise Association say the fee violates basic federal constitutional and statutory protections ... from exacting fees from maritime visitors to defray local government expenses. In other words, they say the tax is illegal and unconstitutional.
The Association further claims the money has not been used as the state promised. $46 of the $50 fee were supposed to go to improving facilities directly related to cruise ships; docks and dredging for example. The cruise lines say the money has gone to municipalities not even visited by cruise passengers.
All Alaska tourism is suffering the past few years, but cruising accounts for about 90% of that tourism. So Alaska is now feeling the blessing and the curse of being a cruise ship destination. Alaska loves the hundreds of thousands of dollars provided every single time a cruise ship docks in any Alaska town. But lately the locals has been decrying the tackiness that has grown up around the dock areas - saying they are now filled with Caribbean-style jewelry stores and t-shirt shops. This is typical - a destination loves the cruise ship visitors soaking in the local charm at first, but soon they blame the same visitors for ruining the local flavor that attracted them in the first place.
But here is the thing, at some point the cruise lines are going to make it clear that if they are not welcome in one place they can move on. Micky Arison, CEO of Carnival Corp., rarely gets personally involved in such matters, but this one seems to have struck a chord with him. Carnival Corp. also owns Alaska heavy hitter cruise lines Holland America (based in Seattle) and Princess (based in Los Angeles). Both have already cut back the number of cruises going to Alaska next summer and Arison says these lines plan to cut even more in 2011.
Princess' president, Alan Buckalew, told industry newsletter CruiseWeek that he believes the new governor, having replaced Sarah Palin when she quit office, is especially pro-tourism and would at least set up a debate. Buckalew also said, up until now dealing with the state of Alaska for the cruise industry has been more like a one-sided lecture.
It has not been lost on the cruise lines that everything else about a visit to Alaska has gone up as well. Airfare, hotels, car rentals, local transportation, fishing licenses... if it is related to tourism it has become much more expensive lately. Take fishing licenses; residents pay nothing to fish, while visitors must pay $20/day or $55/week. Socking it to the tourists is always a temptation for local state legislatures; Alaska car rental and hotel taxes are also among the highest in the nation.
Essentially, the cruise lines feel they have become little more then the cheap conveyance to get the tourists to Alaska so the local businesses can soak all of the extra revenue out of them. The cruise lines are quick to point out that there are always other places to deploy their cruise ships. They don't need Alaska.
That is a tough call, however. The West Coast cruise market is suffering economically. The other major West Coast destination, Mexico, also has Swine Flu worries. Mexico cruises are as ridiculously cheap now as Alaska cruises were last summer. So two non-Carnival Corp. cruise lines just announced they are planning to go to Alaska in 2010; for the first time for Disney, and the first time in five years for Crystal. Both of these cruise lines have a dedicated following that rarely cruise on other lines, so Alaska is still an opportunity to offer their regular guests a new destination.
Looking at the long term, however, both San Diego and Los Angeles have just approved massive port upgrade projects to manage bigger and bigger ships sailing to Mexico and sometimes Hawaii. In the case of Los Angeles the upgrade will cost over $1 billion. These won't be completed for several years and the economy should turn around by then.
While the SoCal port improvements are a great start, what the Mexico cruise market really needs is some improvements to the Mexico destinations along the lines of what Royal Caribbean has done in Labadee and Carnival has done in Grand Turk. If the cruise lines can create more excitement for Mexico as a destination then we would see far more interest in West Coast cruises.