Six months after Concordia, the cruise industry still faces strong headwinds
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Cruise News takes a look at the industry in the aftermath of Concordia and what lies ahead
A special memorial service was held on the island of Giglio on Friday for the relatives of Costa Concordia’s 32 victims. The wreck of the Costa Concordia, still lying on its side, serves as a constant reminder of the events of 13 January, which was to become the most reported event of the travel industry.
Six months on, the industry still faces major challenges, faced with depressed fares in key markets, continuing negative headlines and many would- be cruisers still spooked by the deadly event.
The Concordia disaster served as catalyst for the introduction of a raft of safety measures by the industry which includes compulsory musters prior to sailing, more life jackets and visits to the bridge at busy times. Many question why some of the key initiatives had not been in place years earlier, nevertheless, the new measures are all positives for the industry.
Immediately after the accident many cruise lines reported double digit drop in bookings, the case far worse for Costa with a drop of as much as 75%. The industry reports that six month on, bookings are almost back to pre-Concordia levels for all except Costa. This achievement was driven by aggressive promotions and some of the lowest cruise fares on record particularly in Europe. Even Costa in recent weeks reports a significant lift in bookings driven mainly by spate of low priced offers.
The house arrest of Concordia’s Captain Francesco Schettino was recently lifted and he publicly apologised for the accident on several Italian television programmes. His explanation of the incident at times came across as comical and misleading and lacked the sincerity and remorse that must rile those touched by the incident.
In the meantime, lawsuits against the company related to the January incident are piling up and they could take years of litigation to finally resolve. The work to remove the Concordia wreck is underway; and it could take a further six months to complete.
The fallout from Concordia, the economic downturn and massive over-capacity have driven fares down to as low as £45 per night on some cruises. Even on lines such as Cunard you can find fares on some departures as low as £50 per night and these fares are not only for last minute deals. Many are available for later in the year and even into 2013. As prices in Europe have hit new lows, Americans are travelling across the pond in vastly increased numbers. That affects traditional markets such as Alaska which has seen fares fall dramatically in recent weeks in an effort to stimulate the U.S. domestic market.
The last couple of years have seen Europe as a key growth market for cruise lines where they could grow the market and charge higher fares. With more ships in Europe this year than in previous years, cruise lines find themselves even more exposed to the fallout from Concordia and the economic instability in many European countries, halting cruise traffic. For now, sluggish business amounts to great deals for cruise devotees who have plenty of great offers to choose from.
The economic crisis in Europe is unlikely to be resolved anytime soon, and the low price environment is here to stay for some time yet. The further from the Concordia incident we get the lesser impact it will have on the market at large and particularly new-to-cruise passengers. First time cruisers are a key to industry growth, and it is this market that was heavily impacted by the incident.
That was the greatest fear the industry had, and in last month’s earning call, chairman and CEO of Carnival Corp Micky Arison stated that the industry’s fears were realised.
He said: “Our surveys clearly show that first time cruisers were impacted by the events and hopefully the further we get away from those events, the more likely they will bounce back”.
The number one priority for the industry is the safety of passengers and crew, followed by the restoration of profitability. The safety aspect has certainly come under scrutiny over the past six months with positive outcome; the restoration of profits through higher fares is still some way off.