Alaska Head Tax Ruckus Has Little Impact on Cruise Sellers

While the cruise industry makes a hullabaloo about the increased head tax in Alaska, slashing scheduled sailings and threatening law suits, travel sellers say they’ve been relatively unaffected by the tax and the subsequent fallout.

“Alaska is some place people tend to go only once, unlike the Caribbean,” said Donna Johnson, president of Red Bird Travel Plus. “So, reduced capacity hasn’t affected me. I book quite a few Alaska cruise/tours and there seems to be adequate space for early bookings with decent prices.”

Ken Schwinn, owner of Schwinn Tours & Travel, agreed that the reduction in capacity did not affect his business at all. He told Travel Market Report that he has already gotten requests for the 2011 season and is waiting for the booking window to open.

“Alaska has always been a strong destination for us and is again this year,” said Linda K. Strait of Great Southern Travel. “A great portion of our business to Alaska is group business. The capacity cut has affected the prices, and consequently, probably has affected the agency’s business with individual bookings.”

On the other hand, Stan Jenson of All Ways Cruising and Out Cruising said that he can’t recall anyone specifically avoiding Alaska because of the head tax.

Jenson added that he felt such personal resentment of the tax, however, that he wrote a letter to the Alaskan government.

“I chuckled when I saw that their tourism rate and number of ships was decimated by their greed,” said Jenson. “Individuals resisting the tax wouldn’t be noticed, so I’m very glad that the cruise lines decided to chop the number of ships.”

Alaskan destinations may, in fact, be the only ones suffering. The loss of cruise ship port calls, and the accompanying influx of money from the cruise line, ship employees and passengers, could potentially wreck havoc on these destinations.

“I would venture to guess that the economic losses, including job losses, in Alaska will be greater than the revenue generated from the taxes imposed,” said Micky Arison, CEO of Carnival Corp. & plc in an earning calls with analysts.

According to the Alaska Cruise Association, the cruise industry pulled three ships from Alaska this season, which it says will cause a decline of some 140,000 tourist visits in 2010, which translates to a 17% decline in cruise visitation.

The reduction in scheduled cruise calls to Alaska by Holland America Line, Princess Cruises, Royal Caribbean International, and others are finally forcing the Alaska government to take notice.

Alaska governor Sean Parnell recently announced plans to lower the state head tax on cruise-ship passengers by more than $10, from $46 to $34.50.

It makes sense that Alaska would do what it can to retain the cruise business, said Strait, noting that “in addition to the cruise revenue, Alaska small businesses are losing revenue by not having the passengers in their stores and shops.”

While the proposal for a reduction is being welcomed by most, not everyone believes it will make that much of a difference overall.

“While I applaud Governor Parnell’s idea to reduce the Alaska head tax on cruise ship passengers, I don’t think a reduction of $11.50 will make any difference at all. If this reduction goes into effect, should we expect to see cruise lines reduce fares by an equal amount? The tax was a bad idea from the start,” said Schwinn.

Others believe it certainly can’t hurt.

“I think anything that reduces the cost to the traveler will encourage more travel to Alaska,” said Johnson.

Jenson concurred. “I think any diminution of that tax is a good thing. I hope everything returns to the way it was a few years ago, before the tax was applied at all.”