Cruise Analysis: NCF Policies As Clear As Mud

Cruise customers are seeing plenty of good deals as Wave Season shifts into high gear, but the annual promotion has some agents smarting over the lower commissions these deals produce. Non-commissionable fees, a maddening frustration to the trade, add salt to the wound when discounting is widespread.

“When the fares go on sale, we lose out because the cruise lines make the NCFs bigger,” said Wendy Cushing, a CruisePlanner agent in Sagamore Beach, MA—though no cruise line would ever admit to such a practice. Indeed, the lines are notoriously tight-lipped about the various charges they decide are not included in a commissionable fare.

As Holland America Line’s web site explains it: “Taxes, fees and port expenses may include any and all fees, charges, tolls and taxes imposed on us by governmental or quasi-governmental authorities, as well third party fees and charges arising from a vessel’s presence in a harbor or port.”

The fees, says the line—in wording that is virtually duplicated on every cruise line site—may include U.S. Customs fees, head taxes, dockage fees, wharfage fees, inspection fees, pilotage, air taxes, hotel or VAT taxes incurred as part of a land tour, immigration and naturalization fees, and Internal Revenue Service fees, as well as fees for navigation, berthing, stevedoring, baggage handling/storage and security services. 

No cruise line breaks down the fee for customers; they simply state the total cost. And cruise lines assess these costs on a per-ton or per-vessel basis, and spread the expense across the total number of passengers.

The amounts vary widely depending on itinerary. Carnival Cruise Line’s web site this week is advertising a four-day sailing in January 2018 from Long Beach, CA, to Ensenada and Catalina Island at $179 per person. Taxes and port charges add another $89 per person—nearly 50% of the discount fare.

MSC Cruises is promoting a seven-day Caribbean cruise from Miami in March priced at $529 per person in Bella category. Taxes and port charges come to $116 per person, about 22% of the fare.

The fewer the ports, the lower the charges. For example, the fare on Cunard’s Queen Mary 2 for a weeklong eastbound transatlantic in May starts at $1,099 per person. Taxes and port charges are $68—which is just 6% of the fare, even though one might expect the large, high-demand ports in New York and Southampton, England, to charge top dollar for docking and other services.

Fare lawsuits against several cruise lines in the 1990s led to changes in the way additional fees are presented to consumers. A settlement with the state of Florida in 1997 essentially required the lines to disclose the total cost of an advertised cruise. Consumers can see NCFs on cruise line web sites when they search for a cruise and then click on a cruise fare. Some lines, such as Princess Cruises, save the customer an extra click by showing the fees on the first search results page.

Since cruise line negotiations and contracts with port authorities across the globe are proprietary information, it seems fruitless to argue with what they say their bottom line is on such expenses. 

“Cruise lines could mark up the port charges, and none of us would know. The port authorities aren’t going to tell us what their charges are, that’s why it’s hard to make sense of it all. It’s almost like they want to keep us confused and guessing,” said Cushing. In the end, she added, “It doesn’t make you want to go looking for those lower-priced cruises.”

It’s worth noting that, aside from the river cruise lines, Viking Ocean Cruises is the only major cruise supplier that currently pays commission on government taxes and fees, and on port charges. In recent years both Regent Seven Seas Cruises and Silversea Cruises offered short stints where they were rolling taxes, fees and port charges into the commissionable fare, but the experiments were short-lived and the lines have returned to carving out NCFs.

It is possible to find agents who are not up in arms about NCFs.

Lila Ermel Fox, an independent Smartflyer agent, is one of them. “The commission the line pays is more than fair for the amount of work I put into a booking,” she said.

Ditto for Ricki Le Vine, who operates Cruising with Ricki, in Sarasota, FL. “I don’t see it as an issue because the tax and port charges don’t go back to the line. I don’t feel I’m entitled to it. However, if you do a lot of mainstream lines, your commissions are less and you are dependent on volume. If my income depended on the mass market lines I might feel differently,” said Le Vine, who specializes in luxury cruises.

According to CruisePlanner’s Cushing, the only thing cruise sellers can do to mitigate the loss of revenue from NCFs is to find other ways to boost revenue. Cushing said she routinely uses trip insurance companies that pay commission—some of them up to 30%–and tries to use third-party vendors for shore excursions, since the cruise lines don’t pay commission on those either.

Agents also can try to up-sell cabin categories, look for override opportunities and stay informed about which lines are offering time-sensitive bonus commissions.

For the details on the policies of all the major cruise lines regarding NCFs, read the TMR Cruise Report Card.