Cruise Lines Leave Europe, as Economy Worsens

North American cruise lines are bailing on Europe.

In recent weeks, four lines have announced that in 2014 they will move out of Europe, or reduce their presence there, to avoid softening demand.

A combination of weak European economies and high airfares have necessitated the moves, observers note. The developments have derailed cruise lines’ strategic plans to source growing numbers of passengers in Europe.

Going elsewhere
Carnival Cruise Lines announced that it will leave the Europe cruise market behind altogether in 2014. The line cited the high cost of airfare to the region. Carnival will move the Carnival Legend to Australia and leave the rest of its vessels in North America.

Last week, Regent Seven Seas Cruises said it had cancelled Mediterranean cruises for the fall 2014 season. Regent will move its Seven Seas Mariner to Miami and the Seven Seas Voyager to Southeast Asia.

Princess Cruises will move the Pacific Princess and Crown Princess to Alaska in 2014, leaving the line with five ships in Europe.

Royal Caribbean plans on sending nine ships to Europe next year, but will reduce its total berths in the market by sailing the Oasis of the Seas just three times out of Barcelona.

Exposed to risk
“The majority of the major cruise lines that are active in North America, like Carnival and Royal Caribbean, were drawing a significant amount of their passenger boardings from the European source market,” said Rod McLeod, former cruise executive and co-founding partner of McLeod, Applebaum & Partners.

“Clearly the European economy and the austerity programs that have blanketed continental Europe have exposed the lines to a greater level of risk.”

Shifting vessels around
Carnival and Royal Caribbean will use the shift as an opportunity to move their ships to markets with stronger demand, like Asia and North America.

“The bigger lines are taking advantage of the reality that cruise line management can make prudent moves and shift vessels around,” said McLeod.

It remains to be seen, however, if the moves will help the lines maintain their profitability beyond the near term.

“What’s going to be interesting for those making more reactive moves is where they stand a year from now,” cautioned McLeod.