Royal Caribbean Drops Alaska Instead of Slashing Prices

(MoneyWatch)  Did you really think that Royal Caribbean Cruises Ltd. dropped about 20 Alaskan cruises a year because of a local $50 head tax on passengers? No, I didn't either.

Alaskan cruises are more expensive than most other cruises in North America -- perhaps slightly because of taxes, but mostly because of distance and costs. Because the luxury cruise market, along with any high-end demand, is dwindling, cruise lines are slashing fares around 40 to 50 percent. Last year, the cheapest cruise to Alaska was $799, now it's $475 (that report has been usurped by Norwegian Cruise Line which is now offering $399 per person.) It seems as if cruise lines are making deep cuts just to fill up their ships.

So with all the price slashing, how much are cruise lines actually making? Probably not much. And that's most likely why Royal Caribbean decided to yank its Serenade of the Seas from Alaska. Now maybe the cruise line can put it into service on the Caribbean bargain circuit, one of the few cruise niches making money.

Royal Caribbean blaming the Alaskan legislature for the $50 head tax and saying it's causing them to withdraw a ship is disingenuous. Like almost every action in the travel industry, this decision is based solely on the politics of demand.