Royal Caribbean, Why End a Fuel Surcharge in Two Years But Not Now?

Royal Caribbean Cruises announced last week that it would end its fuel surcharge on its cruises, as well as Celebrity and Azamara cruises -- but not until 2010, and only then if customers booked on or after Nov. 10, 2008. Those booking before Nov. 10, or sailing before 2010, will have their fuel surcharge refund considered on a quarterly basis.
Doesn't that sound more complicated than it has to be? Carnival already reduced their fuel fee, too, but at least had the honesty to say it was probably raising fares anyway.

The quarterly basis consideration becomes clearer after looking at Royal Caribbean's finances in the second quarter. It's easy to see a rise in fuel costs, approximately $48 million year-over-year, or a 28 percent rise. But when you read further, you see that in the first six months of 2008, expenses increased $125.5 million, and a little less than half of it was adding more expensive cruise ships. The remaining $74.2 million was attributed to the rise in fuel and "to a lesser extent payroll and related expenses." It's obviously not all about the rising cost of oil, but also about adding bigger ships and the usual operating costs of a business.

So how much of this quarterly consideration is really about fuel costs, and how much of it is about a steady source of income for two years? Evaluating the fees on a quarterly basis can be handy to a company that could use the extra cash to improve the look of its bottom line every three months.

Photo courtesy of Royal Caribbean