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Cruise lines returning to Europe in a big way

By Johanna Jainchill

Insight logoAt the end of 2008, when the US economy began spiraling downwards, many cruise ships began a steady march home.

But this year and next, many ships are headed back out, and Europe is once again the destination of choice.

Back in 2008, Carnival Cruise Lines CEO Gerry Cahill said that, "Based on current market conditions, continued economic uncertainty and high air costs to Europe, we are shifting our focus to an even greater extent toward our core, close-to-home cruise options."

But in January, the line said it would go abroad again. Carnival plans to return to Europe in 2011 after a two-year hiatus, with what will be its new, 3,690-passenger Carnival Magic, sailing the Mediterranean from Barcelona.

Royal Caribbean International, meanwhile, recently said that the Liberty of the Seas would go to Barcelona in summer 2011, putting it head-to-head with the Magic and with Norwegian Cruise Line's next new ship, the Norwegian Epic.

Royal Caribbean CEO Adam Goldstein said in his blog last week that the line would have 10 of its 22 ships -- almost half -- based in Europe in the summer of 2011.

"Just a few years ago we would not have imagined such a scenario," Goldstein wrote.

Holland America Line begins beefing up it Europe presence this summer, when it will base seven ships there, including its newest vessel, the upcoming Nieuw Amsterdam.

Some of the European capacity is being replaced in North America with newer ships like the Oasis of the Seas and the Celebrity Solstice sailing year-round in the Caribbean.

But not all of it.

Much of Europe's gain is North America's loss, especially Alaska's. Princess Cruises and HAL, Alaska's two largest cruise operators, will significantly reduce their Alaska capacity: Princess by 16% this year, and HAL by 7% in 2011.

The lines' parent company, Carnival Corp., has not tried to conceal the reason, citing the "astronomical" costs the state had put on the cruise industry in taxes and fees.

"If it pays to pull a ship from Alaska and put it in Europe... they will do that," company CEO Micky Arison said of the Carnival Corp. brands. "That is exactly what they did in 2010, and we are going through those reviews right now, and it is likely we are going to do more of it in 2011."

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