Johanna Jainchill
Johanna Jainchill

*logoCruise West became the latest cruise line to decrease its presence in Alaska next year when it put the 120-passenger Spirit of Oceanus on a 335-day world cruise in 2010. 

The world cruise leaves four ships in Alaska next year, down from eight last year and five this year, with the 96-passenger Spirit of '98 staying on the Columbia River this summer and two ships, the Spirit of Alaska and Spirit of Glacier Bay, laid up.

The largest Alaska cruise players have famously been dropping Frontier State capacity in 2010, with Princess Cruises, Holland America Line, Royal Caribbean International and Norwegian Cruise Line all removing capacity in some form.

And Alaska's $50 head tax, voted into law by a 2006 citizens ballot initiative, has been the punching bag they slam with every redeployed ship.

Just last week, Carnival Corp. chief Micky Arison said that the cruise industry had no choice but to file litigation to try to repeal the tax. 

But the Cruise West situation shows that while the head tax could be a significant factor for these cruise lines, it is not the only one. Cruise West ships are not subject to the head tax: It applies only to ships with 250 berths or more.

In a statement about the recent itinerary changes, Cruise West President and CEO Dietmar Wertanzl only said that the redeployments were "in response to demand and current market conditions."

It seems the economy is likely the biggest player when it comes to the softness in Alaska. Cruise lines have traditionally enjoyed higher premiums there than in other parts of North America, but this year, it is where cruisers are finding some of the biggest price slashes. And since operating there is more expensive than in other places (Cruise West has an all-American crew), those per diems need to be high to be worth staying.

When a line like Cruise West, which has been operating cruises in Alaska since 1983, takes two ships out of the state, it is a very good indicator that the economics are not what they once were.

Joe Geldhof, one of the authors of the ballot initiative that brought the tax into law, has been stressing this for a long time.

"The step to reduce capacity in Alaska is both market-driven and intelligent from an economic perspective," Geldhof said. "Lowering capacity may actually improve profitability. ... They are using the 2006 tax changes as an excuse for necessary redeployments."

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