As airfares soar, U.S. agents see Europe cruise sales fall

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Cruise fares in Europe this summer look like great bargains, with per-day rates well under $200, even as low as $100 in some cases.

But tack on skyrocketing airfares and the total price is causing sticker shock.

And when you add in concerns about personal safety due to growing political unrest in some destinations, agents find themselves facing a considerable selling challenge.

"People are not booking Europe," said Ross Spalding, president of Crown Cruise Vacations in Princeton, N.J. "The lines are trying to offset the costs of airfare with reduced pricing, significantly reduced in some cases. I’d say this is one of the best years ever for cruise pricing. The problem is that consumers can’t get there."

A survey of cruise and other Internet retail sites found that in most cases, airfares are typically exceeding the cost of the cruise.

NorwegianJadeOn Norwegian Cruise Line’s site, for example, a 14-day Eastern Mediterranean sailing on the Norwegian Jade in mid-August starts at $1,438 per person. The air-inclusive rate from New York is $3,073.

Airfares booked independently through an online travel agency are no better: Chicago to Copenhagen, Denmark, in mid-July, $2,000; Miami to Naples, Italy, in early August, $1,200; Boston to Barcelona in late July, $1,700. The list goes on.

Cruise lines are fiercely marketing discounted rates and other incentives. For example, Holland America Line is offering up to 50% off its Europe cruises. MSC Cruises is pitching a two-category upgrade and 60% off on balcony suites.

But Spalding isn’t convinced that discounting and incentives are going to work.

"The cruise lines may end up worse off," he said, "because when clients see that a cruise they were going to book at $1,500 is now half that much, but they’re having to pay $1,500 to fly there, they feel like they’re not getting a good deal."

The markets most affected by rising air costs are the family and midmarket segments, according to Susan Gannon, senior director of marketing and development of cruise products for Ensemble, which has 800 agency members in North America.

"Air is soaring, and a lot of people in these categories have a specific budget for vacation," Gannon said. "They’re seeing half of it going for air."

She said Ensemble members are feeling the pain.

"We started the year in a very strong position, then saw a slowdown in April," Gannon said. "We’re not feeling that Europe is falling apart because of this, but we definitely see there is pull-back [as a result of] airfares.

"On the cruise side, a lot of lines are taking steps to kind of balance it out, to make the trip overall affordable. And if you look at the cruise line promotions, on a per diem basis the value is still very, very strong."

Spalding also noted that the dampening demand for travel to Europe isn’t just related to airfares.

"There’s a safety issue, too," he said. "People are still a little nervous about going to Europe. That said, though, when you're looking at air rates into Rome of $1,800 for coach, you’re not going to get clients to go for that."

Rick Sasso, CEO of MSC Cruises USA, a Europe-based line that sources about 20% of its passengers from North America, agreed with Spalding on the safety issue. In fact, Sasso said he believes "destination anxiety" is to blame, not economics.

"It’s not air, or costs in general," Sasso said. "There has been a drop in destination trends. Like Tunisia, for instance. I say that with some assertiveness because even though we saw slower bookings in March and April, it was all about politics.

"I will tell you up front that airfares have not had a major effect on booking patterns. People booked months ago for the Med, and they’re going."

For those customers who are just now booking Europe cruises for July sailings, "Yes, air exceeds cruise," he allowed. "But the combination of the two is still a great value. It isn’t a problem. Yet."

Other cruise lines with major commitments in Europe this summer declined to discuss the impact of rising airfares on their sales.

A spokeswoman for NCL said, "Since most guests book their air independent of the cruise, we really can’t comment on this."

A spokesman for Royal Caribbean International, which has 11 ships, half of its fleet, in Europe this summer, also declined to comment.

For the frontline retailer, said Ensemble’s Gannon, consumers' tepid response to shelling out thousands for airfare translates into more work.

"It comes down to the agent having to do a lot more research," she said. "They’ll look at more consolidator fares and at the preferred suppliers in our Air by Ensemble program.

"They’ll try to find wholesalers who might be offering air with a couple of hotel nights, something they can bundle with a cruise to come up with an affordable 10-day vacation, for example."

Agents can seize the advantage now, Gannon said, "by using their skills, sourcing their options and finding what works best for their client."

If there’s a silver lining in the Europe airfare conundrum, it's the boost in destinations closer to home.

"It’s being offset by homeport cruising," said Spalding, who cited Alaska, Caribbean and Hawaii cruises. "You can still find good air deals to Hawaii from the West Coast, and we’re having our best year ever in Alaska, even with higher pricing than we’ve seen in the past."

The reason, he said, "is that people who had interest in Alaska and Europe this year are choosing Alaska. For a lot of them, it’s a combination of cost and safety issues."

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