Johanna Jainchill
Johanna Jainchill

Is the CDC dragging its feet when it comes to giving the cruise industry the guidance needed to resume cruising from U.S. ports?

During Carnival Corp.'s fourth-quarter earnings call Monday, a Wall Street analyst asked the question on the mind of all cruise industry-watchers: when does the company expect to sail its first test sailings?

The test sailings are a critical piece of the CDC's Conditional Sailing Order (CSO). Cruise ships are required to complete a series of trial sailings that test the company's Covid-related protocols in real time. Only after the trials are completed to the CDC's satisfaction will it allow the line to begin revenue-cruise operations.

But Carnival Corp. CEO Arnold Donald answered that the company can't yet schedule its test cruises, because it is waiting on additional guidance from the CDC.

"It's a work in process," he said. He added that Carnival Corp. is in Phase 1 of the CSO and that "the additional guidelines for future phases have not yet been issued by the CDC."

Donald said that Carnival has weekly calls with the CDC and that the company is "on track to be able to do whatever we need to do a in very timely manner to be able to resume cruising ultimately."

When pressed as to whether Carnival can't schedule the cruises without the additional guidance, Donald said, "yes, we are waiting, but obviously we are doing a lot of things: We are starting to bring ships back to the U.S. and meeting the criteria that is currently out there to be in a position to then subsequently do test cruises. But to give a specific timing on the test cruises, we'd need additional guidance back from CDC."

The CDC issued the order on Oct. 30 and said at that time it would issue subsequent technical specifications. It seems it still has not done so, at least in terms of what the cruise lines need to do to launch test sailings.

"We wouldn't be surprised if delay had to do with rising virus cases, but maybe other factors, too," said Robin Farley, UBS cruise industry analyst, adding that given the currently mandated 60-day period between test cruise results and revenue cruises, "we don't anticipate revenue cruises before Q2."

It is perhaps for that reason that another analyst asked Carnival execs whether they had considered not bringing ships back to the U.S. this summer and instead keeping them in other global jurisdictions -- especially considering that summertime is the off-season in the Caribbean.

"We want the freedom to operate, period," Donald said. "We'll be focused on being in compliance with whatever CDC regulates."

He added that "the fact that we are global and a large number of sailings are outside the U.S. gets us additional degrees of freedom, but we also have to secure freedom to operate in other places. We are doing a really good job so far in Europe with the limited startups of Costa and Aida."

He also reminded the analyst that summer is a busy time for U.S. sailings, "with holidays and vacations." And although Carnival Corp. is "well-positioned" with nine brands operating in different countries, "as things open up in staggered ways around the world, we can take advantage of that; we'd like to have freedom to operate everywhere." 

Carnival Corp. CFO David Bernstein said that the company has brought 30 of its ships back into U.S. waters -- 16 Carnival Cruise Line ships, seven Princess ships, six Holland America ships and one Seabourn ship -- with one more expected: Carnival's Mardi Gras.

"Those are the ships we expect to sail in U.S. waters throughout the balance of the CSO," Bernstein said. "The remainder of the ships would sail outside U.S. waters."

When the CSO replaced the No Sail Order last year, it seemed there was finally a path in place for cruising's resumption, even if the return wasn't until February -- which at that point seemed really far away. Now, with even test sailings delayed, and most cruise resumption dates postponed through April and beyond, it's not all that clearer when we will really see cruises resume.


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