Carnival Cruise Lines has launched its own early booking discount program, Super Savers, which applies to all sailings departing from January 1, 1993 through June 1994.
According to Bob Dickinson, Carnival's Senior Vice President of Sales and Marketing, the program progresses from the largest to the smallest discount. Thus, a seven-day cruise may start out at the highest available discount of $1,000 per cabin (the highest level for a three- or four-day cruise is $400). As demand for that sailing increases, the discount level decreases. When the ship is at a high occupancy level, no discount will be offered. The discounts are also subject to change without notice.
The new program replaces nearly all other discounts by Carnival including recently announced discounts for the 1993 winter season which ranged from $700 to $400 per cabin on four- and seven- day cruises. The only exception are three- and four-day cruises aboard the Mardis Gras and Carnivale which continue to be promoted on a two-for-one basis.
Dickinson said that Carnival's new program is unique in that it is directly linked to brochure rates and that it includes air. He also said that the same rates will be available to all agents throughout the country.
Carnival's program also applies to groups, thus guaranteeing that better deals cannot be obtained by agents who wait for better rates, according to Dickinson. As a further incentive, Carnival will pay up to 15 percent commission on groups.
Carnival has filed with the Securities and Exchange Commission for a shelf offering of up to $500 million of debt.
This procedure will enable Carnival to raise money in the market in case additional funds would be needed. It is a common procedure for companies considering issuing more debt.
In other developments, the Shipbuilders Council of America (SCA) has petitioned the US Federal Maritime Commission (FMC) for sanctions against the Italian government for subsidizing three ships being built for Holland America Line, a Carnival subsidiary.
A spokesperson for Carnival responded that the charges were unfounded and that the company was not benefitting from subsidies on the scale claimed by the SCA.
Effort to Eliminate Subsidies
The SCA's move is another step in trying to eliminate foreign government subsidies, according to John Stocker, President of the SCA.
The FMC has agreed to consider a petition from the SCA requesting action to be taken to discontinue the subsidies the SCA claims the Italian government has granted in association with the three new HAL ships being built by the Fincantieri shipyards.
The petition specifically requests an FMC investigation into and relief from the subsidies granted by the Italian government in connection with the construction of HAL's newbuildings: the Statendam, which will enter the market in December; the Maasdam, due in 1993; and the Ryndam, which will follow in 1994.
"Italy must bear the lion's share of the responsibility for the most egregious distortions in the cruise ship construction market with its massive subsidies which have enabled Fincantieri to control 40 percent of the current orderbook for passenger liners; the petition states. It maintains that the unfavorable conditions created by Italy's subsidies deny oceangoing passenger ship construction work to the unsubsidized shipbuilders of the U.S. and significantly contributes to keeping U.S.-flag companies out of the oceangoing passenger liner trade of the U.S.
According to the SCA, the Italian government has agreed to grant subsidies equivalent to 58 percent of the contract price, or $464 million, for the three HAL/Carnival ships. According to the SCA, approximately 30 percent ($240 million) of the subsidy is for the vessels to fly the Italian flag.
According to Stocker, the petation recommends that the FMC "seeks restitution from the Italian government and denies entry to Italian flag-carriers."
"Our target is the Italian government, not Carnival Cruise Lines; Stocker said.
However, there are aspects of this petition which could have substantial effects on Carnival, Stocker acknowledged, if the governments do not work out an agreement. These include possible limitation of sailings, or complete denial of entry into U.S. ports of all ships built in Italian shipyards and flying the Italian flag; penalty up to $1 million per voyage; or cancellation of Carnival's certificate of financial responsibility, making it impossible for the cruise line to write tickets.
But, Stocker acknowledged, since the time of the SCA research, Carnival has stated that the ships will not be Italian-flagged although this would not necessarily protect the line from the potential sanctions.
"We feel that the Italian government will settle first and that the petition won't hurt Carnival," Stocker said. The SCA's hope is that a government agreement would then have a domino affect with other foreign countries, such as Germany and France, which also subsidize their shipbuilding industries.
According to the spokesperson for Carnival, the line's legal department is planning on filing comments before the December deadline.
The spokesperson added that "all the numbers used in the report are inaccurate" and that "if they're serious about this, they should have done more research." According to the spokesperson, Carnival never intended to fly the Italian flag on these ships, which accounts for the greatest percentage of the subsidies cited. While the Statendam has been advertised as being registered in the Bahamas, the spokesperson said, the flag of the other two newbuildings has yet to be determined.
Because of this, the spokesperson said that there are better examples of subsidies out there. He added that Carnival is "puzzled why they've focused in on these ships. We assume it's probably because of the Carnival name."
The FMC has subsequently sent the petition to the Federal Register where it was published last week. Comments concerning the petition are due by December 10, at which point the FMC will review them and potentially hold hearings before deciding whether to proceed to a proposed rule making.
All this, however, would only happen if the FMC accepts the SCA's arguments that it has jurisdiction over this case. This is the first time that the FMC has accepted a petition from a body which is not a U.S.-flag shipping company. However, according to the SCA, the authority of the FMC extends to the transportation of people as well as cargo and a petition can be filed by any person "who has been harmed by, or who can reasonably expect harm from existing or impending conditions unfavorable to shipping in the foreign trade of the United States."
Stocker added that while the Gibbons bill was touch and caught the operators in the cross-fire, the peution to the FMC is a way for the governments to tron-out an agreement in order to try to level the playing field. According to Stocker, the Gibbons bill will be re-introduced to Congress in its next session.
With President-elect Bill Clinton aboard, the legislative scenario may change drastically in 1993. The industry can no longer count on a President vetoing what it considers restrictive trade legislation. In addition, Clinton is likely to support measures intended to create jobs in the U.S., including the shipbuilding industry. Thus, the coming year will put the International Council of Cruise Lines to the test.