At least three major cruise lines have left Australia because it’s too expensive to cruise here
Major international cruise companies are deserting the $8.4bn Australian cruise industry, with Disney the latest to flee for more profitable waters in the Carribbean.
Major international cruise companies are deserting Australia’s $8.43bn cruise industry, with the Disney Cruise Line the latest to ship out of local waters following the departures of the Carnival Corp-owned Cunard and Sir Richard Branson’s Virgin Voyages.
Three major lines have withdrawn from this market in the past two years, in a blow for many Australian cruise goers and the 26,000 staff the industry employs. The up-market Princess Cruises is understood to be reducing its local presence from four to two cruise ships, while the popular home grown brand P&O Cruises has been retired.
Yet global demand for cruising has never been higher, with Australians on a per capita basis the world’s fourth-biggest cruisers after Americans, the British and Germans.
The problem is Australia is no longer a lucrative market for the largely Miami-based cruise lines. Financially challenged by high port charges and Sydney’s chronic lack of port infrastructure, the situation mirrors the cruise recession in New Zealand where ship visits halved over the past year.
The booming North American cruise market is incentivising more ships to be deployed state side, senior cruise executives said.
“Some of them are going because they can get better yields elsewhere,” said Graham Turner, managing director of travel agency Flight Centre, which sells $1.4bn worth of cruises annually.
“Cruise lines can get $US600 to $US700 per person a night in the Caribbean, here they are likely to get $US150 to $US200 a night,’’ said Mr Turner.
“Added to that, some of the products are not the right products for here.”
He agreed with industry sentiment that port charges in Australia and New Zealand are “ridiculous”. “Many cruise lines have pulled out of the Melbourne port altogether as their port charges aren’t competitive,” Mr Turner said.
Ann Sherry, who arguably launched the Australian cruise industry back in the early 2000s as CEO and chair of Carnival, the world’s largest cruise company, says the low Australian dollar is making it harder to attract business because cruise companies operate in US dollars.
“If the Aussie dollar drops 20 per cent you can’t lift fares 20 per cent,’’ said Ms Sherry, who is now a non-executive director of NAB and Townsville Port chair.
“Our general cost base on items like food is higher relative to the rest of the world,” Ms Sherry said, adding that although there is high demand here for cruising, it’s not inherently a high margin business.
“Landed fuel costs are high here because it is shipped in from Singapore, and fuel is a major cost,” she said.
“The other issue and challenge is many of the brands have only a couple of ships which are looking to the markets with the best economics.” Virgin and Disney are two of these.
Cruise Lines International Association managing director for Australia, Joel Katz, has consistently warned the complex regulatory environment and high operating costs in Australia and New Zealand are putting the region at risk of ceding cruise capacity to other markets.
“Demand for cruising remains strong internationally, however, without action we risk losing valuable tourism revenue, jobs, and investment to countries with more competitive conditions,” Mr Katz said.
“There is an urgent need for globally competitive policy settings that provide certainty for long-term planning — and recognise the enormous economic benefits that cruise delivers — to secure the full potential of this vital sector of tourism.”
But, there are positive signs, too, according to cruise executives contacted by The Australian.
The latest cruise ship exodus will free up much-needed space in ports such as Sydney which have been difficult to access. Royal Caribbean, the world’s second-largest cruise company, is building a permanent island destination “Lelepa” in the South Pacific which will open in 2027, reaffirming its commitment to the region.
Royal Caribbean is also bringing better ships here.
The NCL line is adding exciting itineraries starting with four-day cruises from Sydney to Tasmania aimed at locals.
But perhaps Mr Turner offered the best advice: “Hopefully the government can consider cruise as an economic contributor and not tax the hell out of it moving forward.”
Meanwhile, the Disney Wonder ship will be re-positioned to another part of the world following its 2025-26 season in Australia and New Zealand, the company confirmed.
Disney said it is always “looking at destinations to explore with our guests, and sailings, from Australia and New Zealand remaining on our list of future considerations”.
More Coverage
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout