The travel industry’s made a strong recovery post-Covid, but cruise lines welcoming passengers aboard in droves have another problem: skyrocketing fuel prices.
Miami-based Carnival Cruise Line posted its first profit post-pandemic last week, but it anticipates a significant fourth-quarter loss amid rising fuel prices. Chief financial officer David Bernstein said the company is looking at instating higher prices rather than fuel surcharges in response, The Wall Street Journal reported.
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Diesel prices in the U.S. have jumped about 11 cents over the past month to around $4.56 a gallon, partly because traders are concerned refineries will not be able or willing to sell enough fuel to meet global demand, per The New York Times.
Carnival implemented a fuel surcharge, or temporary extra fee tacked onto goods or services when fuel prices spike up, to combat high prices in the past. Fuel reached $148 per barrel in 2007, and customers were “very accepting” of the cruise line’s surcharge, Bernstein told the WSJ.
Current prices sit around $90 per barrel, and Carnival doesn’t intend to introduce a surcharge. “What we think about [with surcharges] is, will that get us more money than just raising the price, because if you can get future people to pay more, you’re probably better off,” Bernstein explained to the outlet, adding that the company hopes to make its fleet more fuel efficient, too.
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The company is also trying to pay down the debt it accumulated during the pandemic. Earlier this year, Carnival Corporation sold a $1.31 billion leveraged loan and $500 million in junk bonds to replace that debt and reduce interest costs, Bloomberg reported.