News

Disaster, take two?

Cruise ships crowd the port of Juneau in the good, old days/Wikimedia Commons

UPDATED – Feb. 4, 2021

Canada appears to have now torpedoed a big chunk of the Alaska cruise business.

A Canadian federal government order out of Ottawa today prohibits cruise vessels carrying more than 100 people from operating “in all Canadian waters until February 28, 2022.”

Most major Alaska cruises now stop in the port of Vancouver, British Columbia, Canada.

The order further advised “Canadian citizens and permanent residents to avoid all travel on cruise ships outside Canada until further notice.” That advisory should not greatly affect the tour business given the smallish population of Canada, but the closure of the Vancouver to major cruise lines will wreak havoc on tours to Alaska.

Some have suggested tours to 49th state could be helped by exempting foreign-flagged ships from the federal Passengers Service Act, which requires that foreign-flagged vessels leaving the U.S. stop at least once in a foreign port before returning to a U.S. port. But no U.S. lawmakers have, as yet, called for such a fix.

More than half of the tourists who visit Alaska during the summer season arrive or depart on a cruise ship. Of the 2.2. million visitors in 2019, the state reported 1.33 million traveled by cruise ship.

The original story continues below:

In the wake of the COVID-19 driven disaster of 2020 for the Alaska tourism industry, there is bad news coming out of Canada at a time when people are starting to book summer tours to the 49th state.

Canadian Prime Minister Justin Trudeau last week announced a ban on all but essential travel into and through Canada along with mandatory testing and quarantines for visitors flying into the country.

The new rules create huge problems for the cruise ship industry that is the biggest component of the Alaska tourism business. Many of its ship head north from the port of Vancouver, British Columbia or end their journeys there.

“While it remains unclear what will happen with Alaska cruises in 2021, it looks like Canada is not yet moving in a direction friendly to cruises,” Royal Caribbean International, a major player in the state, warned on its company blog.

It quoted Trudeau’s statement that “travelers will…have to wait for up to three days at an approved hotel for their test results, at their own expense, which is expected to be more than $2,000,” and then spend another 11 days in independent quarantine “under significantly increased surveillance and enforcement.”

“Rules like this, as well as the ban on cruise ships (until at least the end of this month), make operating cruise ships to Alaska or New England effectively impossible because U.S. cabotage laws require foreign-flagged vessels leaving from a U.S. port of call to first call on a ‘distant foreign port’ before returning to the United States,” the company said.

Holland America Line has already announced the Nieuw Amsterdam and Noordam won’t sail for Whittier from Vancouver until at least mid-May with two more ships – the Eurodamn and Oosterdam – on hold at least through the first week of June, and the Zuiderdam delayed until at least “early June.”

Windstar Cruises, a small player in Alaska, has already announced plans to abandon the state for the season, Seatrade Cruise News reported.

Princess Cruises, one of the biggest players in the Alaska market, has sold its Sea Princess and Sun Princess ships that were scheduled for more than a dozen trips to the state this summer. Those trips have been cancelled. 

The company shut down all its operations last year – including major lodges on the Kenai Peninsula and near the Denali and Wrangell-St. Elias National Parks and Preserves – but is so far planning to operate those facilities this year.

An unclear future

The continuing global pandemic is, however, stirring huge fears across the industry.

“Should We Forget About the 2021 Alaska Cruise Season?” the Cruise Hive asked in a Sunday headline. 

Reporter Robert McGillivray, who has spent more than a decade involved in the cruise industry, offered a dour analysis below.

“The Alaska cruise season is becoming ever more unlikely now that Canada is tightening its travel regulations, COVID-19 vaccination requirements, and PCR testing regime,” he wrote. “Without Canada, the Alaskan cruise season will be unlikely to take place.”

He offered the best hope for small, Seattle-based cruises, given weaker Centers for Disease Control and Prevention (CDC) regulations for ships carrying less than 250 passengers and their avoidance of British Columbia.

Province Premier John Horgan has declared travel shouldn’t be opened up until Canadians are thorougly vaccinated against COVID-19 and, as McGillvray observed, that could be months away given global distribution problems.

Not to mention questions concerning new, possibly-vaccine-resistant COVID-19 variants and the overall efficacy of the eight different vaccines now in play.

“Variants, 3 New Covid Vaccines, and Contested Efficacy Claims: A Month of Seismic Shifts and Confusion,” Hilda Bastain posted on her blog at PLOS on Sunday. PLOS, the Public Library of Science, is a nonprofit, open-access, peer-reviewed website for science research.

The pandemic-plagued, 2020 Alaska tourism season was a disaster that ended with most of the smallish, in-state operators thankful they made it through the year thanks largely to Alaskans staying in-country to staycation. Many business owners said they doubted they could survive a second such summer.

The only state’s hit harder by the economic consequences of the pandemic were Hawaii, New York, Massachusetts and Vermont, the Alaska Department of Labor reported in the fall.

Massachusetts and New York were devasted by some of the highest death tolls in the nation. Hawaii and Vermont largley closed themselves off to prevent the spread of the virus, which limited deaths but crushed their economies.

Hawaii reported air travel arrivals down by 2,967,703, or 58.3 percent, in just the first half of 2020. The 50th state lost more visitors in the first half of last year than the 49th state welcomed in the record year of 2019.

The McDowell Group, a consultancy, reported slightly more than 2.5 million visitors to Alaska in its October 2018 to September 2019 tourism year. Nearly all of Alaska’s tourists, however, come in the May-September period.

As bad as it gets

Tourism numbers for 2020 aren’t yet available, but state labor economist Neal Fried reported the state’s major tourism centers were hard hit by the lack of visitors.

“Second-quarter industry employment in the Denali Borough, for example, fell 88 percent over the year,” he wrote in the state’s Economic Trends report in December. “Haines’ and Skagway’s stories were similar.”

Denali National Park and Preserve is the economic mainstay of the Denali Borough. The major lodges near the entrance closed because of the pandemic, and the National Park Service banned climbing on Mount Denali, the continent’s tallest peak, for the same reason.

As a result, the area was strangely quiet all summer.

Haines and Skagway are heavily dependent on cruiseship traffic to the Klondike Gold Rush National Historic Park. With no cruiseships coming, Skagway was a near ghost-town.

“Twenty-twenty was down for us 87 percent,” Janilyn Heger, the manager of Skagway Spirits Distillery told Juneau radio station KTOO last week.

The city’s few year-round residents are now living in fear the worst could happen again. And it wasn’t all that good in the rest of the state last year.

“Anchorage, home to nearly 40 percent of the state’s population, lost about 4,000 jobs, which was a third of its eating and drinking employment, Fried reported. “That was the state’s biggest numerical loss.

“Other hard-hit areas included the Kenai Peninsula, Fairbanks, and Ketchikan, places where eating and drinking employment dropped by half due to jobs that were cut or never materialized over the summer.”

Everyone was hoping for a recovery by the summer of 2021. That is now looking in doubt.

The Institute for Health Metrics and Evaluation (IHME) at the University of Washington is predicting COVID-19 infections rates will continue falling through the months ahead, but doesn’t expect them to be down to September levels until mid-May.

And in IHME’s “worst-case” scenario, infections start climbing at mid-month, peak in mid-March and then start slipping toward November levels at the end of May.

“The United States on Monday reported more than 1 million new cases of COVID-19 in just the first 10 days of November” is how Voice of America recorded the start of the 11th month of 2019. 

A May with COVID-19 levels raging at that level would be the worst nightmare of the Alaska tourism industry.

 

 

 

18 replies »

  1. I am not sure what Alaska you guys live in. I live in the Anchorage bowl and work here and on the peninsula. Business has never been better….checked home prices lately? going up..up…up. If you quit worrying about politics and concentrating on work, the sky is the limit. but it is a bit easier to sit at the computer and bitch…keep at it, makes more work for me!

  2. Tourism is a resource extraction business and should be treated the same way all other resource extraction businesses are treated in this state. Many complain that mines and oil companies are run by those out of state and out of country big bad businesses and yet the same is true of the tourism industry, except it doesn’t pay as well as the others resource extraction businesses.

  3. There is a simple solution for the cruise industry:
    register their companies and hence flags in the USA.
    Oh wait-never mind-if they did that they would have to
    pay honest taxes. Best to blame Canada or Covid instead of the American companies hiding their wealth on the
    islands.

    • It has more to do with the Jones Act than honest taxation…whatever that is.

      These cruise companies couldn’t just register their ships, they would need to build new ones and they would need to be built in the US by US labor, the ships would also need to be operated by US crew. Many (most?) of the cruise ship companies aren’t even American companies to begin with.

      • Carnival avoided $600 million in 2019 US federal income taxes by registering their ships in other countries.

      • Hi Steve, people are confusing the Jones act which prohibits foreign built vessels from operating commercially with the Passenger Vessel Services Act of 1886 which requires foreign flagged vessels to stop in a foreign port when transiting from an American port to another American port. There is an exemption in place for Hawaii and congress could pass an exemption for Alaska if they so desired. Just FYI

      • Mitch,
        Tnx for the clarification.
        Not like anybody could have planned for this,but i wonder what the difference would have been,revenue wise (say amortized over 15yrs)between Foreign flagged and US,when u factor in 2 lost seasons.
        Its not just lost revenue,but i would think that some with Merchant Marine ratings will be scrambling.

      • Mitch,

        I think the Jones Act and the Passenger Vessel Services Act of 1886 work together in regulating commerce which includes goods and passengers.

    • Carnival and others can avoid the Jones act by registering their companies-ships in the USA-oh wait never
      mind then they would have to pay their honest income taxes.

      This is not a Covid or Canada concern-this is a corporate
      choice.

      • the ships are built elsewhere
        but am sure for $600 million a year in tax revenue the us
        govt would make an exception.

      • These companies already have an exception, it’s the Jones Act and/or PVSA. You’d like to think it would make sense to get $600 million in taxes, but we have politicians that allow the offshoring of our companies and our labor and pretty much everything else for a few grand in campaign donations. These companies are only doing what the laws allow them to do. I am antitax on basically everything, but I have no problem when the tax is placed upon the end user. Local communities should be taxing these companies for the toll they take upon them, some do this, other don’t. If your local community deems that taxing cruise ships for the costs they incur then that makes sense, but if it decides that it would rather the local citizenry pay for it then great an informed person can make the decision to live in either community and choose to foot the bill for others or they can choose not to.

  4. The Elite that own private yachts are not affected by this, expect no bailout. No aid. But if you own a hedge fund and the little guy figures out how to play your game, the little guy gets restricted quickly. Gamestop stock. People its not republican vs democrat. That is an obfuscation. Its the elite versus the common man. And government aint helping you.

  5. “The United States on Monday reported more than 1 million new cases of COVID-19 in just the first 10 days of November” (with zero new flu cases) – and this means what exactly? Not much. A “case” of Covid means absolutely nothing but sensationalism. There will be 50-75+ million Americans getting Covid and yes that means Alaskans to. With a 99.987% overal survival who cares?
    The bio-war at this level has to run its course. Life goes on. Wait until the next virus release. As the saying goes “you ain’t seen nothing yet”..These so called current “vaccines” do not prevent, nor keep you from spreading Covid, they merely lesson the symptoms. Canada is going to stay closed for a long time OVER NOTHING..Wonder how their flu numbers are turning out this year? Numbers are what you want to make it. The “new cases” numbers are cooked and the “death” numbers are cooked. As we saw with the media and new administration politics is the driving factor and NOT factual data collecting.

    As for this “Massachusetts and New York were devasted by some of the highest death tolls in the nation”, well, Cuomo should be jailed for murder. I know, but “Trump, Trump, Trump…”.

    Meanwhile our King Xiden is signing America down the shitter so fast with EO’s from every loon imaginable that he doesn’t even know what he is signing.
    Or is it King Obama? King Soros? King Xi?

    • What about your proud boy buddies? How is that working for them? Or what about those Oath Keepers, are they rallying around the flag?

      Can you see Russia from where you are?
      How’s that hopey changey stuff working?

      Gotta love it, so glad we are working together now!

Leave a Reply