The initial headlines around the CDC’s lifting of its No Sail Order (NSO) might have given cruisers hope that they’d be sipping Champagne at sail-away parties by the holidays, but the framework that the health agency put in place to replace the NSO will probably delay the first commercial sailings until February, industry analysts and stakeholders say.
Robin Farley, an analyst with UBS, noted last week in a note to investors that the new requirements for cruising — the “Conditional Sail Order” — “sounds a lot like the No Sail Order,” in part because of the gaps in time between when cruise lines submit plans and when they can implement them.
According to reports in early October, CDC director Robert Redfield had at one point hoped to extend the No Sail Order to February but was thwarted by the White House, leading to at least two congressional probes. If that was true, it can be argued that Redfield was able to retain his preferred timeline, while the White House got its preferred headlines.
Meanwhile, cruise lines and travel advisors aren’t much closer to putting people onboard today than they were on Oct. 31.
As Farley put it, “restarting is not prohibited, but restarting is also not allowed yet.”
There are two main barriers to a quick resumption of cruise operations. One is a footnote in the CDC Conditional Sail Order that requires the cruise lines to submit the materials necessary to apply for certification to cruise “at least 60 calendar days” prior to when the cruise line plans to commence passenger operations.
The other is the requirement that ships must conduct test sailings prior to resuming commercial operations and present to the CDC a report showing that those sailings were successful in mitigating the risk of Covid-19 spread to crew, passengers and communities.
This combination of requirements led all CLIA cruise lines, 95% of the world’s oceangoing capacity, to push their operations pause to Dec. 31.
But Bruce Nierenberg, president of Bruce Nierenberg & Associates and a former executive with several cruise lines, said the timeline isn’t a surprise to industry insiders.
“Frankly, those on the inside never expected revenue voyages to begin before January,” he said. “The focus on an exact start date is not as important as being confident it’s going to happen, whether January or February, as far as the trade and the investment community is concerned.”
Nierenberg contends that what’s important is that a gradual return to service this winter is in sight.
“That, in turn, will trigger increased booking for the summer, which is where the most money is made per passenger, per day, annually,” he added. “An active booking level now for summer 2021 onward will stimulate cash flows so vital to the industry’s health. The early months of 2021 are designed to start the process and prove the lines can operate safely until vaccines become widely available during 2021.”
John Delaney, who stepped down as president of Windstar Cruises in February, said that although it may be that the requirements of the new order — such as testing all passengers upon embarkation and disembarkation, which he called a “smart way to protect the public” — are so burdensome that the lines might wait for a vaccine, particularly if it looks like one will be available early in 2021. “Because that is the one thing, I think, that will completely mitigate the risk,” he said. When a vaccine is available, he added, “I’d make it a requirement at the day of embarkation to show proof of vaccination.”
Nierenberg said there is nothing in the new order that the cruise lines were not prepared to implement.
“The vast majority of what is required was offered by the cruise lines themselves to the CDC as potential solutions,” he said. “The cruise lines would not have done so without the confidence to be able to accomplish the same in a timely and efficient manner,” adding that the requirements are “not overly restrictive and difficult.”
Delaney added that “the CDC clearly put a lot of thought into this, appropriately so. They are erring on the side of public safety but also want to come up with some path back for the cruise lines to get back into service.
“We all know the tremendous amount of revenue they generate for ports and cities,” he added. “Living in downtown Seattle, it’s devastating not to see those hundreds of thousands of cruise passengers coming through this summer.”
Advisors’ mixed reaction
Travel advisors had mixed reactions to the news, with some praising the CDC for at least providing clarity, if not the timeline they had hoped for.
Michelle Fee, CEO of Cruise Planners, said that the cruise lines’ preparations for resumption during the NSO will enable them to set sail as soon as possible.
“[They] are ready. They were ready before the No Sail was lifted. They were ready to sail in December from all we heard. So now they’ve got to go back and take into account the conditions that [were] added. I think once they can wrap their heads around that and figure it out, we’re going to get a date real soon,” she said. “I’m always a hopeful person, I always see the glass half full, so I’d like to say sometime end of January. But I don’t know how realistic that is. They were ready to go, but of course, now there’s extra hurdles they have to jump over.”
However, Josh Friedman, CEO of California-based Josh Friedman Luxury Travel, said that despite the news, the virus situation worldwide is keeping people from rushing to book. “Whatever they’re seeing is not good enough,” he said.
“It’s not generating any interest, that’s for sure. I don’t see travel rebounding at all until the end of the second quarter.”
Delaney said that the cruise lines did the right thing canceling through the end of December, rather than “trickling out cancellations every few weeks, which created a lot of uncertainty and an environment where passengers aren’t going to want to book because they are afraid it’s going to get canceled again.”
Jamie Biesiada contributed to this report.
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