Cruise Fuel Rebates About to Kick In?
Written by: Paul Motter
Carnival Corp. announced fuel supplement rebates if the price of oil is $70 or less for 25 days in a row. It has been 15 days. To be exact, the company said you will get a full refund on your fuel supplement payment if the price of oil is $70 or less for 25 days in a row at the 2:30 p.m. close of business on each of the 25 consecutive trading days ending five trading days prior to the your cruise departure date.
OK, that is complicated, but according to my charts the price of light crude closed below $70 on November 5 and has stayed below that price ever since. This means that 12 trading days have passed with the price below $70/barrel.
Since the price is now at $49.62/barrel, I contacted Carnival to see if they are tracking this and they confirmed that if the price stays below $70 then they will start giving discounts starting with the December 18 cruise sail dates. By the way, I originally saw that the price closed below 70 on Oct 21, which would have meant the cutoff date was Dec. 1st. But it did close above 70 for ONE DAY on November 4 setting the deadline back by three weeks – because weekends are not counted.
This is a significant onboard credit, equal to the fuel supplement they charged these customers. The supplement was $10 per person per day. In other words, the onboard credit should equal $140 per couple for every 7-day cruise.
Furthermore, while Carnival has suspended the fuel supplement for cruises departing in 2010, they are still charging it for all cruise sold that sail in 2009. However, based on the current economic situation it appears to me a reasonably safe bet that a cruise you book now for 2009 will very likely qualify for the onboard credit.
In other words, while you will still have to pay the fuel supplement for any 2009 cruise, there is a very good chance you will get it back in the form of an onboard credit on the day you cruise. Remember, the price of oil has dropped below $50/barrel for the first time today, actually trading at $49.62 as I write this. That means it has dropped about 27% since the day it first dipped below $70 barrel. Nothing in this economy has gone UP 27% in the last few months, so it is pretty good bet you will get your rebate.
If you don’t it probably means our economy has improved significantly, and that is also good news. Either way you win. Naturally, the only reason why this shouldn’t remain true for an extended period of time will be if the price of oil creeps back up, or if (Heaven forbid) somekind of cosmic event should push the price of oil up overnight.
This is great news for cruisers – you can effectively take away the fuel supplement from the total cost for any cruise sailing after December 18 st, although you will pay it, you will get it back in the form of an onboard credit.
This will apply to all Carnival Corp cruise lines: Carnival, Holland America, Princess, Cunard, Seabourn and Costa.
Royal Caribbean and NCL have a different approach from Carnival – but surprisingly similar to each other. They are charging no fuel supplements for any cruises departing in 2010. If you book a cruise leaving in 2009, then know that they plan to check the price of oil quarterly to see if fuel surcharges will apply, and whether or not people who pay them will get rebates.
Here is the chart of the date they check the price of oil. If it is below $65 when they check it, then for cruises in the time frames in column number 2 will not be charged when you book, or if you have already booked and paid a fuel surcharge you will recieve a rebate in the form of an onboard credit:
Fuel Price Determination Date Quarter of Possible Fuel Supplement Refunds
December 18, 2008 First quarter 2009
March 18, 2009 Second quarter 2009
June 17, 2009 Third quarter 2009
September 17, 2009 Fourth quarter 2009
December 18, 2009 First quarter 2010
March 18, 2010 Second quarter 2010
June 17, 2010 Third quarter 2010
September 17, 2010 Fourth quarter 2010
As noted, the price of oil is under $50/barrel today, so the chances of it going above $70 or $65 again anytime soon are remote, it COULD happen, however. December 18th is a good day to check in and see what the state of fuel supplements will be – that is the date they will end for Carnival for the first time, and that is the first “check-date” for Royal Caribbean.
UPDATE: Some market people are saying oil is oversold and that the price could come above $70/barrel again in the next two weeks. If it does then Carnival will NOT be offereing the promised discounts. If it is above $65/barrel on December 18 then RCL and NCL will put off their rebates until after the first quartter of 2008, minimum.
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