April Lay Ups Could Cost Cruise Operators $1 Billion

Majestic Princess

Over 400 cruise ships are poised to spend April without revenue-generating passengers, leading to lay up costs totaling some $1 billion across the industry, according to a Cruise Industry News estimate.

The estimate takes into account a mostly hot lay up scenario, where ships are kept essentially ready to go operations-wise with a full set of deck and engine crew, and a near fully-staffed hotel crew.

Carnival Corporation recently estimated that such a scenario would cost between $2 and $3 million per month per ship. With the company’s massive economies of scale, with nine brands and over 100 vessels, Carnival should be able to leverage any synergies. Smaller operators may not be as lucky.

However, some operators are already sending hotel crew home, which could help lower layup costs, but incur travel costs home and eventually back to the ships.

Various scenarios offered by analysts have some ships returning to service in Q3 and then in stages throughout the fall and winter, which would see layup costs in some cases continue for several months.

With the global cruise fleet forecast to include 423 primarily ocean-going cruise ships by the end of this year, including 2020 newbuild deliveries, 235 are primarily dedicated to North American sourcing and deployment, 143 are dedicated to Europe and 45 are dedicated to Asia-Pacific, according to the 2020 Cruise Industry News Annual Report.

Eleven newbuilds have gone directly into layup or are expected to, including Virgin Voyages’ Scarlet Lady, Celebrity’s Apex and P&O’s Iona. More may go into layup or see their production schedule extended pending the COVID-19 situation and the market comeback which may be more elongated the longer the virus situation lasts.

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