Will your next cruise see a fuel surcharge? And what exactly is the charge anyway? We dive into all the details below…
If you think refueling is expensive, imagine a cruise ship’s fuel bill. Each year, cruise lines spend hundreds of millions, if not billions, of dollars to keep their ships fueled as they travel the world.
In fact, in 2019 (the last full year before the health crisis), Carnival Corporation spent more than $1.5 billion on fuel for its ships. Is equivalent to more than 4 million dollars a day on all its cruise lines.
Of course, recently the price of oil has skyrocketed to over $100 a barrel. With this, you can expect fuel costs to rise as well. Although the financial hedges put in place by the cruise lines temper this price increase, it is undeniable that the increase in fuel prices will eventually affect the bottom line.
One company – Norwegian Cruise Line Holdings – said in a recent financial filing that it “I estimate that a 10% increase in our weighted average fuel price would increase our projected fuel expenses for 2022 by $63.3 million.
But cruise lines are not powerless in the face of rising prices. The most obvious way to offset the higher cost is to increase cruise fares to cover the increase. But there is another lesser known tool: fuel surcharge.
If you’re cruising during a time of high oil prices, these charges may come into play. Here’s everything you need to know about fuel surcharge charges on a cruise.
What is a fuel surcharge?
As the name suggests, these charges are extra charges added to your cruise to offset the cost of fuel for the trip. Most of the time there is no fuel surcharge. But if you search in the terms and conditions of your ticket contract, you will often find a notice about a possible fuel charge if the price of fuel exceeds a certain threshold.
For example, if the price of crude oil is above $70 a barrel (the “trigger price” varies with each line, and some do not specifically mention a price), then a cruise line reserves the right to veer from board on this supplement. This is even if you have already paid for your cruise.
However, just because the oil level is above this level does not mean that the load is automatically applied. This is at the discretion of the cruise line.
How much is the fuel surcharge fee?
If a fuel surcharge is in place for your cruise, the price varies by cruise line.
For example, Carnival sets out in its terms and conditions that the cruise line reserves the right to charge up to $9 per person per day. So on a seven day cruise it would cost an extra $63 per person.
Norwegian Cruise Line has a similar policybut says their load “will not exceed $10.00 per passenger per day.”
Other lines like Royal Caribbean simply states that a charge could arisebut do not mention a specific price in their conditions.
When can the charge take effect?
Setting up fuel charges is a bit tricky.
Some cruise lines set a price per barrel of oil, above which the charge can be applied. For example, Carnival says that when the price of oil is above $70 a barrel according to the New York Mercantile Exchange (NYMEX) index, it may charge a fee. Norwegian Cruise Line uses a price of $65 per barrel.
But just because the price of oil is higher does not automatically mean that a royalty is applied. For example, right now we don’t see any lines applying the charge yet, even with high oil prices.
Does every cruise line have a possible fuel surcharge?
Not all cruise lines charge extra for fuel, but many do. You can search your cruise line’s terms and conditions and/or passenger ticket contract to see what is mentioned.
Of the major cruise lines we interviewed, most mentioned the possibility of a fuel charge. Here are the details of the three main lines:
Carnival reserves the right to charge a fuel surcharge of up to US$9.00, or its foreign currency equivalent, per person, per day, without notice, in the event that the price of light sweet crude oil according to NYMEX ( New York Mercantile Exchange Index) is above US$70.00 per barrel of oil.
Norwegian cruise line:
Norwegian Cruise Line reserves the right to charge a fuel surcharge without notice if the closing price of West Texas Intermediate Fuel exceeds $65 per barrel on the NYMEX (New York Mercantile Exchange Index). In the event that a fuel surcharge is charged, Norwegian Cruise Line will have sole discretion to apply the surcharge to existing and new reservations, whether or not such reservations have been paid in full. These additional costs are not included in the price of the cruise. The fuel surcharge will not exceed $10.00 per passenger per day.
The Operator reserves the right to impose additional charges related to unforeseen events, including but not limited to fuel price increases. These additional charges may apply, at the sole discretion of the Operator, to existing reservations and to new reservations (whether or not such reservations have been paid in full). These supplements are not included in the Cruise or CruiseTour fare.
Other lines like MSC and Celebrity also mention possible charges due to fuel costs. On the other hand, we haven’t seen any mention of fuel charges for Princess, Holland America or Disney.
I’ve already paid for my cruise. Can I still be charged?
Yes. In the passenger contracts we reviewed, each clearly states that charges can be applied even if you have already paid in full for your cruise.
So you could have paid for your cruise months ago and seen another charge on your account if the cruise line decides to implement the fuel surcharge.
Can I cancel due to fuel costs?
At this point, it’s unclear whether implementing a fuel charge after booking would give you the option to cancel the trip and receive a refund.
Carnival is among the most open with the terms of any charge and they specifically state in the ticket contract that “No right of cancellation shall be implied.”
Other lines don’t mention we’ve seen whether or not you can cancel due to the extra charges. If fees are indeed imposed, we expect to also see more clarity on how this might impact cancellation policies.
Will I know the fuel surcharge in advance?
The official policies we read regarding these charges provide for the implementation of the policy at the cruise line’s “sole discretion” or “without notice” and they “reserve the right” to charge or not.
In our view, we find it unlikely that this will simply be thrown at passengers without warning. That would mean a lot of unhappy guests. Instead, we expect that if these charges are put in place, there would be sufficient notice.
For example, when tipping prices are increased for a cruise line, there is usually several weeks or months notice before the change. Meanwhile, passengers who have already booked their journey are normally grandfathered under the old fares.
While the language of the policies appears to give the power to implement the fuel surcharge fee on short notice – even if the passenger has already paid for it in full – it wouldn’t be surprising to see a more phased approach.
Are fuel surcharges on the horizon?
We can’t say for sure. Our checks of sample bookings on cruise line websites show no mention of these fees at this time. Plus, the cruises we’ve booked before didn’t say anything about the fees either despite significantly higher oil prices.
Cruzely has contacted Carnival and Norwegian Cruise Line about the possibility of implementing fuel surcharges given that these are two lines with specific mentions of fuel prices. They did not immediately return a comment.
In our view, the longer oil prices stay high, the more likely this charge is to come into play. But we haven’t started to see that yet.