Changing Mandates Affect Aggregate Planning For Cruise Lines

July 5, 2021
Changing Mandates Affect Aggregate Planning For Cruise Lines

Cruise companies have awaited and processed ever-changing reopening mandates from the CDC for months. Some, like Norwegian and Carnival, plan to move cruises away from U.S. departure ports to other countries whose requirements are already in place and are less restrictive.

The first cruise ship to depart from the US in fifteen months, Celebrity Edge, left port in late June, and returned after a five day cruise. More cruise ships are set to depart over the summer. Royal Caribbean has announced that all of its summer cruises are fully booked.

Video Spotlight: 

This post is based on the US News & World Report article, When Will Cruises Resume?, by Nicola Wood, July 1, 2021; the Condé Nast Traveler article, Cruising is Returning This Year, Here’s What to Know, by Scott Laird, May 4, 2021; the Forbes article, Norwegian Cruise Line CEO says U.S. ships are unlikely to sail this summer, calls CDC guidance ‘unfair’, by Nadine El-Bawab, May 7, 2021; the Travel Weekly article, When will cruise ships sail? The latest cruise line restart dates, by Johanna Jainchill, June 10, 2021; and the YouTube videos in the Spotlight. Image source: StockStudio Aerials/Shutterstock

Discussion Questions:

1. What unique advantages do cruise companies have in regard to location planning that many other businesses do not?

Guidance: Many businesses that operate within the travel industry operate from a fixed location.  For instance, restaurants, hotels, rental car companies, and theme parks have been at the mercy of local lockdown regulations and CDC guidelines throughout the pandemic.  Although the industry as a whole has been hit particularly hard during the pandemic, some cruise companies have had a bit more flexibility when it comes to their points of operation.

Cruises with less than 250 passengers were still permitted to run during the pandemic.  Companies like American Cruise Lines and American Queen Steamboat Company added more offerings on the Mississippi River and created new itineraries in the Great Lakes and Pacific Northwest to cater to people who want to cruise but wanted to stay relatively closer to home. Last summer, some lines began operating from international ports, but to date, most cruises departing from U.S. ports have not been allowed to launch.

In recent months, continued uncertainty about pending CDC rules led more cruise lines to move their departure points outside the U.S. while still embarking with U.S. passengers.  Viking and Royal Caribbean, for instance, hold registries in Bermuda and the Bahamas, so they moved cruise departures there for Summer 2021.  Similarly, Norwegian and Celebrity scheduled Mediterranean departures from ports in Greece, Turkey, and Croatia, knowing that entry requirements for their international patrons would be simpler and easier.

In addition, Iceland, Mexico, and French Polynesia have already okayed cruising for fully vaccinated and/or COVID-tested patrons. Thus, because of the ability to relocate ships to different ports around the globe, cruise companies have a unique set of location planning options before them than do some in the tourism business.

2.  How does aggregate planning play a role in the plans to relaunch cruises from U.S. ports?

Guidance: Aggregate planning involves looking two to 18 months into the future to try to roughly match capacity and demand.  Demand appears strong for the cruise lines, with Norwegian reporting unprecedented levels of bookings for 2022, despite higher prices.  Even in the shorter term, many people are ready to travel this summer and have saved money during the pandemic to do so.  However, cruise lines, like large ships, need time to maneuver.  Scaling back up from pandemic closures requires time and training for employees on new COVID-related protocols.

As a result of pandemic-related layoffs, many employees were laid off.  In Florida alone, for instance, an estimated 160,000 jobs were either directly or indirectly tied to the cruise business.  It will take time for cruise companies and related businesses to rebuild their staffs, something that is proving difficult in many industries as generous unemployment benefits and personal reasons make people reluctant to re-enter the workplace.

While it looks as if the CDC will set aside complex mandates to simulate voyages prior to reopening regular voyages, cruise line employees will require vaccinations.  That process will take time for those who have not yet had their shots.  Ships themselves must be readied, and food and other supplies must be ordered and restocked.

Norwegian Cruise Line’s CEO in May 2021 had said it was unlikely they would have a ship ready to sail from a U.S. port in July, and doubted even August would be possible.  He reported that the CDC’s restrictions and requirements have been unfair and oppressive for the cruise industry as compared to other types of businesses. With later guidance from the CDC, NCL has been able to add several cruises for the summer.


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