As airfares soar, cruise lines are on board with summer deals

As summer vacation plans take shape, rising fuel costs have sent itineraries into a tailspin.

The share of US consumers planning vacations abroad or road trips closer to home sank in March, according to survey data out last week from the Conference Board. Fewer than 17% said they plan to travel internationally over the next six months. The last time the measure fell that low was December 2022, when it was 14.7%

Given that gas prices have now surpassed $4 gallon, just 22% of respondents expect to travel by automobile in the next six months, the lowest since 2020.

That’s why this might be your summer to consider taking a cruise.

“We’re expecting a record cruising year,” Stacey Barber, vice president of AAA Travel, told Yahoo Finance. “Cruising’s popularity keeps growing as the industry makes improvements to ships and investments in ports. There are some great sales with high value right now, and, so far, fuel surcharges aren’t being charged.

Air travel costs are sky-high

Many summer travelers may be scared off by ticket shock. Airfares — both domestic and international — have exploded since the war in Iran started: On March 30, an average international trip cost $998, Kayak found, compared with $774 on Feb. 23.
United Airlines warned that it may have to hike prices and prune flights, and Canadian carrier WestJet announced a temporary fuel surcharge.

Global airlines have already begun trimming less popular routes, according to a recent Deutsche Bank report on the airline industry. If jet fuel prices remain persistently high and oil shortages “become more pronounced in Asia and Australia” and spread to Europe, airlines could even cut “their most lucrative long-haul routes,” per the report.

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Setting sail with sweet freebies

For travelers who want to go on an ocean cruise, however, the outlook is more promising.

AAA projects 21.7 million Americans will take ocean cruises this year, up from 14.2 million in 2019. The Caribbean is a popular destination, and summer deals are noteworthy, according to AAA data

“While airlines have spiked fares and may cancel flights if not enough people book, cruise ships have to run all the time, so they’re having sales right now,” Gene Sloan, cruise team lead at the Points Guy, told Yahoo Finance.

“For consumers, it means that while pricing may not seem down all that much from last year, there is a tick up in brands announcing value-add promotions,” he said.

Cruise lines such as Royal Caribbean, Carnival, and Norwegian “try not to cut the actual headline price, but they’re giving more of value-adds, which include, for example, free gratuities,” he said.

Gratuities at many lines are an automatic charge, often $20 per person per day. Cruise lines are also offering free access to specialty restaurants and free Wi-Fi.

Other, more creative types of promotions at the moment include the cruise lines only giving a few dozen of the largest travel agencies special offers that are not made publicly available, according to Patrick Scholes, a Truist Securities analyst. “The cruise companies go about this very strategically with non-publicly available offerings in order to protect price integrity on their websites,” he said.

So far, booking disruptions and cancellations resulting from geopolitical events have been minimal, with only a very modest pullback in Mediterranean bookings over the past three weeks, per Scholes. The only notable cancellations so far for the public companies have been with Viking in Egypt.

And there have been no fuel surcharges — at least not yet. “That said,” Scholes added, “it would not surprise us if the major cruise lines followed suit should oil prices remain elevated.”