From left to right: Stein Kruse, president and CEO of Holland America Line; Kevin Sheehan, CEO of Norwegian Cruise Line; and Adam Goldstein, president and CEO of Royal Caribbean International on the State of the Industry panel at Seatrade Cruise Shipping Miami Conference and Exhibition // © 2010 Seatrade
In a battle that went on to virtually the last possible moment before adjournment, the Alaska State House passed a bill late Sunday, April 18, reducing the head tax on cruise passengers. The 27-13 vote was preceded by a number of recesses as members worked to sway one another toward acceptance or rejection of the measure.
Alaska Cruise Association president John Binkley has blamed the state’s regulatory measures and $46 per passenger head tax for Alaska’s 14.2 percent drop in cruise capacity, with 140,000 fewer cruise passengers projected this year after 30 years of growth. The association had filed suit in federal court over the collection and use of the head tax, a suit that will not be pursued now that the tax has been cut.
During the State of the Industry session at the Seatrade Cruise Shipping Miami Conference and Exhibition in March, Holland America Line (HAL) president and CEO Stein Kruse sharply criticized the taxes and “overzealous regulations” in Alaska.
“We can and will redeploy our ships,” Kruse said. “The regulations in Alaska are more burdensome and more costly than anywhere else on earth.”
Alaska’s Governor Sean Parnell met with cruise line leadership including Kruse; Carnival Corp. chairman and CEO Micky Arison; Royal Caribbean Cruises Ltd. chairman and CEO Richard Fain; Norwegian Cruise Line CEO Kevin Sheehan; Celebrity Cruises president and CEO Dan Hanrahan; Crystal Cruises president Gregg Michel; and Charlie Ball, president of Alaska land operations for both Princess Cruises and HAL. The meeting led to the governor’s recommendation of reducing the tax to $34.50 and arranging a fair allocation of the monies to ports, some of which have their own local head taxes. One of the complaints from the cruise lines was that the revenue raised by the head tax was being used for inland projects having nothing to do with the cruise industry.
The cruise lines have pledged to work to bring ships back to Alaska, but Ball clearly stated during an Alaska panel at the convention that, given the two-year advance scheduling pattern, the earliest possible date to increase capacity in Alaska would be 2012.