Speculating the Future of Cruises

Louies Paolo Abellanosa

Cruise liners and airlines are similar in some aspects of their development. Both were innovations that created a surge of opportunities for business, tourism, and research. The two redefined the meaning of travel and made broader the umbrella industry comprising of hotels, travel agencies, conventions, and resorts sector. Besides the obvious, the two have become and are still being target by government for regulation. The history of airlines describes how the national institutions intervened with ownership and operations to boost tourism and subsequently the economy. During Marcos’ time as president, Philippine Airlines was monopoly of convenient international travel in the country. Likewise, firms such as Alitalia are still under their own national regulation today.

Perhaps a main reason why governments want to create policies governing the use of their international waters for cruise liners is the similar with why the former had done the same for the use of airspace. Being late in development, cruise liners operate at very high cost with returns and margins at the most promising levels. Without the long list of taxes, the savings increase, and these are used for the investment of more ships.

The same is true for airlines during their maiden years. But today’s period is marked with the increase in technological capacity, so that cruise liners aggregate growth rate per year is greater than that of airlines in the 1940s. I have no economic measurements to predict whether cruise liners shall suffer what most airlines suffer today—bankruptcy. Just a few days ago, three Mexican airlines ceased operations because of this financial problem.

Nevertheless, we can speculate. What can be the reasons for cruise liners to lose profitability in the future? One is increased regulation—when a certain country imposes heavy taxes just by entering its territory and a heavier fee for the use of harbors. Second is competition. According to the article, there are only about 200 ships in the start of the millennium. Following the trend of high profitability experienced at this period, investments for more ships shall facilitate for greater number of ships that shall divide the market into bits and pieces.

While these two are general, we can also cite problems regarding safety. Just like the security boost when Titanic sunk in 1912, a major accident for cruise liners can force them to invest on greater security facilities. Cruise liners can also be target of terrorism and public-attention seekers just like the 9/11 attack in the US. Natural violence should also be considered by liners. When the 2006 tsunami hit the coasts of south Asia and parts of Africa, fortunately no cruiser was harmed. But the risk shall be greater with the proliferation of ships due to attractive investment returns. Moreover, global warming is intensifying weather conditions, entailing an equally great investment on equipment and stricter protocol on pollution and accident prevention.

My predictions are based from the common experiences of many airlines in the globe. Whatever commonality we try to assume on cruises, there are still some distinct characteristics that would define the development of this industry into something reasonably distant from that of airlines. An immediate incomparability would be the main essence of cruise ships—transport as destination. While airlines are used to carry cargoes and passengers—something that is not exclusively for tourism use—cruise liners are not necessities of economy. Hence, government intervention to regulate this industry may take us far into the future, when national institutions already intend to share the profits of cruises to alleviate poverty. Until this period though, we can be certain that cruises shall remain a free global business machine that is owned and tamed by no patriot.

(Essay on reaction with the "deterritorialized" nature of cruise ships)