The coronavirus pandemic’s blow was felt across many different industries, but the impact was particularly crippling to the cruise industry.
Even after surviving norovirus, Sars, and other disease outbreaks, the industry seems unprepared to deal with the magnitude of COVID-19 and its effects.
Many cruise ships are docked with no certainty when operations will resume. Carnival, the biggest cruise line in the world, is losing $1 billion a month to maintain its docked fleet.
In addition to coronavirus risks and gaining public trust, the cruise industry faces another challenge: Issuing refunds to an unprecedented number of customers impacted by canceled voyages.
Millions of Dollars per Month Owed in Cruise Refunds
Cruise cancellations have left millions of would-have-been passengers with two options: They can get a Future Cruise Credit (and perhaps some OnBoard Credits) or a refund.
Although customers report having received their Cruise Credit from Carnival Cruiselines, those who opted for a refund have complained that they are still waiting to get their money returned.
According to Carnival Chief Financial Officer David Bernstein, the country is handing out an estimated $200 million in refunds every month.
He attributes the delay in refunds to “hurdles to normal business operations, which included an unprecedented number of guests impacted by canceled voyages, a shift to work-at-home for call center employees, and the need to reprogram systems to handle the volume.”
In an interview, CEO Arnold supported this point, stating that the company wasn’t set up to accommodate the flood of refunds but the company is “committed to getting people who want refunds their money back.”
Where Will Your Refund Money Come From?
Considering the $200 million in monthly refunds owed by Carnival and the state of the cruise industry, we have to wonder where the refund money will come from.
Current Quarterly Earnings Total a Fraction of Total Losses
Their second-quarter earnings report didn’t exactly inspire confidence: According to the cruise line, Carnival brought in only a mere $700 million in sales and cruise deposits but suffered $4.4 billion in losses during the second quarter, which ended May 31.
2021 Bookings Look Okay, But What About Now?
Even though the company reports a strong number of bookings for 2021, Carnival still has some rough sailing ahead. The halt of operations has had a huge impact on the company’s financials and the impact will continue to grow the longer operations are paused.
The First of Many Cruise Ships Sold
One possible source of refund money? Carnival is slated to sell six ships within the next 90 days. Already, the cruise line has sold off the first of them.
In late June, Carnival sold its Costa Victoria ship to the San Giorgio del Porto Group shipyard, where it will be scrapped. We are still waiting to learn which other ships from Carnival’s line will be sold.
What Rights Do Cruise Customers Have?
In response to the lack of reliability among cruise lines with ticket refunds, the Federal Maritime Commission (FMC), a federal agency responsible for the regulation of U.S. international ocean transportation has conducted an investigation.
They recently released a report with recommendations to create a uniform standard for distributing refunds. The report proposed the addition of the following regulations to cruise line policies:
- When a cruise is canceled or boarding is delayed by 24 hours for reasons other than government orders, refunds are required to be paid within 60 days
- If a customer cancels a cruise that could be impacted by a public health emergency but the sailing hasn’t cruise, the cruise company must provide a future cruise credit.
- A cruise company may set a deadline that is not less than six months after the cruise.
- Refunds should include all fees and be processed in the original form of payment.
About the Author:
Andrew Winston is a partner at the personal injury law firm of Winston Law. For over 20 years, he has successfully represented countless people in all kinds of personal injury cases, with a particular focus on child injury, legal malpractice, and premises liability. He has been recognized for excellence in the representation of injured clients by admission to the Million Dollar Advocates Forum and named one of America’s Top 100 High-Stakes Litigators. Mr. Winston is AV Preeminent Rated by the Martindale-Hubbell Law Directory, enjoys a 10.0 rating by AVVO as a Top Personal Injury Attorney, has been selected as a Florida “SuperLawyer” from 2011-2020 – an honor reserved for the top 5% of lawyers in the state – was voted to Florida Trend’s ”Legal Elite,” recognized by Expertise as one of the 20 Best Fort Lauderdale personal injury attorneys, named one of the Top 100 Lawyers in the Miami area for 2015-2017, and one of the Top 100 Lawyers in Florida for 2015-2017 and 2019.
