Carnival Corporation: IMO Rules & Bahamas-Focused Itineraries

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How would you compare the revenue uplift or the revenue yield?

Why are we, the industry, the Royal "we," sending probably 10 million people to private ports in the Bahamas next year? By 2026, when Celebration Key is fully operational, there will be at least 10 million people visiting private islands on the northern coast of the Bahamas. The big question is why? The answer partly lies in our investments there, but more importantly, it relates to the greenhouse gases policies and regulations issued by the IMO in 2018. The IMO, under pressure from Europe, which already passed its own greenhouse gases law called Fuel Europe, created a situation not intended to penalize cruise lines. Your emissions are calculated based on the distance your ship travels. Every ship has a pollution threshold, and if you exceed it, you face extensive penalties. The question is, why were the cruise lines penalized by that system? Because the IMO considered 400,000 commercial vessels, and the cruise lines are 400. Nobody realized that we are not actually transporting refrigerators from Shanghai to Los Angeles. Instead, we are leaving Nassau, going slow, and when we are in port, we are burning fuel. When you measure the distance we do on an itinerary, suddenly, it's terrible. We will face penalties in the hundreds of millions. So, all around the world, in anticipation of the implementation of the new IMO rules, which have recently been slightly amended for the benefit of the cruise lines and other operators, it means we want to go slow and cover short distances. The shorter and slower we go, the less we impact the thresholds above which we have to pay penalties. Paradoxically, for cruise lines, those ships that only go to the northern Bahamas and travel slowly and short distances will actually allow one-third of your fleet, depending on your size, to go to further destinations because we can pool the emissions between all the ships.

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