$26 Million Still Owed on Mobile Alabama Cruise Terminal

Carnival in Mobile, ALLocal officials in Mobile, Alabama were “shocked” when Carnival Cruise Lines announced it would be pulling the Elation from that port and moving it to New Orleans. Carnival explained that the port hadn’t been as profitable as expected, while locals say the ship was constantly filled. Dealing with a blow to your city’s ego is one thing, but the city still owes $26 million on the terminal that will be empty come October.

Mobile County Commissioner, Connie Hudson, told a local news station that during negotations, Carnival said it would stay as long as business was good – and in her eyes, business was good. The contract gives Carnival the option to break the contract with the city with a 90 day notice, and Carnival is giving much more than that. However, city leaders say that still isn’t enough time to fill the vacancy as cruise itineraries are scheduled years in advance.

Carnival’s Side

One needs to remember that Carnival Cruise Lines is a publicly traded company — one that is responsible to its shareholders and thousands of employees that depend on it to feed their families. As such, it needs to act in the best interest of those parties — not necessarily those of a port city.

There were several reasons Carnival is moving the Elation to New Orleans according to president and CEO Gerry Cahill.

“Although we have consistently filled the ship, it has been at lower relative pricing to the rest of our fleet,” Cahill said. “We have made every effort to drive higher demand and pricing through our sales and marketing initiatives and the deployment of a newer class of ship in 2009. However, we have not been successful in achieving a sustainable level of acceptable pricing.”

Translated into plainer terms – the cruise line may have been at near 100% capacity every time it left port, but if it was only possible to book that level at $100 less per person than it could make in another port – it doesn’t financial sense to stay there.

Relative to other home ports, fuel costs in Mobile were much higher – and scheduled to become even more unfavorable when new, local environmental regulations begin in 2012.

Cruise Ship Forum’s Take

While we feel for the city of Mobile, the decision for Carnival to reposition its ship to a more profitable port is a sound business decision. It is normal for any community that loses a business to feel disappointment, though when money and jobs are at stake, one needs to take emotion out of the equation and look at the facts.

Since the Carnival Cruise Line started operating full time out of Mobile in 2004, the global economy has changed. If in 2004, you would have told someone that giant banks, insurance agencies, and two of the largest car manufacturers in the world would be on the brink of bankruptcy – they would have given you a strange look and continued to pour money into the stock market – because things were great – and no one knew what the future would hold.

The fact Carnival stayed in Mobile as long as they did is impressive. Perhaps the local regulations that are going to increase fuel prices next year were the straw that broke the camel’s back in this case – if that is the case – Alabamians needn’t point the finger at anyone but themselves.

Photo: Press-Register file/Bill Starling

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