Interview with Alfredo Serrano, Director of CLIA Spain

*CLIA (Cruise Line International Association) is the world's leading association of cruise lines.

Almost the entire global cruise fleet has voluntarily suspended operations for at least a month, and some companies have already announced longer shutdowns. What are the operational complexities of such a significant decision?
As you point out, the complexity is enormous. Consider that a scheduled shutdown, such as dry-docking, takes months of preparation. Choosing the optimal location, disembarking passengers, determining the necessary crew, repatriating those going on vacation, organizing the logistics of materials and supplies, and so on. And this is just for one ship. Imagine doing it on all the ships in a fleet simultaneously, with only a few hours or days to organize it. Let's also consider that some ports are closed to passenger ships, that air connections are scarce, that there are restrictions on certain nationalities traveling, that consulates that issue visas are working at a slow pace due to established quarantines, that some countries are refusing the return of even their own citizens if they have not previously undergone a medical analysis carried out by their own doctors before they can board the return flight…

Right now, companies are focused on finding a stable "layup" situation. Once this occurs, we will all take advantage of this temporary suspension to continue focusing on our public health protocols and policies and preparing for the restart of operations.

Are any cruise ships still sailing? Have they all returned to their homeports?
As of March 30, 2020, 93.9% of the CLIA fleet had no passengers, and 3.6% were completing their itineraries so they could disembark passengers at the end of their voyages. A few ships were in port awaiting disembarkation.

Have all passengers been repatriated yet?
Flight restrictions and port closures have created some logistical challenges; however, shipping companies are working to resolve them as soon as possible.

In the case of the US, where the greatest challenges have arisen, the government has assured that US ports will remain open to returning ships so that passengers and crew, regardless of their citizenship, can return home, and they are asking ports and governments around the world to adopt a similar approach.

We can list several cases, such as the Grand Princess, which docked in Oakland, California, where authorities provided flights and buses to their countries of origin or military bases for a 14-day quarantine. Or the MS Braemar (Fred. Olsen), which managed to dock in Cuba on March 18, 2020, for the disembarkation and repatriation of passengers, as well as the MSC Fantasia, currently in the port of Lisbon, for which buses and flights were chartered to repatriate non-Portuguese citizens.

What is the situation with the crews? Are they waiting on board?
The situation varies depending on the company and the ship. Of course, in all cases, a minimum safety crew is being maintained on board. Some ships are in the process of repatriating some of their crew members, but the companies are facing the same logistical challenges that affect our customers in getting their crews home.

Some cruise lines, however, have opted to convert their ships into long-term residences for their crews after confirming their good health and allowing them access to areas previously reserved for guests, thus making their stay more comfortable. Others, for example, have raffled off the best suites among the onboard employees, where some become guests of their own colleagues.

What does this for the sector? There are many businesses within the cruise industry that are directly affected—port agents, suppliers, etc. Have you estimated the direct and/or indirect economic impact of this shutdown?
The cruise industry is a vital artery for the global economy. Our community's activity supports travel agencies, airlines, hotels, and a broad supply chain of industries that spans the globe, the vast majority of which are small businesses. Worldwide, the cruise industry supports approximately 1.17 million jobs and contributes US$150 billion annually to global economies.

In terms of operating losses to date, based on the information we have, a three-vessel operator will suffer losses of more than €20 million over the next two months. Extrapolating this figure across the entire sector leads to a total loss of more than €2 billion for each month that operations are suspended. This figure represents the net loss, after taking into account operational savings.

We must also consider the indirect and induced impacts of our activity on all aspects related to suppliers, travel agents, airlines, hotels and restaurants, taxes, etc. We fear that the impact on the entire value chain will be much greater, but we do not have data at this time. 

Spain is the second most popular cruise destination in Europe and the fourth largest source of cruise passengers, and Barcelona is the most important cruise port in Europe and one of the most important in the world. Will Spain play a significant role in the industry's recovery?
The cruise community is fundamental to the Spanish and global economy, and we know it will be a significant contributor to driving economic recovery once the current situation ends.

Spain is a very important part of this; we contribute €4.3 billion and create 33,000 jobs. In the case of Barcelona, ​​according to a 2015 study by the University of Barcelona, ​​€230 million was generated for the Balearic economy as a contribution to GDP. Today, those figures would be even higher.

It is impossible to know at this time when and how the recovery will occur and what role each market will play, but one thing is clear: this is a strong and resilient industry. That strength stems from the quality of the product we offer. Many people want to enjoy their holidays on a cruise; many Spaniards want to and will continue to do so, and many foreigners want to do it as a way to get to know our country. Furthermore, Spain has excellent infrastructure to accommodate this traffic. Finally, although a very vocal minority has been spreading misinformation about this in recent times, the majority of our citizens welcome our industry and appreciate our commitment to sustainability. All of this leads me to view the future with cautious optimism in the medium term.

Cruises are primarily sold through travel agents, a sector severely impacted by this crisis. Is it reasonable to expect that major cruise lines will develop return-to-normalcy plans that include support for their networks?
While commercial policies are beyond CLIA's purview as a member trade association, we have been impressed by the cruise industry's generosity and flexibility during this challenging time. Cruise lines are already demonstrating the utmost responsibility in scrupulously honoring their refund obligations in the event of cancellations, actively protecting their distribution channels. We have no doubt that this support will extend as far as possible. The travel agency segment was already one of the hardest hit during the previous crisis. It is a vital part of our value chain, and we will do everything we can to protect it.

On the other hand, CLIA submitted a document to the European Commission requesting a series of aid measures for the sector to mitigate the impact that the entire industry may suffer. We hope they will be taken into consideration.

Where is the fleet currently docking? Spain does allow cruise ships to dock in its ports. Is this happening?
They are scattered across different locations on different continents. In some cases, passengers have been allowed to disembark while the crew remains on board. Others are docked in port with no passengers or crew on board, and some have been denied disembarkation at certain ports and have had to proceed to another where they were given permission to do so. 

With few exceptions, Spain is not being particularly welcoming to cruise ships seeking refuge in our ports during this period. The situation is fluid and subject to change, but at the moment we are aware of five ships in the Canary Islands ports and one on the mainland. Imagine that, as the resumption of operations draws nearer, ships that are further afield will approach our shores and request berths to prepare for that restart.

Some companies have offered their ships as hospitals in certain countries. Is this a global initiative?  Could something like this be done in Spain?
Yes, some cruise lines, such as Carnival Corporation in the US, have made this offer, and it's yet another example of our sector's commitment to global health and to contributing in this critical situation.

Other companies such as MSC, which has one of its largest ferries belonging to the GNV brand in the port of Genoa, have made an agreement with the Genoa city council and the Liguria region, and have made this vessel, operational since March 20, available as a floating hospital with a capacity of up to 400 beds.

This crisis has occurred at a time of unprecedented growth for the sector, with a cruise order book of over 120 ships and more cruise passengers than ever before. Doesn't this present the moment to analyze the past, reshape the future, and see what lessons we can learn from all of this?
Our sector has demonstrated in the various crises we have experienced that it is very resilient and recovers with increasing speed. The magnitude of this pandemic is unprecedented, and when we take full stock of all the damage and impact it will have, we must implement the recovery plan we are already working on.