Cruise Lines Eye 40-Year Service Life
“If we can have our assets for up to 40 years we will,” said one senior cruise line executive at a recent industry event.
Cruise ships have traditionally been built and designed with a 30-year service life for their first owner, before being sold into secondary or non-competing markets.
That service life is now extending with large-scale drydock projects making existing tonnage competitive, with over 100 ships set to drydock this year, according to the 2020 Drydocking and Refurbishment Report by Cruise Industry News.
Better yet, with some new ships paying for themselves in as little as five years or less, an extended service window continues the earnings potential.
Classic ships can also serve new or untapped markets, while new ships compete against other new ships in the big-market homeports in North America, Asia or Europe.
When Cuba opened temporarily for U.S. travellers, it was the older tonnage from the mainstream cruise lines that were able to serve Havana, where the port offers limited infrastructure and can’t handle modern mega-ships.
But it comes down to the bottom line, according to previous remarks made by Carnival Corporation President and CEO Arnold Donald on the company’s 2018 year-end and fourth-quarter earnings call.
"We'll continue with the ship in the fleet if it's relevant to the guests and its earning is key if it's not then the ship will be gone,” he said.