Cruise line f inally relents on refunds

After weeks of resisting, Carnival agrees to give customers their money back, David Lazarus writes.

Craig Morris, his wife, two kids and three grandchildren are no longer booked on a seven-day holiday in hell.

But they were fought by the cruise operator, Carnival, every step of the way.

Morris, 71, and his family were booked into three cabins on the Carnival Panorama, which was scheduled to set sail from Long Beach on April 11.

Until Monday, Carnival had insisted the Riverside resident was out of luck if he wanted his $7,500 ticket cost refunded. Instead, the company said he and his family could book a different cruise at any time over the next 12 months.

Needless to say, that wasn’t a very appealing option.

“We’re not going to take any cruise over the next 12 months,” Morris told me. “At my age, I can’t risk it.”

Carnival announced Monday that it will extend to May 11 a voluntary suspension of voyages and will offer refunds to passengers whose trips have been canceled.

The fact that Morris had to spend weeks battling the world’s biggest cruise operator over a refund illustrates the frustration many travelers have experienced recently with cruise ships, airlines, hotels and other businesses that didn’t want to forgo profits, regardless of the circumstances.

“It’s ridiculous,” he said. “I’m amazed it took them this long to act.”

Recent horror stories about people being trapped on cruise ships as the coronavirus raged from deck to deck would make any pending holiday at sea appear more like a death wish than a restful vacation.

On Friday, the Carnival-owned Holland America Zaandam reported that four people had died on the vessel and dozens more were exhibiting coronavirus symptoms.

Yet Morris, who figures he and his wife have taken about a dozen cruises over the years, told me he couldn’t get Carnival to listen to reason.

“I paid $7,500 last July for this trip,” he said. “But no matter how much I explained how dangerous this is, Carnival kept saying they wouldn’t refund my money.”

Carnival’s intransigence over the past few weeks mirrors that of many other cruise operators and leading airlines. Yes, you can reschedule. But, no, in most cases you can’t have your money back.

Meanwhile, cruise operators, airlines, hotel companies and others in the hospitality trade haven’t hesitated to seek taxpayer cash to keep them afloat during the pandemic.

There’s a case to be made for bailing out ailing U.S. airlines, although, as I’ve written, it should come with strings attached. Cruise lines are a tougher sell, bailout-wise.

Like airlines, these companies lavished the multibillion-dollar windfall of President Trump’s tax cuts on themselves, indulging in stock buybacks aimed at padding the pockets of shareholders.

That’s bad enough. Even worse is the fact that most major cruise operators are incorporated outside the United States and don’t pay federal income taxes.

Carnival’s headquarters is in Miami but the company is incorporated in Panama. Most of its ships, including the Carnival Panorama, fly the Panamanian flag.

Foreign flags allow cruise ships to skirt stricter U.S. regulations, including safety rules, and to take advantage of home ports’ more advantageous tax benefits.

The $2-trillion aid package signed into law Friday appears to leave the cruise industry out in the cold. It limits financial assistance to U.S.-incorporated companies with a majority of workers based in the country.

But the industry may still receive its slice of bailout pie. Trump said last week that aid for cruise lines remains in the cards.

“We are going to work very hard on the cruise-line business, and we are going to try to work something out,” he said, singling out Carnival as “a great company.”

Carnival announced in February 2018 that it would spend up to $1 billion repurchasing its own shares as part of a plan for “increasing shareholder returns.”

Over the span of three years, the company said, it had allocated $3.5 billion for stock buybacks and doubled quarterly dividends paid to shareholders.

Morris started rethinking his upcoming family cruise to Mexico while watching the drama of the Diamond Princess play out last month off the coast of Japan.

More than 3,700 passengers and crew members were stuck on board the Diamond Princess as the coronavirus tore through the vessel. Over 700 people tested positive. At least 10 have died.

A second Princess ship, the Grand Princess, docked in Oakland this month after a trip to Hawaii. At least 103 passengers tested positive for the coronavirus. Two have died.

Princess Cruises is a Carnival subsidiary.

“When I saw all this happening, I was petrified,” Morris said. “There was no way I was taking my family out on a cruise.”

He didn’t have travel insurance, but that might not have helped. As I’ve previously reported, epidemics are routinely listed among exclusions in most travel policies.

“I called Carnival and explained our situation and asked for a refund,” Morris said. “All they were willing to offer was a credit for a future cruise.”

Vance Gulliksen, a Carnival spokesman, told me last week that rules are rules. This was before Monday’s announcement that Morris’ cruise had been called off.

“Please understand that this is a special circumstance, and normally guests like Mr. Morris and his traveling companions who did not purchase travel insurance would be subject to our cancellation guidelines,” Gulliksen said.

Those guidelines require that passengers forfeit 75% of their fare for any cancellation made between 29 and 15 days before a cruise.

Cancellations made 14 days or fewer before a cruise require passengers to give up 100% of the booking cost.

Gulliksen told me Monday that Morris now “can opt for a full refund.”

“We remain committed to our return to service and will use this time to continue to build additional processes, protocols and resources to protect the health and safety of our guests, crew and the destinations we serve,” Carnival said in a statement.

“We thank our guests for their understanding and look forward to welcoming them on a future Carnival cruise.”

I asked Morris if that was in the cards.

“No,” he replied without hesitation. “Maybe a Disney cruise. We’ll never go with Carnival again.”

Carnival’s shareholders might want to put that long-term customer feedback alongside the shortterm gain of all those stock buybacks.