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Why is Alaska losing market share in the global cruise industry?

Broadcast on KTOO FM
By Casey Kelly
Posted on February 11, 2014 at 6:21 am

The Oosterdam was one of the last ships of the 2013 season. (Photo by Heather Bryant/KTOO)

The Oosterdam was one of the last ships of the 2013 cruise season. (Photo by Heather Bryant/KTOO)

Alaska’s share of the global cruise industry is on the decline.

While the number of passengers to visit the state last year was nearly back to the level before the Great Recession, other cruise destinations continue to attract more ships.

The Juneau Assembly on Monday heard about the trend from an industry representative.

Cruise Lines International Association of Alaska President John Binkley. Photo by Casey Kelly/KTOO.

Cruise Lines International Association of Alaska President John Binkley. Photo by Casey Kelly/KTOO.

Long before he was a Republican state lawmaker and candidate for governor, John Binkley worked on his family’s riverboat in Fairbanks, doing tours for visitors to Alaska’s Interior.

“When we were growing up in our family business, my father used to always tell us that, ‘If you’re coasting, you’re going downhill,’” Binkley told the Juneau Assembly Committee of the Whole.

Binkley is now president of Cruise Lines International Association of Alaska, formerly the Alaska Cruise Association. He says the state has been coasting when it comes to attracting tourists.

“I think we’ve taken a lot of it for granted, what we’ve had here in Alaska in terms of the industry, and other destinations around the world have not,” he said.

Almost a million cruise ship passengers sailed to Alaska last summer, an increase from 2012 and nearly back to the levels seen in 2007 and 2008. But Binkley says Alaska’s share of the global market has declined from 6.5 percent in 2006 to 4.5 percent.

He says the companies that belong to Cruise Lines International plan to deploy 24 brand new ships over the next two years. But instead of sending them to Alaska, Binkley says they’ll be heading to places like the Caribbean, Northern Europe, Australia, and Asia.

“In Alaska we’ll fall a bit. We’ll actually be down slightly in 2014,” Binkley said. “Some of this capacity is going to these other destinations that will come out of Alaska.”

Still, Binkley said he remains cautiously optimistic about the future. He says some of the most successful cruise ship ports have partnered with the industry to improve their facilities.

“Recently we appreciate the efforts of the mayor and the administration in reaching out to the industry here locally, saying let’s sit down and talk about what the use of some of those head tax funds will be in the coming year,” he said. “What are some of the needs of the industry? How can we work together to make sure the community is spending those dollars to meet the needs of the industry in the future? I think those are examples of how we need to work together to be successful.”

Assembly member Kate Troll asked Binkley for his thoughts on the city’s planned $54 million expansion of its downtown cruise ship docks, to which he gave a lukewarm response.

“That’s $54 million that comes from the passengers that have to try and afford to come to this destination,” said Binkley. “So it’s great to have those facilities, but when you have to pay a premium for those, that then becomes an inhibitor for people to come, because the cost goes up.”

But Troll said she thinks the docks are still in the best interest of the community and the industry.

“I’m particularly interested in the fact that the proposal would provide conduits for shore side electricity for the cruise ships, so we don’t have to have diesel burning in our port area,” said Troll. “So, yeah, that’s all part of the package of making our port more efficient, more attractive, all those things.”

The project is being funded entirely with Juneau’s share of the state’s cruise ship passenger fee revenue. In 2006, voters approved a citizen’s initiative that included the head tax.

Binkley’s organization successfully lobbied lawmakers and the Parnell administration to reduce the per passenger fee in 2010. Last year, the cruise lines were successful in getting lawmakers to change another part of the 2006 initiative, lowering the standards for wastewater discharge.

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