Royal Caribbean Cruises Ltd. said Friday it's ending fuel surcharges for now for certain cruises because the global price of oil has come down and stabilized.
"Because it has done those things, we feel it is appropriate to end our fuel supplement," said Royal Caribbean spokesman Michael Sheehan.
After Nov. 10, the cruise line will not charge the fees for new bookings on the Royal Caribbean International, Celebrity Cruises and Azamara Cruises for departures worldwide on or after Jan. 1, 2010.
Royal Caribbean also said refunds of fuel charges for bookings made before Nov. 10 for sailings in 2009 and beyond will be determined quarterly.
Refunds will be given if the closing price of the West Texas Intermediate crude is $65 or lower per barrel on the New York Mercantile Exchange, two weeks before the start of the next calendar quarter.
For instance, closing fuel prices on Dec. 18 will determine refunds in the first quarter of 2009. Refunds will take the form of onboard credits.
Royal Caribbean said it could reinstate fuel surcharges if oil prices trend up.
The company is following in the footsteps of rival Carnival Cruise Lines, which announced two weeks ago that it was dropping its fuel surcharge starting Oct. 31 for new bookings on 2010 sailings. Carnival also pegged a refund on the closing price of crude oil.
Royal Caribbean announced a fuel surcharge in November for sailings on and after Feb. 1, 2008. It has since revised its fuel fees twice.
Currently, Royal Caribbean and Celebrity ships charge $10 per person daily for the first two guests in a stateroom, capped at $140 per person for each cruise. Additional guests pay $5 per person daily with a maximum of $70 per person for each cruise.
Azamara ships charge $15 per person daily for the first two guests in a stateroom, with no caps. But additional guests do not pay a fuel supplement.
While Royal Caribbean stands to lose income from fees, analysts said that these will be offset by savings in fuel.
On Thursday, Goldman Sachs analyst Steven Kent raised his 2008 earnings estimate for Royal Caribbean to $2.68 per share from $2.57 per share because of fuel savings. Analyst Robert LaFleur of Susquehanna Financial Group also expects Royal Caribbean to capitalize on falling oil prices.
He said cheaper oil, ample liquidity and access to sufficient levels of credit should enable Royal Caribbean to weather the current financial storm.