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Cruise fuel surcharge under review

/ Source: The Associated Press

Florida's attorney general is reviewing whether cruise lines such as Carnival Corp. and Royal Caribbean Cruises Ltd. adequately disclosed surcharges they started billing passengers this month to offset rising fuel prices.

Attorney General Bill McCollum has received 150 complaints from customers regarding the fuel surcharge, spokeswoman Sandi Copes said Tuesday. The charge was announced in November by both cruise lines and it began to be applied on voyages beginning Feb. 1.

"We are reviewing complaints about whether cruise lines can retroactively impose a fuel supplement/fuel surcharge to passengers," Copes said in an e-mail. She added that the primary concern is "the adequate disclosure of surcharges and whether or not consumers are aware of surcharges up front at the point of sale."

The attorney general's office was reviewing whether the charges were applied to passengers who had already booked a cruise when the announcement was made. Both cruise lines have said that they provided customers with enough time to cancel their sailings with no penalties.

Carnival and Royal Caribbean, the world's top two cruise operators, both began a $5 per person, per day fuel "supplement." Both Miami-based cruise lines said the charge applies only to the first and second guests in each stateroom and does not exceed $70 per person, per voyage. Other cruise operators also have added fuel surcharges.

In announcing the charge in November, Carnival Chairman and Chief Executive Micky Arison said the price the company had paid for fuel increased 140 percent over the last three years. The surcharge applies to Carnival brands Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America Line, Princess Cruises, and The Yachts of Seabourn.

However, it's unclear whether a fuel surcharge goes against a 1997 state settlement stemming from accusations of misleading advertising on "port charges" that included additional fees to cover the cost of fuel, fresh water and wages. Travelers complained that they didn't realize the fees were not included in the advertised cruise price.

Several cruise lines, including Carnival and Royal Caribbean, agreed not to put extra charges on their bills unless they were for taxes or government fees.

Carnival spokesman Tim Gallagher said the cruise operator was cooperating with the review.

"We believe that our fuel supplement complies with all applicable laws," Gallagher said.

Royal Caribbean said in an e-mail that it believes the charge is a "fair and reasonable response" to rising fuel costs. The company said in last week's earnings report that its fuel prices in the fourth quarter of 2007 increased 41 percent compared to the previous year.

Royal Caribbean, which also announced its fuel surcharge in November, said it applies to its Royal Caribbean International, Celebrity Cruises and Azamara Cruises brands.

"We intend to continue assessing the supplement on a temporary basis, and may periodically adjust it as fuel prices fluctuate," Royal Caribbean's statement said.

Cruise analyst Robin Farley of UBS Investment Research noted that shares have been under pressure since word of the review got out this past weekend.

Carnival operates 84 ships among its brands; Royal Caribbean has 35 total in its portfolio.