Covid-related cruise shutdown has cost Alaska more than any other state

Alaska has suffered a revenue loss from the lack of cruising this year greater than any other state on a per capita basis, according to a report from the Federal Maritime Commission.

“In 2019, twice as many people than the number who live in the state came to Alaska and took a cruise,” said commissioner Louis Sola. “With the suspension of the cruise season, the economic activity of 1.3 million was wiped out of the Alaskan economy for the year.

“Under the best of circumstances and in any other state, there would be no disguising the consequences of losing that much revenue. In Alaska, in the context of the cruise industry, the consequences are greatly exacerbated.”

The FMC began a fact-finding mission in April into the impact of the cruise shutdown on the cruise industry and ports that rely on it, and it ordered Sola to engage industry stakeholders to “identify commercial solutions to Covid-19-related issues that interfere with the operation of the cruise industry.”

In June, a month where cruising is typically at full steam in Alaska, we examined the impact of the loss of big cruise ships.

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This interim report looked specifically at the economic impact of Covid-19 on the cruise industry in Alaska, Washington, and Oregon. Sola said the findings indicated that “passenger cruising is a vital part of the Alaskan tourism business and the loss of an entire cruise season has led to the loss of revenue for a disproportionate number of Alaskans.”

The report examined 16 Alaskan ports as well as ports in Seattle and Astoria, Oregon, and chronicled the economic impact the canceled 2020 cruise season is having on residents and tourism-related businesses. The FMC said that Sola traveled to the Alaskan cities of Anchorage, Whittier, and Seward and met with elected officials, port directors, business executives and labor leaders.  

The report said visitors to Alaska increased 45% between 2010 and 2019, to 2.2 million. Of that 2019 figure, 60%, or 1.3 million, were cruisers.

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Sola said that some port facilities exist solely to support passenger vessels and a segment of the hotel sector specializes in serving cruise passengers.

The report also said that the difference between Alaska and other states is that in many Alaska locations the cruise industry may be the only economic driver.

“If a ship does not call, especially at some of the smaller cruise-focused ports in Alaska, people do not make money,” Sola said. “If there is no cruise ship in port, there is no work for the longshoremen.  If there is no cruise ship in port, no one is shopping in local businesses or eating in local restaurants.  If there is no cruise ship in port, landside tour companies have no clients. In many places in Alaska, the cruise business is the local industry.”

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Sola also said that the loss of the cruise season means the the loss of direct contribution the cruise companies make to the state from the thousands of cruise line employees based there, such as those who work in cruise-owned lodges and within its cruisetour operations, who pay rent, shop in grocery stores, eat in restaurants and purchase services. Furthermore, cruise lines and their subsidiaries spend close to $300 million in procuring goods and services from Alaska-based companies, the report said.

The report noted that Alaska’s cruise industry is closely tied to Washington state. The port of Seattle serves as the homeport for many cruise ships and more than one million individuals fly in and out of Seattle-Tacoma Airport to take cruises each year.

“The hotel, ground transportation, and tourism sectors have all been affected by the cessation of cruise operations in general and the suspension of the Alaska season in particular,” the report says.