Because I Could

We may not have all done it, but I guarantee that everyone reading this knows someone who, at some point in their lives, has done something just because they could. From putting a super-hero cape around our neck and jumping off the garage roof to see if we really could fly (might have been a towel now that I think about it) to standing sideways with one side of our body against a wall and trying to lift the opposite foot to see if it could be done (it can't), most of us have done something like that.

The speculative run-up in crude oil prices last year was probably the pin that finally popped the U.S. economic balloon. The combination of rising interest rates, gas prices going up $1600 a year per family on average and escalating prices on many other consumer goods was probably what squeezed a lot of families so hard that they began missing mortgage payments and when that happened it was a race to see who could hit bottom first.

Airlines and cruise lines jumped right in as well, adding relatively small fuel surcharges at first, ultimately reaching $11.00 per person per day. It was not until January that cruise lines removed these onerous charges, but did so by adding a qualifier to all bookings from which the surcharge was removed and inserting a provision in all new bookings that stated that if the price of light sweet crude oil on the New York Mercantile Exchange rose above $70.00 per barrel for some period of time (that varies by cruise line) that the cruise line reserved the right to add the fuel surcharge back to all bookings. As I write this, light sweet crude oil is bouncing around $68.00 a barrel as OPEC meets to discuss output and pricing. It is likely that oil will close above $70.00 per barrel in the next few days, or weeks at most.

Vacation travel has been surprisingly resilient this year with cruises especially in demand. Suites and deluxe staterooms have been the first to sell out, in great part because the cruise lines have reduced prices very substantially to stimulate demand (if you're a marketing/economics type, the cruise industry is the poster child for demonstrating price elasticity). As a result, mini-suites are selling for prices more typical of an inside stateroom of five years ago, and we may not have seen the bottom yet. The cruise industry is egg-shell fragile just now and so are many of the retail agencies and agents selling their product.

So what does this all have to do with anything? When oil does go back above $70.00 a barrel, I ask the cruise lines to think long and hard about adding back the surcharge to bookings just because they can. Like the boy jumping off the garage roof, the consequences of taking that step will be painful for the cruise lines and for their retail distribution system. This is really not the time to do something just because you can.

And here's another certainty - all you ladies have finished reading this and are off to other endeavors. The vast majority of the guys are still over at the wall trying to lift their opposite foot off the floor.