Cruise ships cleared by CDC to plan return to U.S. waters

By Michael Smith and Jonathan Levin | Bloomberg

The U.S. Centers for Disease Control and Prevention announced Friday that it would lift a ban on cruises in U.S. waters, even as government scientists warned that ships remain vulnerable to deadly Covid-19 outbreaks.

The agency provided a list of detailed requirements that cruise lines must meet to resume U.S. operations — meaning that ships could return to U.S. ports in the next few months.

“This framework provides a pathway to resume safe and responsible sailing,” CDC Director Robert Redfield said in the statement.

Yet with its statement Friday, the CDC said recent outbreaks show cruise travel “facilitates and amplifies” Covid-19 transmission even at reduced passenger capacities and would pose a risk of fueling spread without proper oversight.

The decision, which comes as coronavirus cases are surging in several parts of the U.S., ends a ban that had been in place since March 14. The CDC last month had recommended extending the ban to February, but Vice President Mike Pence, who chairs the White House Coronavirus Task Force, overruled that proposal, according to two people familiar with the matter.

Getting back to sea may not be simple. The initial phase will require cruise operators to “demonstrate adherence to testing, quarantine and isolation, and social distancing requirements to protect crew members while they build the laboratory capacity needed to test crew and future passengers,” the agency said.

Carnival Corp., the largest operator, gained as much as 12% in New York trading. Royal Caribbean Cruises Ltd. was up as much as 7.4% while Norwegian Cruise Line Holdings Ltd. rose 8.2%.

Catastrophic shutdown

The seven-month shutdown has been catastrophic for an industry that was booming before the pandemic struck. It has cost thousands of jobs and generated billions of dollars in losses. Since the end of January, the three biggest cruise lines, Carnival, Royal Caribbean and Norwegian, have lost tens of billions of dollars in combined market capitalization.

Since the order was imposed in March, the CDC has faced intense pressure by the world’s biggest cruises lines and the White House to end it, Bloomberg reported.

The cruise industry has gone on a blitz this year to convince the Trump administration to lift the order, doubling the number of lobbyists who targeted the White House, Congress and numerous federal agencies, disclosures show. Major cruise lines also have presented detailed plans to make ships safer from Covid-19, with recommendations that include sailing initially with fewer passengers, eliminating food buffets and requiring face masks and some testing for the virus onboard.

The CDC can impose no-sail orders due to public health threats under federal law, but Pence and the task force view the CDC in an advisory role, along with other federal agencies like the Department of Homeland Security, according to a senior administration official who asked not to be named to discuss the task force’s approach.

That view has led the White House to clash with CDC cruise-ship experts and overrule them in some cases. Pence’s decision last month to override extending the ban to February was first reported by Axios. The White House task force intervened similarly last spring to shorten an extension proposed by the CDC, according to three people familiar with the matter.

Return unclear

It’s unclear when cruise lines will return to filling ships with passengers again at U.S. ports, despite the end of the no-sail order. Cruise lines had already voluntarily halted cruises until Oct. 31 and canceled many cruises planned for the rest of 2020. Carnival recently said that “November 2020 operations will not be feasible,” but there’s solid demand for bookings next year. “The company believes this demonstrates the long-term potential demand for cruising,” Carnival said in an Oct. 12 statement.

The CDC has made it clear cruises are a long way from being safe from coronavirus. As of Sept. 28, 124 cruise ships, or 82% of the U.S. fleet, had suffered Covid outbreaks, killing at least 41 people and sickening 3,689, the CDC said late last month. And recent cruises in other countries suffered Covid outbreaks despite implementing the same measures U.S. cruise lines are proposing.

Paul Golding, an analyst with Macquarie Group, said the cruise lines face hard decisions irrespective of the CDC lifting the no-sail order. Rising Covid cases will weigh on consumer sentiment, he said. “It’s not likely to be a watershed moment for cruise resumption,” he said of the CDC decision.