Carnival Corporation History - Part 3
- 1 Introduction
- 2 Continued delivery of earlier post-Panimax cruise ship designs
- 3 Continued delivery of earlier absolute-Panamax cruise ship designs
- 4 ex Renaissance Ships
- 5 A transatlantic liner for the twenty-first century
- 6 Further development of existing designs
- 7 Comparative cruise fleets at the end of 2006
- 8 Ships on order for the three major cruise groups - January 2007
- 9 Comparative Financial Results 2006
- 10 Comparative Operational Performance 2006
- 11 Bibliography
- 12 Photographs
The article Carnival Corporation History – Part 1 covers the period from Ted Arison’s cruise trade debut in 1968, up to his retirement in 1990. Carnival Corporation History - Part 2 continues the history up to the acquisition of P&O Princess in 2003. This article covers the Carnival story up to 2006. Since 1990 the group has been controlled by Ted’s son Micky Arison.
When Ted Arison retired Carnival had grown to become one of the leading cruise companies. In the period covered by this article it has dominated the phenomenal growth of the cruise industry. In 2006 Carnival carried over 7,000,000 cruise passengers, representing just under 50% of the market. Royal Caribbean, its nearest rival is now about half the size of Carnival, whilst the third player, Star, is only half the size of Royal Caribbean. This article and Part 2 record the growth of Carnival and its construction and acquisition of the largest fleet of passenger ships the world has ever seen.
Continued delivery of earlier post-Panimax cruise ship designs
The development of the first post-Panamax cruise ships up to 2003 is covered in detail in Carnival Corporation History – Part 2. The following ships were delivered after 2003: -
Carnival Destiny class: -
- Costa Magica (2004)
Carnival Conquest class
- Carnival Valour (2004)
- Carnival Liberty (2005)
- Costa Concordia (2006)
Photo 1: Costa Concordia
A further four ships of this class were on order at the end of 2006.
Continued delivery of earlier absolute-Panamax cruise ship designs
The development of the first absolute-Panamax cruise ships up to 2003 is covered in detail in Carnival Corporation History – Part 2. The following ships were delivered after 2003: -
8000 Class: -
- Carnival Miracle (2004)
Photo 2: Carnival Miracle
- Westerdam (2004)
- Noordam (2006)
Photo 3: Noordam
ex Renaissance Ships
Although Carnival builds ships in multi-vessel series, the decor of the public rooms in each ship is different. Renaissance Cruises adopted the opposite policy, where every ship is exactly the same, internally and externally. The company began trading in the early 1990s with eight identical 4,000 ton mini-cruise liners financed by the Italian government in a vain attempt to keep some smaller Italian shipyards open. To add to the design uniformity, the ships were named Renaissance One through to Renaissance Eight. The project was an abject failure, but undeterred Renaissance Cruises decided that the only problem was that the ships were not big enough!
Renaissance then ordered eight identical 30,000 ton ships in France at $180 million each with first being delivered in 1998 and the last in 2001. These ships were still too small and as a result too expensive per berth. They were named R One to R Eight. As a further marketing handicap the owners decided not to pay travel agency commission. The company became bankrupt in 2001 and the French banks repossessed the ships. Carnival bought three at knock-down prices. Their basic specification is: - 30,227 grt; 181 metres Loa; 25.46 metres beam; 702 passengers; 372 crew; service speed 18 knots (20 knots trials)
The ships in the class are: -
- Pacific Princess (1999) ex R Three
- Tahitian Princess (1999) ex R Four
- Minerva II (later became Royal Princess) (2001) ex R Eight
Photo 4:Minerva II
A transatlantic liner for the twenty-first century
Photo 5:Queen Mary 2 in Hamburg
Most of Cunard’s senior management were delighted when their company was acquired by Carnival in 1998. At long last they belonged again to a shipping line. The years of constant struggle to maintain Cunard’s professional standards against the odds were over. Moral was up. They hoped that Cunard would be allocated one of Carnival’s new cruise ships to provide a fitting partner to work with QE2. They were all stunned when Micky Arison told them that he wanted them to build a classic ocean liner. The initial reaction was one of disbelief. Everyone had lived so long with the concept that QE2 was the last ocean liner that it took a little time to for Micky to convince them that he was serious. A full design study was commissioned under the leadership of Ian Gaunt and Stephen Payne.
One of the first tasks was to question the need for an expensive, fully fledged liner. The reduced earning capacity from finer lines and the heavier construction of a liner was thought to add at least 40% to the price of a cruise ship with comparable passenger capacity. Many cruise ships transit from North America to Europe in the spring and return in September. Why not build a faux liner like Disney Wonder – a cruise ship pretending to be a liner? A large faux liner with enhanced speed could be built at a much lower cost and could maintain a transatlantic service during three months in the summer.
At the time of the study, QE2 was spending nine months on the transatlantic schedule during which time she was sailing at full capacity. The fear was that if a faux liner was built, her summer month’s transatlantic success could lead to her season being extended into conditions for which she would be ill equipped. After lengthy analysis Carnival decided that the project would only consider a true liner.
The study became known as Project Queen Mary. Its starting point was to consider the design of QE2. When QE2 was built she was considered to be the largest liner that could pass through the Panama Canal. Her fine lines meant that she was only 65,000 grt and this was only achieved by building the entire superstructure of QE2 in aluminium to gain an extra deck without compromising stability. Over the years the aluminium structure has deteriorated and it was decided against repeating the use of this material. A Panamax true liner built entirely from steel would be smaller than QE2 and this would be completely uneconomic. As QE2 only performed one Panama transit each year, it was decided to adopt a post-Panamax design.
Having removed the Panama Canal as a design restriction, the remaining physical limitations on the size of the new ship were the diameter of the turning circle in Southampton Docks, the length of Pier 90 in New York, the water depth in both ports and the clearance under the Verazzano Narrows Bridge. As a result the maximum overall length was set at 350 metres, the draught at 10 metres (the same as QE2) and the air draught of 62 metres. Beam was not a critical dimension other than to produce the waterplane area needed for stability. The provisional estimate was a beam of 40 metres.
Photo 6:Queen Mary 2 size comparison with Titanic and other objects
The general arrangement of the ship was decided after a critical review of QE2. From the outset it was accepted that the new accommodation arrangements must take second place to the absolute structural strength needed for a transatlantic liner. It was also agreed that the new ship should be in the style of a 1930s “ship of state”. To this end the tweendeck height for the public rooms was fixed at 4.5 metres, instead of the usual 3.5 to 3.8 metres.
A critical factor in the layout was the height of the lifeboat stowage deck above the waterline. Current regulations limit the height of boats to 15 metres. The lifeboats on QE2 are at 30 metres and even at this height they have suffered occasional damage. After consultation with the British Maritime& Coastguard Agency and the US Coastguard agreement was reached and a concession was granted to allow the boats to be carried on the new ship at the same height as those on QE2. This fact helps to quantify the huge leap in size between the two ships.
The resolution of the lifeboat stowage enabled the deck layout to be finalised. In line with the usual current concepts the main public rooms occupy two decks (plus part of a lower deck for embarkation) in the hull. There are then three decks devoted to passenger accommodation, followed by public rooms on the boat deck. Above this there are four decks with balcony cabins (protected by full width superstructure fore and aft) and finally the sun deck facilities.
The propulsion arrangements for a ship as large and fast as Project Queen Mary were the subject of considerable debate and amendment. Preliminary weight estimates and lines adapted from QE2 modified for the much greater size of the new ship plus adaptation of the stern for propulsion pods enabled the Carnival Corporate design team to produce a powering estimate of 80MW for 29.5 knots plus 16 MW for hotel requirements.
By June 1999 the design was sufficiently mature for Carnival Corporate to be able to issue a bid package to 5 shipyards: -
- HDW, Kiel, Germany
- Kvaerner Masa-Yards, Turku, Finland
- Fincantieri, Monfalcone, Italy
- Harland & Wolff, Belfast, UK
- ALSTOM Chantiers de l’Atlantique, Saint-Nazaire, France.
Initial reactions from all yards indicated that the cost of the ship was going to be far higher than the budget. A design rationalisation exercise was implemented that increased passenger capacity by about 4% and reduced overall costs to a more acceptable level, enabling the bidding process to continue. As the competition proceeded HDW decided to withdraw and it became clear that the existing workload of Fincantieri and Masa-Yards would have imposed an unacceptable delay. In the end Chantiers de l’Atlantique offered the best price and delivery combination and they were awarded a letter of intent in March 2000.
In the following months the design was further refined. One of the most important decisions was the finalisation of the machinery specification. After model testing various configurations it was decided to adopt a unique arrangement of four propulsion pods, two are fixed and located near to the turn of the bilge with a skeg between them, the other two are fully azimuthing and are mounted further aft and inboard. Power is provided by two gas turbines located in the base of funnel and four diesel alternators in two machinery spaces on the tank-top. To counteract the weight of the gas turbines high in the superstructure the waterline beam was increased to 41 metres, with tumblehome to bring this back to 40 metres at the boat deck.
Photo 7:One of the four Mermaid pods used to power Queen Mary 2
The $780 million contract was signed on 6 November 2000, with delivery set for December 2003. The Swedish firm Tillberg Design and its London sister company SMC Design were appointed as lead interior designers. There then followed a period of definitive tanktesting, which was completed in February 2001. Based on these tests, the shipyard drawing offices devoted over 1 million man-hours to producing more than 80,000 detailed production drawings. These were used to construct 94 partially outfitted prefabrication units, consisting of more than 300,000 components brought together by 1,448 km of welding. Over 97% of the cabins were prefabricated off-site by sub-contractors and installed as single units, complete with their bathroom facilities. For much of the build period over 4,000 people were working in the ship. Including all suppliers and sub-contractors, it is estimated that some 25,000 people have been involved in the construction and completion of the ship.
Photo 8:Part of the Holyrood duplex suite
Photo 9:The lower section of the Balmoral duplex suite
The new ship was floated out from the building dock on 21 March 2003. She began sea trials on 25 September and these were completed on 11 November 2003. The completed ship arrived in Southampton on 26 December 2003. She was named Queen Mary 2, by the Queen on 8 January 2004 and sailed on her maiden voyage on 12 January. This is an outstanding shipbuilding achievement. For comparison, construction of the QE2, which is about half the size of QM2, took 48 months from contract signature to commencement of final trials. These trials were a failure and QE2 was not delivered until rectification work was completed 4 months later. QM2 was built in 36 months and delivered on time without problems.
Photo 10:Queen Mary 2 alongside at Fort Lauderdale
The basic specification of Queen Mary 2 is – 148,258 grt; 345 metres Loa; 41 metres beam; 2,620 passengers on the basis of 2 passengers per cabin; 3,090 passengers max; 1,238 crew; service speed 26.5 knots, 29.62 knots trials.
Photo 11:Queen Mary 2 entering San Francisco with about 20 feet of air draught to spare
Further development of existing designs
Caribbean Princess was on order when Carnival acquired Princess. She is the first development of the Grand Class, with an additional superstructure deck made possible by using aluminium to construct the two upper decks.
Caribbean Princess was built by Fincantieri’s Monfalcone shipyard. Her basic specification is: - 112,894 grt; 290 metres Loa; 36 metres beam; 3,114 passengers on the basis of 2 passengers per cabin; 3,592 passengers max; 1,205 crew; service speed 21.7 knots (23 knots trials)
The ships in the class delivered up to the end of 2006 are: -
- Caribbean Princess (2004)
- Crown Princess (2006)
Photo 12:Crown Princess entering Bridgetown, Barbados at dawn
The final post-Panamax cruise ships ordered by Princess prior to acquisition were placed with Mitsubishi Heavy Industries, Nagasaki, Japan. Their machinery arrangements differed from the company’s Italian built ships, to meet the high environmental standards demanded in Alaska. The power station generating machinery is driven by two Wartsila 8L46C and two Wartsila 9L46C plus one General Electric LM gas turbine.
The two vessels order was the first to be placed outside of Europe by a leading cruise company. Unfortunately the lead ship suffered a major fire during fitting out and was delayed until after the completion of her sister. Princess decided to exchange the names of the ships so that they entered service in the sequence covered by the company’s existing publicity programme.
Micky Arison expressed his considerable satisfaction with construction and outfit standards achieved by Mitsubishi, but the company seems to prefer to return to the simpler ships required in its booming traditional commercial markets.
The basic specification of the Japanese built ship is: - 115,894 grt; 288.3 metres Loa; 37.5 metres beam; 2.678 passengers on the basis of 2 passengers per cabin; 3,100 passengers max; 1,238 crew; service speed 22.1 knots (22.5 knots trials)
Note; Fitting a glass dome over the swimming-pool lido is the major reason for the ship’s tonnage being higher than that of the Caribbean Princess.
The ships in the class are: -
- Diamond Princess (2004)
- Sapphire Princess (2004)
Photo 13:Diamond Princess at Lyttelton, New Zealand
When Carnival acquired Cunard an immediate idea was to build a cruise ship to match the standards of QE2. To achieve this objective a further modified unit of the Holland America Zuiderdam class was ordered from Fincantieri. Micky Arison’s ambition however, was to build the new transatlantic super-liner that became QM2. When it became apparent that his ambition was to become reality it was realised that the proposed ship, whilst equipped to a standard that would fully match QE2, it would not be adequate to be a partner for the superb QM2. Carnival decided therefore to re-allocate the ordered ship to the booming P&O Cruises and build a new ship to an even higher standard. The P&O Cruises ship became their Arcadia. The major technical difference between Arcadia and her Holland America half-sisters was in her power plant, which is all diesel.
Photo 14:Arcadia in Southampton
Comparative cruise fleets at the end of 2006
At the end of 2006 the three major cruise companies operated the following brands: -
Carnival Corporation & plc
- Carnival Cruise Lines – 21 cruise ships – 47,818 passenger capacity
- Princess Cruises – 15 cruise ships – 32,232 passenger capacity
- Costa Cruises – 11 cruise ships – 20,218 passenger capacity
- Holland America Line – 13 cruise ships – 18,848 passenger capacity
- P&O Cruises – 5 cruise ships – 8,840 passenger capacity
- AIDA Cruises – 4 cruise ships – 5,378 passenger capacity
- Cunard Line – 2 cruise ships – 4,380 passenger capacity
- P&O Cruises Australia – 2 cruise ships – 2,474 passenger capacity
- Ocean Village – 1 cruise ship – 1,578 passenger capacity
- Swan Hellenic – 1 cruise ship – 678 passenger capacity
- Seabourn Cruise Line – 3 cruise ships – 624 passenger capacity
- Windstar Cruises – 3 cruise ships – 608 passenger capacity
Fleet total – 81 cruise ships – 143,676 passenger capacity
Photo 15:Carnival Cruise Lines' Carnival Liberty in Palma
Royal Caribbean Cruises Ltd
- Royal Caribbean International – 19 cruise ships – 47,804 passenger capacity
- Celebrity Cruises – 7 cruise ships – 13,770 passenger capacity
- Pullmantur – 5 cruise ships – 5,040 passenger capacity
- Island Cruises – 2 cruise ships – 2,866 passenger capacity
Fleet total – 33 cruise ships – 69,480 passenger capacity
Photo 16:Royal Caribbean's Freedom of the Seas in Oslo
Star Cruises Ltd
- Star – 6 cruise ships – 5,799 passenger capacity
- Norwegian Cruise Line – 10 cruise ships – 19,172 passenger capacity
- NCL America – 3 cruise ships – 6,524 passenger capacity
- Orient Line – 1 cruise ship – 848 passenger capacity
Fleet total – 20 cruise ships – 32,343 passenger capacity
Photo 17:NCL America's Pride of America
Ships on order for the three major cruise groups - January 2007
In January 2007, the three leading cruise groups had been placed for the following newbuilding orders: -
Carnival Cruise Lines
- Carnival Freedom – Delivery 2007 – 2,974 passengers
- Carnival Splendor – Delivery 2008 – 3,000 passengers
- Carnival Dream – Delivery 2009 – 3,652 passengers
- Carnival Magic – Delivery 2011 – 3,652 passengers
- Emerald Princess – Delivery 2007 – 3,100 passengers
- 6150 – Delivery 2008 – 3,100 passengers
- Eurodam – Delivery 2008 – 2,044 passengers
- Costa Serena – Delivery 2007 – 3,000 passengers
- 6155 – Delivery 2009 – 2,260 passengers
- 6148 – Delivery 2009 – 3,000 passengers
- 6166 – Delivery 2010 – 2,260 passengers
- AIDAdiva – Delivery 2007 – 2,050 passengers
- AIDAbella – Delivery 2008 – 2,050 passengers
- 660 – Delivery 2009 – 2,050 passengers
- 680 – Delivery 2010 – 2,050 passengers
- Newbuild – Delivery 2009 – 450 passengers
- Newbuild – Delivery 2010 – 450 passengers
- Ventura – Delivery 2008 – 3,076 passengers
- 6168 – Delivery 2010 – 3,076 passengers
- Queen Victoria – Delivery 2007 – 2,014 passengers
In total these 20 ships have capacity for 49,308 passengers on the basis of two passengers per cabin. Their combined contract value is $10.82 billion. The contracts for the AIDA ships are placed with Meyer Werft, Germany and those for the Seabourn ships are with Mariotti in Italy. All the other ships are placed with Fincantieri, Italy.
- Liberty of the Seas – Delivery 2007 – 3,634 passengers
- Independence of the Seas – Delivery 2008 – 3,634 passengers
- Genesis I – Delivery 2009 – 5,400 passengers
- Genesis II – Delivery 2010 – 5,400 passengers
- Celebrity Solstice – Delivery 2008 – 2,850 passengers
- Celebrity Equinox – Delivery 2009 – 2,850 passengers
- Celebrity Eclipse – Delivery 2010 – 2,850 passengers
In total these 7 ships have capacity for 26,618 passengers on the basis of two passengers per cabin. Their combined contract value is $6.00 billion. The contracts for the Royal Caribbean ships are placed with Aker Yards, Finland and those for the Seabourn ships are with Meyer Werft, Germany.
Norwegian Cruise Line
- Norwegian Gem – Delivery 2007 – 2,394 passengers
- C33 – Delivery 2009 – 4,200 passengers
- D33 – Delivery 2010 – 4,200 passengers
In total these 3 ships have capacity for 10,794 passengers on the basis of two passengers per cabin. Their combined contract value is $2.40 billion. The contract for Norwegian Gem is placed with Meyer Werft, Germany and those for the other ships with Aker Yards, France.
Comparative Financial Results 2006
The 2006 operational results of the big three cruise companies are: -
- Total Revenue $11.839 billion
- Operating costs $9.226 billion – 77.93% of Revenue
- Operating profit $2.613 billion – 22.07% of Revenue
- Interest payments $0.295 billion – 2.49% of Revenue
- Net Profit $2.318 billion – 19.58% of Revenue
- Total Revenue $5.230 billion
- Operating costs $4.371 billion – 83.58% of Revenue
- Operating profit $0.859 billion – 16.42% of Revenue
- Interest payments $0.225 billion – 4.30% of Revenue
- Net Profit $0.634 billion – 12.12% of Revenue
- Total Revenue $2.343 billion
- Operating costs $2.278 billion – 97.23% of Revenue
- Operating profit $0.065 billion – 2.77% of Revenue
- Interest payments $0.221 billion – 9.43% of Revenue
- Net Loss $0.156 billion – 6.66% of Revenue
It will be noted that Carnival’s operating costs are a significantly lower proportion of revenue than the costs of the other two groups. It will also be seen that Royal Caribbean’s revenue is only 44% of Carnival and that Star’s revenue is only 44% of Royal Caribbean, yet the interest cost for the three groups is about the same monetary value. At the end of 2006 Carnival was financially very strong, Royal Caribbean good and Star was weak.
Comparative Operational Performance 2006
There is not an international organisation compiling authoritative statistics on the cruise industry in the way that IATA does for commercial aviation. There are a number of regional cruise industry associations, but their figures only cover their members’ activities. The only source that aims to provide global coverage is the Swedish based trade publication, ShipPax. They give a world-wide figure of 16,882,000 cruise passengers for 2006. This figure is double that recorded 10 years earlier.
The Big Three cruise organisations however, are public corporations with audited figures disclosed to their shareholders. For 2006 these were: -
- Carnival: 7,008,000 passengers – 41.51% of the ShipPax world total
- Royal Caribbean: 3,600,800 passengers – 21.33% of the ShipPax world total
- Star: 1,923,500 passengers – 11.39% of the ShipPax world total
Total passenger numbers provide only limited information however, as some ships are engaged on cruises of only two or three days duration, whilst others are employed on cruises that take several weeks. The only meaningful statistic is the number of passenger / days performed by each company. These figures are not available for the world fleet, but they are disclosed in the accounts of the Big Three. For 2006 these were: -
- Carnival: 52,951,435 passenger / days
- Royal Caribbean: 23,849,606 passenger / days
- Star: 10,497,371 passenger / days
Dividing the 2006 Financial Results by passenger / days provides the following operational performance figures: -
Revenue per passenger / day:
- Carnival: $223.58
- Royal Caribbean: $219.29
- Star: $223.20
Royal Caribbean earns about $1.9 less per passenger / day than the other two groups
Operating Cost per passenger / day:
- Carnival: $174.24
- Royal Caribbean: $183.27
- Star: $217.01
Even after more than 30 years trading, Carnival’s operating costs are still significantly lower than its rivals; almost 5% less than Royal Caribbean and almost 20% less than Star. The hopelessly uneconomic cost of operating even a small number of ships under the US flag is a significant factor in Star’s poor performance.
Net Interest Cost per passenger / day:
- Carnival: $5.57
- Royal Caribbean: $9.43
- Star: $21.05
These startling figures show the effects of Carnival being financially very strong, Royal Caribbean moderately strong and Star being weak.
Net operational result per passenger / day:
- Carnival: $43.78 profit
- Royal Caribbean: $26.58 profit
- Star: $14.86 loss
Photo 18:Holland America Stewards. Two of the 75,000 employees of Carnival Corporation
- Various publications of The Royal Institution of Naval Architects, particularly their annual Significant Ships
- Various publications of ShipPax Information, Halmstad, Sweden, particularly their three annuals, Designs, Guide and Statistics
- Genesis of a Queen: Stephen Payne & Tim Knaggs: Royal Institution of Naval Architects; 2004
- Queen Mary 2 – The greatest ocean liner of our time: John Maxtone-Graham: Bullfinch Press; 2004
- Carnival Corporation & plc Annual Report and Accounts – 2006
- Royal Caribbean Cruises Ltd Annual Report and Accounts – 2006
- Star Cruises Ltd Annual Report and Accounts – 2006
Many of the photographs used to illustrate this article are from the very large collection contained in the Ships Nostalgia Galleries, which are available for use in the Directory. The individual photographs have been provided as follows: -
- Ships Nostalgia – newda898
- Carnival Corporation
- Ships Nostalgia – Angus Murray
- Ships Nostalgia – sparkie2182
- German Wikimedia Commons file
- Wikimedia Commons file
- Carnival Corporation
- Carnival Corporation
- Wikimedia Commons file
- Wikimedia Commons file
- Ships Nostalgia – Coop
- Ships Nostalgia – sammyspot
- Ships Nostalgia – Pompeyfan
- Ships Nostalgia – mmoreno
- Ships Nostalgia – BEDDY
- Ships Nostalgia – CobhRambler
- Cruise Lines International Association
Article written and compiled by Fred Henderson
Carnival Corporation History
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