Carnival Halts Asia Cruises As China’s Covid Zero Policy Bites

By K. Oanh Ha (Bloomberg) Costa Cruises, a unit of cruising giant Carnival Corp. that targets the nascent Chinese market, is canceling all future Asia departures amid waning expectations Beijing will ease its zero-tolerance Covid policy and border restrictions any time soon. 

Port stops in China, Hong Kong, Taiwan, Singapore, Japan and South Korea will be canceled since international cruises in those locations still haven’t resumed, the Genoa, Italy-based company said in a statement, adding that it’s reorganizing its business in the region. 

“After the pause imposed due to the pandemic, the resumption of international tourism across the whole region has been registering continuous delays, and we don’t know when and how international cruises will restart in the area,” the company said. “Given the continued uncertainty we had to take this decision.”

Though Costa didn’t reference China, the company had big plans to tap consumers there and was the first cruise brand to enter the country in 2006. It built two massive ships exclusively for the market, but plans for a 2021 debut of the Costa Firenze in Asia never materialized and the ship was redeployed to Europe as Chinese leaders adopted a strict Covid Zero policy to deal with the pandemic. China is widely expected by the industry to eventually become the largest cruise market in the world. 

Hopes of China easing its Covid restrictions dimmed after the leadership shuffle over the weekend at the once-in-five-years Communist Party congress. President Xi Jinping gave no indication he is looking to depart from a pandemic approach that’s leaving China increasingly isolated, with lockdowns, compulsory quarantine and restrictions on entering and leaving the nation still very much in place. Chinese tourism stocks, along with Asian equities, slumped Monday, even after Bloomberg News reported last week officials were looking at easing the mandatory quarantine policy for those coming into China. 

China Debating Cut to Covid Quarantine for Inbound Travelers

China has allowed limited cruise operations domestically for mainland residents since the onset of Covid, with most taking place on inland rivers and along some local coastlines. It recently allowed a domestic operator to restart a cruise to the disputed Paracel Islands, which Vietnam also claims in the South China Sea.  

Costa Cruises said it’s informing employees and local stakeholders in Asia affected by the reorganization and cancellation of Asian cruises. The company’s website for the Asia market generated an error message this week. In February, the company touted plans to resume cruising in the region this year. 

Carnival Joint Venture

Carnival, the world’s largest cruise company, is a minority stakeholder in a joint venture with state-owned China State Shipbuilding Corp. and operated cruises to serve Chinese guests. That joint venture is unaffected by Costa’s news, a Carnival representative said. The two luxury liners the joint-venture purchased from Costa to run its cruises have been out of service since the pandemic and are now anchored off Cypress. 

Some of the earliest mass Covid outbreaks occurred on cruise ships, leading to an effective global suspension of the industry. While cruises have started to return in other parts of the world — some still requiring vaccination and virus testing — Asia has been slower to dismantle pandemic barriers that helped much of the region avert the higher death tolls seen in places like the US. 

China, in particular, has staked political credibility on avoiding Covid fatalities, making exiting the current strategy difficult. 

By K. Oanh Ha With assistance from Zibang Xiao. © 2022 Bloomberg L.P.

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