By
David Mott |
In June the UK cruising world was set back on its heels when it was announced that, in addition to his existing duties, Dingle would take over the day-to-day running of P&O Cruises and Cunard Cruise Line from Carol Marlow and Peter Shanks respectively. So he will not have been surprised to be asked what difference there will be from September onwards, when the two executives leave Carnival. “In truth, I have had personal day-to-day control of P&O for the last 13 years. So in that sense there will not be much difference,” says Dingle, whose origins in cruising are with the company.
“We now have a need for different strategic forward thinking,” he adds. “With our next hike in capacity due in early 2015, we want as much innovation as possible. But this is not a slur on either of the two people leaving.”
There has been much talk in this context of brand management. What exactly does it mean to Dingle and how does it differ from general management? “I see it as having two elements: clarification of what we are offering the customer and how well are we communicating it,” is his response.
P&O Cruises is not likely to order another new ship soon to follow on from the 141,000-ton, 3,600-berth vessel currently building at the Monfalcone shipyard of Fincantieri for delivery at the start of 2015 as the largest vessel in the company’s fleet. Dingle says that the ordering of new ships for Carnival Group companies like P&O is closely controlled from the headquarters in Miami.
“Carnival is sticking very rigidly to a recession-led reduced level of two or three ships a year for all its companies, half the previous level. Because of this there is a queue of Carnival companies lining up for new tonnage. As we have a new ship building already I would not expect P&O to be near the front of that queue,” says Dingle.
The 2015 ship is not only P&O’s largest ship, but also its most expensive, costing US$805 million. Like all major new ships laid down after July, 2010, she has Safe Return to Port (SRtP) features incorporated in her design. This involves a large degree of redundancy to stop the ship being vulnerable to a single point of failure. The chief executive is not able to say what the extra cost of incorporating SRtP will be. “It would get lost in the overall cost,” he says.
Also, it does not appear that any of the P&O fleet is in line for the US$400 million Carnival set aside for the upgrade of ‘other brands’ within its empire. This is to avoid a repeat of the Carnival Triumph incident when, after a fire on board, passengers were left without hot food and sanitation for a number of days while she was towed to a safe port. The creation of a safe area with reasonable conditions for passengers in such circumstances is thought to be the priority for this expenditure. A further sum of US$300 million is being spent on the Triumph’s sisters in Carnival Cruise Lines.
Asked how P&O Cruisese has been progressing through the recession since 2008, Dingle says: “Over the last five years our yields have fluctuated between moments of recovery and other times when they have lapsed back. Also, remember, we have changed our capacity over the five years, which has an impact on yields. We are probably back to where we started in 2008. But I am always very wary about forward predictions in the UK even though there are reports of green shoots being seen.”
He is also keen to clear up what appears to have been some confusion between newly-introduced Vantage fares, which have built-in benefits, and the Getaway tariff, which is a basic, no-frills fares structure. “People were trying to get the Vantage package for the rock-bottom Getaway price. We think we have made the differences clear, but this confusion says to me we need to be even clearer.”
Dingle has always been a considerable market analyst. So what does he think of the present and future market for building cruise ships, now that price has become overridingly important and the overall market appears to be shrinking since STX in South Korea put its three European yards in Finland and France up for sale?
“I think we have to ask ourselves if putting a yard up for sale is the same thing as closing it down,” he says. “I believe what has probably turned STX against European operation are the onerous employment laws which make it difficult and expensive to close anything down.” But it is known that one major ferry operator has already agreed a letter of intent with STX to build ships in Finland in spite of the announcement by the parent in South Korea. This would seem to back Dingle’s point. At least one cruise analyst on Wall Street seems to think that new faces could emerge in the cruise shipbuilding market where “every operator is talking to every shipbuilder including those not normally in this area of construction.”
“I think the idea of many new yards appearing to build large cruise ships is speculative,” says Dingle. “Mitsubishi in Japan has come back to the market after a gap of nine years and – ironically, given the STX move – Hyundai in South Korea could be next. The shipbuilding scene now is very different from 10 or 15 years ago when we were building many more ships. The current level of new orders means there is no need for more shipyards on the scene.”
It is estimated that present shipbuilding capacity could produce up to 10 new ships a year – three times Carnival’s requirement. What Dingle does not mention is that Western owners have always been very cautious about the ability of series producers of cargo ships in the Far East and elsewhere to live up to the rigorous tailor-made demands of the cruise owner. Time will tell how these companies perform in the cruise market but for now, P&O Cruises is happy with progress on its newbuild underway in Italy.
This article appeared in the Autumn/Winter 2013 edition of International Cruise & Ferry Review. To read the full article, you can subscribe to the magazine in printed or digital formats.