American investors just helped kill off ‘beloved’ Australian brand P&O
In 1981 Australia was on the cusp of a recession that would usher in the Hawke and Keating years.
And one Aussie-branded company, P&O Cruises Australia, was selling the idea of escaping the rat race by taking to the high seas.
But now the brand is set to fold as the harsh economic realities of the 2020s take their toll.
Its parent company, the Miami-based Carnival, has decided it’s too expensive to operate the brand in Australia.
There will be job losses in Carnival’s Sydney office, and one of three ships under the P&O brand will be retired, with the other two absorbed into Carnival’s fleet.
Griffith University’s Cruise & Maritime researcher Johnnel Smith called the decision “heartbreaking”.
“It’s sad news all-round,” she said
“Our beloved P&O Cruises will be leaving the Australian market.”
It’s understood P&O Cruises Australia will be absorbed by the Carnival Cruise Line brand.
“It’s a cessation of the [Australian-branded] cruising,” Ms Smith adds.
“Basically Carnival is taking over all of the ships.”
Restructure not uncommon in cruise industry
To be clear, P&O Cruises Australia is not insolvent.
Ms Smith explains there’s “lots of restructure” in the cruise industry, especially post-pandemic.
“There’s been a lot of restructuring – a lot of bigger cruise lines, you take over smaller ones,” she says.
“I wouldn’t say [the business] is a bust.
“I would say it’s an improvement.”
Which is precisely how Carnival Corporation chief executive officer Josh Weinstein described the move.
“Given the strategic reality of the South Pacific’s small population and significantly higher operating and regulatory costs, we’re adjusting our approach to give us the efficiencies we need to continue delivering an incredible cruise experience year-round to our guests in the region,” he said.
More competition in the cruise market
The fundamental problem is P&O Cruises Australia has become, as far as US bosses are concerned, a high cost and uncompetitive operation.
Costs, including port fees and fuel, are relatively high in Australia and make it one of the most expensive regions to operate a cruise line.
Carnival told the ABC it viewed the Australian P&O brand as a drag on the overall business.
Or to put it bluntly, the business isn’t turning a big enough profit for the company’s American shareholders.
Between 10 and 20 jobs will be lost in Australia and Carnival says crew members will be assigned to other ships, although it’s not clear where or how.
Competition was also an unwelcome factor for P&O, Ms Smith says.
“This past cruise season we had Disney and Virgin Voyages come Down Under for the first time,” she said.
“And so when it comes to the level of competition taking place in the cruise market, Aussies are cruising, and all it means is that [you need to be] a bit more competitive [but] it takes cash to care.”
“It costs a lot of money to stay competitive and to remain top of mind [for travellers].”
Fears for future itineraries
It’s the end of an era for the popular brand which set sail from Sydney on December 23, 1932, on a seven-day itinerary calling at Brisbane and Norfolk Island.
The company’s first permanent ship in Australia, called the “Fairstar” and heavily promoted as ‘the fun ship’, was part of the fleet for nine years until 1997.
The brand’s fold has also led to doubts about the future of cruises across the Tasman Sea to New Zealand for many cruise goers, Ms Smith says.
“People are a bit concerned that, in addition to taking over this cruise line, that there are going to be changes to the itineraries,” she said.
“It’s a major concern.
“And especially also value for money because P&O does provide a lot of value for money for cruises.”
Passengers booked onto P&O Cruises this year won’t be affected, while guests booked for next year will have the option for a full refund.
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