USAToday.com
10/31/2002 - Updated 03:12 PM ET

Princess to sail on as before in wake of Carnival buy

By Gene Sloan,USA TODAY

Don't worry, Princess fans. Your beloved line won't be changing.

That's the word from Micky Arison, the head of industry giant Carnival, which appears to have won its year-long battle with Royal Caribbean to buy the Love Boat line. Princess broke off its engagement with Royal Caribbean on Oct. 25, clearing the way for a marriage with Carnival, which offered a better price.

Nor will Princess rates likely go up, even though Carnival would own n early half the cruise beds afloat.

Princess die-hards "have nothing to be concerned about," says Arison. "If there are changes in the Princess brand, it will be changes that the Princess management were making anyway."

Arison says Carnival plans to take the same hands-off approach with Princess that it has taken with past acquisitions Holland America, Windstar, Seabourn, Costa and Cunard. "The fact that the brands are owned by the same company is irrelevant. Princess will be operated independently, as it is today."

Many industry watchers are relieved that it appears Carnival and not Royal Caribbean will control Princess, the third-largest line. "Carnival's track record (with takeovers) has been spectacular," says travel agent Kathy Sudeikis of All About Travel in Mission, Kan. "They haven't muddled with (the lines) when they were working."

Still, there are worries about the long-term impact of Carnival controlling so many cruise lines particularly on pricing. The acquisition of Princess would be the largest takeover in cruise-industry history and leave Carnival with 65 ships that contain 96,960 beds. Carnival and Royal Caribbean together will control more than 80% of the cruise business, according to Federal Trade Commission figures.

The commission gave a thumbs up to a takeover of Princess in a 3-2 vote on Oct. 4, but the two commissioners who dissented wrote that the deal would leave Carnival and Royal Caribbean too powerful a duopoly that could result in less competition and higher prices.

Most industry watchers, however, agree with the majority of the commission that competition will remain fierce and prices low.

"Sure they could double their prices, but they'd sail empty," says Anne Campbell, editor of CruiseMates, a Web site for cruise lovers (cruisemates.com).

There's such a glut of cabins that lines big and small have no choice but to keep a lid on prices. "It's capacity that determines pricing," says Campbell.

And, of course, there still are other (albeit smaller) players besides Carnival and Royal Caribbean. Indeed, the commission's ruling noted the competitive presence of Norwegian Cruise Line and its Asian parent Star Cruises, which has 19 ships worldwide.

Industry watchers also note that while Carnival may dominate the cruise business, it will control only a small portion of the overall vacation business. Any attempt by Carnival to boost rates would send vacationers flocking to land-based resorts.