Lawsuits Say Cruise Lines Go Overboard With Port Fees

It was April 19, as the U.S. cruise industry was laying plans to reposition its ships for the summer season, that a New York law firm and six passengers decided to rock some boats. Big boats, and a lot of them.

In a batch of lawsuits against seven major cruise companies, the passengers challenged the industrywide practice of tacking “port charges” onto passenger bills. Most passengers may think those fees go directly to paying government levies, but in fact, the lawsuits alleged, most of that money is actually “profit that ends up on the bottom line.”

The plaintiffs, two New Yorkers, two Floridians and two Californians, called for a refund of every dollar “overcharged” through the last four years and are seeking to have the suits accorded class-action status. Plaintiffs’ attorney Joseph Lipofsky of New York-based Zwerling, Schachter, Zwerling & Koppell, estimated that the “overcharge” could reach $600 million.

Cruise lines immediately denied the allegation. It is true that port charges are usually listed separately from the “all-inclusive” base price of a cruise, they noted, but passengers are informed of them in writing and well in advance. Several cruise line representatives added that “it’s the way we’ve always done it,” and said that providing passengers with a breakdown of the various expenses involved would be impractically complicated.

Three months later: Have the legal actions in Florida, California and Washington won any victories for cruise customers? Prompted any changes in practice among cruise lines? Revealed exactly what expenses are and aren’t reflected in port charges?

Not so far, not at all and not quite. But consumers can still profit from the hubbub.

Port charges, a tradition on passenger ships, usually range from $65 to $250, depending on the ship, the ports of call (Alaska and Europe tend to be more costly than Mexico and the Caribbean) and the length of the itinerary. Sometimes, two different companies will cruise the same itinerary and set port charges that differ by more than 10%. And on shortest, least costly cruises, such as Carnival’s three-day Los Angeles-Ensenada-Los Angeles cruises, the port charges of $84.50 (including customs fees and international departure taxes) boost the total cost by more than 35% beyond the discounted base price of $249 per person.

Cruise company officials say that not only government fees but pilot and tugboat services, stevedoring and garbage hauling are among the costs than can be reflected in the charges. But this dispute springs from the mystery of exactly what expenses the cruise lines are building into their port charges.

At Princess Cruise Line, a new 1997 catalog describing cruise-and-land-tour trips to Alaska uses the phrase “port charges/government fees/hotel fees.” But “we do not specify what they include,” said spokeswoman Julie Benson.

Similarly, at Holland America Cruise Line, “We don’t disclose that information,” said general counsel Dan Grausz. Grausz asserted that cruise lines keep mum on such details because full disclosure would mean spilling the beans on various transactions with contractors, and would put a company at a competitive disadvantage.

“There are a lot of costs incurred when you’re in port,” Grausz continued. “There’s no deception going on here.” He decried the lawsuit as a case of “lawyers trying to get rich.”

On the plaintiffs’ side, Lipofsky asserted that only about half the cruise lines’ port charges are actually passed-along assessments from government agencies. (The suits seek remuneration and unspecified punitive damages.)

The legal jousting has only just begun. After the plaintiffs sued Carnival, Royal Caribbean, Holland America, Celebrity Cruises, Princes Cruises, Renaissance Cruises and Norwegian Cruise Line, some lines responded by seeking “discovery” of the plaintiffs’ specific cruising history. Lipofsky said the plaintiffs have sought internal company communications on how port charges are set--information that could be illuminating for consumer advocates no matter how the case turns out. Meanwhile, the Florida Attorney General’s Office has been investigating the cruise-industry cost-disclosure issue since last year. Jack Norris, chief of special prosecutions, has told reporters that “it would be safe to say” that changes will be recommended as a result.

“The consumer says, ‘Why is that?’ ” said Larry Fishkin, president of the Cruise Line, a major cruise-oriented travel agency based in Miami. “I’m not saying that there’s dishonesty in it. But I’m saying that in a consumer age, it smacks of something hidden.”

In the long run, Fishkin said, consumer pressure could force the cruise lines to lump port charges into the main prices of their cruises.

Reynolds travels anonymously at the newspaper’s expense, accepting no special discounts or subsidized trips. To reach him, write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053; telephone (213) 237-7845.