Carnival’s Costa Cruises Cancels Asia Routes Amid No Foreseeable End to China’s Zero-COVID Policy

Italian Cruise liner Costa Diadema, leaving the harbour entrance channel of Le Havre, western France, on May 24, 2022. Jean-Francois Monier/AFP via Getty Images

Costa Cruises, a unit of U.S. cruising giant Carnival, is canceling all future Asia departures amid diminishing hopes for Beijing to ease its zero-COVID approach and stringent border restrictions in the foreseeable future.

The company released a statement on Oct. 25 that it has decided to cancel its Asian home ports cruise programs and reorganize its structure in East Asia due to “continuing uncertainties regarding the full restart of international cruises in [the region].”

The Asian cruise market includes China, Hong Kong, Taiwan, Japan, and South Korea, with China as the largest market. According to Chinese state-run Xinhua News, the number of cruise passengers in China reached 2.19 million in 2018, accounting for over 50 percent of total cruise passengers in Asia.

At the time, China had become the world’s second-largest cruise market, just after the United States, and cruise lines were actively trying to capture what was a growing market.

45 Percent Market Share

Costa Cruises was founded in 1854 in Genoa, Italy. In 1997, the company was acquired by Carnival, the world’s largest cruise company based in Miami, Florida. The acquisition made Carnival Cruise the largest in the industry, reaching a 45 percent market share in 2021.

The Costa Fortuna cruise ship makes its way through the Canale Della Giudecca during the 65th Venice Film Festival on Sept. 1, 2008, in Venice, Italy. Dan Kitwood/Getty Images

The Italian cruise line had earlier entered the Chinese market in 2006 as the first international cruise line to operate homeport cruises in the country, offering sailing roundtrips out of Shanghai. Over the years, the company has deployed many cruise vessels such as Costa Atlantica, Costa Serena, and Costa neoRomantica to operate a number of routes out of the Shanghai homeport.

In May 2019, “Costa Venezia,” the company’s new and largest cruise ship at the time, debuted in Shanghai. The vessel is over 1,000 feet long and can accommodate over 4,200 passengers. It was originally intended exclusively for the Chinese market but was later transferred to serve Europe and other regions due to China’s stringent COVID-19 restrictions.

It was not just Costa Cruises. Cruise companies worldwide were optimistic about the Chinese market prior to the COVID-19 pandemic.

Chairman of Norway’s Royal Caribbean Cruises Asia, Liu Zinan, recently told Chinese state-run Global Times that from 2006 to 2019, international cruise brands successively deployed 23 cruise ships in China, with an average annual marketing investment of about $500 million in the Chinese market.

Impact of COVID-19

The COVID-19 pandemic has severely impacted the global cruise line industry. The more notable incident was the British-registered luxury cruise ship Diamond Princess operated by U.S.-headquartered Princess Cruises.

In early 2020, shortly after the start of the COVID-19 pandemic, Diamond Princess was forced to quarantine over 3,700 passengers for two weeks amid an outbreak. More than 700 passengers onboard were infected with the virus, while 14 reportedly died.

The Diamond Princess cruise ship at Daikoku Pier while it was being quarantined following some of the 3,700 people on board being diagnosed with COVID-19 on Feb. 10, 2020, in Yokohama, Japan. Carl Court/Getty Images

The two years following the COVID-19 pandemic had been a tough time for the cruise industry, with vessels worldwide reporting COVID-19 outbreaks onboard and having to quarantine passengers.

In late March, Princess Cruises confirmed that another one of its cruise liners, the Ruby Princess, reported a COVID-19 outbreak before docking in San Francisco. This was despite all the passengers being fully vaccinated and having a negative COVID-19 test to get on board.

The first year of the pandemic was the most challenging for the cruise industry. Since then, countries have started to ease pandemic measures and travel restrictions, allowing a gradual recovery of the industry.

According to a Cruise Industry News report published in October, 371 cruise ships from 83 cruise brands are now in operation, accounting for 86.2 percent of the global fleet and 93.5 percent of the service capacity.

However, while countries worldwide have completely lifted or substantially eased COVID-related travel restrictions, China has shown no signs of easing its stringent zero-COVID policy.

Chinese leader Xi Jinping’s remarks at the recently-concluded 20th Party congress appear to dash the hopes of Chinese people looking for signs of the policy loosening. The draconian approach aims to eliminate every infection among communities through strict lockdowns, repeated testing, and mass surveillance.

Chinese leader Xi Jinping gives a speech during the opening session of a 5-year Chinese Communist Party political conference in Beijing on Oct. 16, 2022. Noel Celis/AFP via Getty Images

At the opening ceremony, Xi said the Chinese Communist Party “prioritized the people and their lives above all else and tenaciously pursued [a] dynamic zero-COVID policy in launching all-out people’s war against the virus.”

Costa Cruises issued a statement in February with plans to resume operations in Asia later in the year. However, the company’s most recent statement would appear that it has given up hope.

Chinese media Caixin reported that the bulk of Costa Cruises’ employees in the Chinese market had already left the company, including the head of its China business Ye Peng.

Costa Cruises is not alone in withdrawing from operations in Asia. In May, U.S.-based Norwegian Cruise Line announced the cancellation of all of its upcoming 2022-2023 fall and winter sailings in Asia, relocating its vessels to Europe instead.

In addition, U.S.-based Celebrity Cruises, Holland America Line, and Windstar Cruises have also canceled sailing plans in Asia for several months.