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#3: The business of icebreaker cruises
Ponant's Commandant Charcot is the world's only icebreaker cruise ship, but icebreakers are extremely expensive. How does Ponant position such a unique product?
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When Ponant announced the construction of the world’s first luxury icebreaker, I was skeptical it could ever be profitable. To be sure, Commandant Charcot is the most impressive cruise ship in the world.
Charcot can sail without touching civilization for 1.5 months on a full tank of gas.
Safety procedures had to be reconsidered in case they abandoned ship on ice. In addition to lifeboats, Charcot carries tents to allow everybody to survive. They even conducted a safety drill in 2021 (summary and full report).
The passenger areas remind me of a luxurious spaceship (360 tour here). You can easily imagine spending weeks onboard in hostile weather and settling into a routine. Cabins are large, cuisine is overseen by chef Alain Ducasse, and there are plenty of public spaces to stay active or relax.
💰But could an icebreaker make money?
Building and operating an icebreaker is significantly more expensive than a standard expedition cruise ship. The capex alone is staggering. Ponant paid $324 million for Commandant Charcot vs $110 million for Jacques Cartier, one of their standard expedition ships. That equates to more than double the cost per passenger - $1.3 million per passenger vs $598k. Charcot’s operating expenses are also higher. Breaking ice requires much more fuel than sailing in the open ocean. Charcot also has significantly more crew - 215 vs 118 on Jacques Cartier.
One reason you need all those crew is that icebreaking can be boring. Reaching the north pole requires days of sailing or cutting through ice. On Charcot, guests might spend the majority of their time onboard. Entertainment and amenities had to be upgraded to compensate, and that required extra crew and extra space. Most expedition cruises are focused on getting guests out into the destination, so onboard amenities are more minimal. Would people actually buy these cruises with so much time onboard?
Lastly and most importantly - How would Ponant build a year-round schedule of itineraries? Some companies offered trips on Russian icebreakers before the Ukraine war, but they only chartered a few cruises during high season. Ponant owned this ship, so they would need to utilize the full year. And they needed to command a price premium to cover those higher capital and operating costs.
Could Ponant design a full year of differentiated itineraries to justify higher pricing?
In a word, yes. I missed two key pieces of information about Commandant Charcot:
Ponant created more differentiated products (itineraries) than I thought possible.
🗓️ Charcot’s Schedule of Itineraries
A few weeks ago, Ponant announced winter itineraries to the St. Lawrence River and the last building block of Charcot’s schedule fell into place.
Their strategy is as follows:
Charcot always operates differentiated itineraries. Differentiation comes from (1) going to places that other ships can’t go and/or (2) going in seasons when other ships can’t go. This allows Charcot to consistently offer unique experiences versus other expedition ships. The rare exceptions (Northern Norway and Baltic) are forgivable, since winter itineraries are relatively rare in these places and they still match Charcot’s icy, wintry brand.
Charcot offers a surprisingly wide variety of products, which encourages loyal guests to come back for more. This is a luxury product with a very specific clientele (wealthy, polar travel nuts). An itinerary is only offered a few times in a year. Summers are always in the Arctic, with cruises to Greenland, the North Pole, and Northwest Passage. In October to March, Charcot alternates years between Antarctica and the Northern Hemisphere (Europe & St. Lawrence).
Every cruise is a wintry, polar exploration. Unlike most other companies (and other Ponant ships), Charcot does not operate repositioning cruises in temperate or tropical regions. They would rather sail empty for a month in each direction to preserve the brand. The exceptions prove the rule. Ponant offers a few ocean voyages for the low price of $800/night (rather than the $2,000 norm). These cruises have no stops (no confusing these with a “real” cruise) and they allow people to sample the ship.
Ponant’s pricing suggests that the strategy is working. Charcot is commanding an appropriate premium throughout the year. In peak season, Charcot’s itineraries in Antarctica & NW Passage are priced at a 54%-70% premium to traditional ships. The premium is more extreme if you compare a traditional ship’s highest Arctic season fares (Greenland in August) to Charcot’s (North Pole) - they’re $131% higher!
Charcot has the added benefit of extending the peak season. In April and May for example, Ponant’s other ships operate itineraries in the Baltic, Norway, and British Isles. Charcot can already make it to East Greenland.
🗺️ My three favorite Charcot itineraries
You can find a full list here, but these are my favorites:
St. Lawrence River in the Winter
In the winter, the St. Lawrence seaway freezes up and is inaccessible to traditional ships. These cruises allow guests to partake in a wide range of winter activities (eg. dogsled rides, snowshoe walks, ice fishing, kayaking) at a time when Atlantic Canada is rarely visited.
These itineraries are totally unique. Charcot visits East Greenland in April, months before any other ship can. They help the small community of Tasiilaq by delivering the first cargo of the year and allowing earlier access to the sea for small boats. Guests are ferried to and from the ship by dog sled (check out 5 seconds of this clip).
Trans-arctic voyage to both North Poles
This itinerary is emblematic of what makes Charcot a luxury product. You’ll spend 20 nights ploughing through the ice over the top of the world. On the way, you’ll attempt to touch the Geographic North Pole and the Magnetic North Pole, but most of the time you’ll be onboard. Many people - probably most people - would be bored on this trip. That’s what makes it a luxury experience. In The Luxury Strategy, the authors note that a luxury product must have flaws:
The aim of an upper-premium brand is to deliver a perfect product, to relentlessly pursue perfection. But it would need a touch of madness for it to be counted a luxury […] a Ferrari is anything but a perfect car if you like easy, smooth and silent driving; that is why people would do anything to own one. Every model forces its owner to accept its flaws.
Like a Ferrari, Charcot’s flaws enable her strengths. If you’re willing to spend many days onboard, this capable ship will take you on a rare journey that few people could even dream of.
🌐 A few links
🧊 More about icebreaking. A short documentary on Finland’s icebreaker fleet. Sometimes ships break ice backwards because they use a newer design called a double acting ship (that’s why Charcot has two navigational bridges).
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