Major cruise shipping companies are canceling scheduled voyages to Iceland in response to the new fee.
Effective January 1st, 2025, the government introduced an Infrastructure Fee of 2,500 ISK (~USD 18) per passenger. This fee replaces the previous Accommodation Tax but represents a significant increase - five times higher than previously paid.
As a result of this new fee structure, the anticipated influx of cruise visitors has not materialized. Instead, the country has seen ~80 cruise cancellations within January alone. Specific ports report notable impacts: Akureyri expects 44 cancellations, Westman Islands 10, and Grundarfjordur 7 cancellations, with more expected.
Despite these cancellations, the Icelandic government remains firm on maintaining the fee. This decision could compel travelers to seek alternative methods of visiting Iceland if cruise options diminish. The potential financial implications are significant; while the government projected an annual revenue increase of US$10 million from this fee, ongoing cancellations may necessitate a reevaluation of these expectations.
The rationale behind the cruise lines' withdrawal is rooted in the cumulative effect of the fee when applied to large numbers of passengers across multiple port calls. Although the fee appears nominal on an individual basis, it can accumulate to substantial costs for cruise operators over a season.
As a result of this new fee structure, the anticipated influx of cruise visitors has not materialized. Instead, the country has seen ~80 cruise cancellations within January alone. Specific ports are reporting notable impacts: Akureyri expects 44 cancellations, Westman Islands has recorded 10, and Grundarfjordur has seen seven cancellations, with more expected.
Despite these cancellations, the Icelandic government remains firm on maintaining the fee. This decision could compel travelers to seek alternative methods of visiting Iceland if cruise options diminish. The potential financial implications are significant; while the government projected an annual revenue increase of US$10 million from this fee, ongoing cancellations may necessitate a reevaluation of these expectations.
The rationale behind the cruise lines' withdrawal is rooted in the cumulative effect of the fee when applied to large numbers of passengers across multiple port calls. Although the fee appears nominal on an individual basis, it can accumulate to substantial costs for cruise operators over a season.
In light of these developments, cruise lines are faced with two choices: either pass these costs onto passengers or absorb them internally, neither of which is favorable for their business models. Consequently, many operators are opting to forgo Icelandic ports until a more agreeable arrangement can be reached regarding the new fee structure.