Cruise companies hire Dr. Scott Gottlieb, other coronavirus experts to help overcome 'rough patch'

  • The two cruise companies created a joint panel of former public health officials and top epidemiologists to advise the companies on how to safely return to operations, they announced Monday
  • The cruise companies are paying the panel of experts and splitting the costs, Royal Caribbean spokesman Jonathon Fishman told CNBC.
  • "We're looking to establish protocols that protect the health of our guests and crew and do so without undermining what makes the cruising so special," Royal CEO Richard Fain said.

Royal Caribbean and Norwegian Cruise Line have hired a panel of top health advisers to help overcome the "rough patch" caused when coronavirus outbreaks on ships brought the industry to a standstill, Norwegian CEO Frank Del Rio said Tuesday.

The two cruise companies — and fierce rivals — created a joint panel of former public health officials and top epidemiologists to advise the companies on how to safely return to operations, they announced Monday. The recommendations will also be aimed at changing minds at the Centers for Disease Control and Prevention, which has previously identified cruising as a source of spread of the virus.

On March 14, the CDC issued a no-sail order for cruise ships that it later extended until July 24. It currently advises people against taking a cruise and says passengers who return to the U.S. should quarantine at home for 14 days. 

"Because of the unprecedented nature of the novel coronavirus pandemic, and the increased risk of transmission of COVID-19 on cruise ships, the US government is advising US travelers to defer all cruise travel," the CDC says on its website. The CDC said Covid-19 "appears to spread more easily between people in close quarters aboard ships and boats."

The panel is co-chaired by former Food and Drug Administration Commissioner Dr. Scott Gottlieb and former Utah governor Mike Leavitt, who served as secretary of Health and Human Services under President George W. Bush. Other members of the panel include infectious disease specialist Dr. Michael Osterholm and former CDC director Dr. Julie Gerberding.

"We have been in contact with the CDC. The panel has been in contact with the CDC," Royal Caribbean CEO Richard Fain told CNBC's Seema Mody in an interview Tuesday on "Squawk on the Street." "They're well aware of it and they have reacted warmly to it, so I'm actually quite positive that we're doing exactly what we should do."

The cruise companies are splitting the compensation costs for the "brain trust," as Fain called it, Royal Caribbean spokesman Jonathon Fishman told CNBC. The panel began meeting in June, the companies said Monday in a statement, and will present their recommendations by August.

The cruise industry, which has been slammed by the coronavirus pandemic that's brought global travel to a standstill, faces a challenging task: adding safety measures that will convince customers and regulators that companies can keep people safe. Experts say finding the right balance is tricky yet critical to the cruise lines winning the approval of the CDC and at the same time, retaining their loyal customer base.

"We're looking to establish protocols that protect the health of our guests and crew and do so without undermining what makes the cruising so special," Fain said Tuesday. "It will be different."

It's still unclear exactly how cruising might change and if sailing will be able to resume in mid-September, which the companies are currently targeting. The panel "has only just started on the process," Fain said. Norwegian's  Del Rio said "early on, some conclusions were jumped to that perhaps are not valid today."

Fain said the buffet that so many vacationers have grown to love will likely not include self-serve options and instead rely on a crew member. According to industry experts, other changes being considered include face masks on board and doctor's notes for passengers above the age of 70.

One of the earliest outbreaks of the virus outside of China, where the virus emerged, took place on a cruise ship near Japan in February. Since then, the virus has spread aboard a number of other ships, leading to onboard deaths in at least one case.

The CDC's no-sail order says "cruise ship travel exacerbates the global spread of Covid-19 and that the scope of this pandemic is inherently and necessarily a problem that is international and interstate in nature and has not been controlled sufficiently by the cruise ship industry or individual State or local health authorities."

Last month, the Cruise Lines International Association, a trade association that represents all three publicly traded cruise companies, announced that its members would voluntarily extend the suspension of operations out of U.S. ports until Sept. 15. It cited the "the ongoing situation within the U.S." as a reason for the decision.

Despite the concerns around the role of cruises in the pandemic, Del Rio said bookings for 2021 are "remarkable given the circumstances."

"This gives me great encouragement that people understand that the virus is all around us and the cruise ship is no exception," Del Rio said Tuesday. "And as soon as we can provide definitive proof that it is safe to go on a cruise, and that's what the panel's mission is, they'll be back."

Both executives said this is an opportunity for the companies to adapt to current circumstances rather than totally reinvent what it means to cruise.

"We believe that the long-term viability of this business is intact and we're going through a rough patch with this virus," Del Rio said. "But we're confident that this rough patch will not last forever."

Carnival Corp., the largest cruise company in the world, is not involved in the health panel. On Monday, the company announced plans to host its own public summit along with the World Travel and Tourism Council to discuss best practices related to containment and mitigation of Covid-19.

As a result of the outbreaks and government pressure to prevent the spread of the virus, most cruise operations around the world have stalled since mid-March. With no source of steady revenue, Carnival, Royal, and Norwegian have sought new sources of cash through issuing new debt and attracting new investors, including the Saudi sovereign wealth fund and private-equity firms.

Disclosure: Scott Gottlieb is a CNBC contributor and is a member of the boards of Pfizer, genetic-testing start-up Tempus and biotech company Illumina.

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