P&O pays $85,000 to settle Florida charge

Peninsular & Oriental said yesterday it had paid Florida's attorney general $85,000 in settlement of a charge that the company's Princess cruise line subsidiary had overcharged passengers over four years.

Analysts had feared that P&O might be liable to a fine of up to $150m, although the company maintained throughout that such a figure was fanciful.

The company described the payment yesterday as a "contribution" to the cost of Florida's investigation and said it admitted no liability or wrongdoing.

It had been accused of adding an unnecessary "port charge" to cruise fares and has now agreed that only payments to government agencies will be quoted separately from the basic price in advertising campaigns.

The Florida authorities alleged that other payments, such as to privately owned tug-boat operators, had been included in an add-on charge in order to keep the basic price of a cruise as low as possible. A typical P&O seven-day cruise might be advertised at $599 but have a $120 surcharge added to cover other charges usually described as something like "government taxes, port taxes and harbour dues".

Peter Ratcliffe, president of Princess Cruises, said: "We welcome the completion of our discussions with the attorney general's office and will be making the necessary amendments to our advertising practice by 1 June."

Shares in P&O jumped 11.5p on the news to close yesterday at 629p. Last month they had fallen sharply after a report that the company might be liable to pay up to $15,000 for each passenger that had boarded a P&O cruise ship in Florida during the past four years.

P&O's settlement follows an agreement by six other cruise operators to pay $295,500 to the Florida attorney general and change their own advertising. P&O had originally refused to join that class payment, claiming that its own advertising met state standards.

The enforced advertising changes are thought to be more onerous for some of P&O's rivals which specialise in shorter cruises, because for them the add-on charges make up a greater proportion of the fare. One-day cruises advertised as costing $90 with a $70 add-on will now appear much more expensive.