Think your SUV swallows a lot of gas? Try sidling one of Royal Caribbean's (NYSE:RCL) luxury cruise ships up to the pump. Thanks to a 37% spike in prices, the company just ran up a hefty second-quarter fuel bill of around $87.6 million -- representing roughly 7.3% of the company's total revenues. The increase drove net cruise costs per available passenger cruise day (APCD) up 5.7%. Still, the company was expecting an even sharper jump of 8%, and despite the added expense, earnings still rose 22% to $0.71 per share -- cresting far above the $0.57 mark that analysts were expecting.

Revenues for the quarter ticked up 5.3% to $1.2 billion. With virtually no increases in capacity (and occupancy above 106%), it was higher ticket prices that buoyed the top-line growth, as total ticket sales climbed 5.3% to $887.9 million. The company didn't have any trouble coaxing a few extra dollars from passengers once they came aboard, either, with onboard revenues rising 6.7% to reach $315.3 million.

Net revenue yield, a key industry metric that measures total revenues from tickets and onboard sales as a percentage of total capacity (or revenues per APCD), rose 6.3% -- outpacing the corresponding 5.7% increase in costs. Last month, rival Carnival (NYSE:CCL) announced an even stronger 8.4% gain during the quarter.

Both Royal Caribbean and Carnival are in an enviable position. Demand for cruise vacations continues to rise -- with strong bookings already in place for the foreseeable future -- and landlubbers have been willing to pay increasingly higher rates to set sail. Considering the enormous barriers to entry (building a fleet of cruise ships doesn't exactly come cheap), the two are insulated from competition by a moat as wide as the Atlantic. As such, the cruise industry is essentially an oligopoly, with the two firms controlling 70% of the global market.

Royal Caribbean is hoping that fuel has reached high tide but is projecting that costs (net of hedging activities) over the next two quarters will top out $32 million more than the second half of last year, draining $0.14 off fiscal 2005 earnings. Nevertheless, the company is still on course for full-year earnings of $2.70 to $2.80 -- more than 20% ahead of the $2.26 earned last year.

Royal Caribbean's free cash flow is currently underwater, and its operating margins trail those of its larger rival. However, with a strengthening balance sheet, a healthy pricing environment, and three new massive ships scheduled for delivery next year that will dethrone Carnival's Queen Mary II as the world's largest passenger ship, the company still looks seaworthy.

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Fool contributor Nathan Slaughter owns none of the companies mentioned.