What now for the travel sector as stocks tumble?

Merkel making case for tighter travel restrictions in the EU

Travel stocks took a beating on Monday as Angela Merkel suggested that the EU should categorise the UK as a “country of concern”, in addition to implementing restrictions to those travelling from the UK.

The proposal by the German chancellor appears to be ongoing, and due the fact the Delta variant is so prevalent in the UK, could apply to those who have not yet been fully vaccinated.

While Boris Johnson is due to hold talks with Merkel this week, UK travel stocks plummeted on Monday.

At 3pm on Monday, the IAG share price was down by 5.2%, the easyJet share price lost 4.5%, and in addition to others, the Rolls-Royce share price was down by 3.85%.

“Summer 2021 was supposed to bring salvation for the UK travel sector as lockdowns were lifted and arms were jabbed,” comments Danni Hewson, AJ Bell financial analyst. “Instead it has brought more confusion and a dawning realisation that a big money booking boost isn’t on the cards.

Even if the EU’s policy doesn’t materialise, holiday makers will have to read the small print of their booking after country after green lit country seems to be lining up change requirements.

“Malta, Spain and now Portugal are changing the goal posts, worried that pennies won’t be the only thing Britons will bring with them,” said Hewson.

“Though travel companies have reported a surge in bookings there have also been many stories of would-be-tourists hedging their bets and it’s likely many of those will decide to err on the side of caution and plump for their British booking. There are too many variables, too few certainties. No parent wants to get stranded at an airport with disappointed children or to spend their full holiday stuck in one hotel room.”

Changes to the furlough scheme are just days away and this could cause skittishness within the industry.

“How far can airlines and travel companies stretch their meagre incomes, how long can they juggle costs, how much extra pressure will the new wage bill add? There are no easy answers and every day seems to bring more questions,” said Hewson.