Britain’s Latest Travel Rule Affected Airline Stocks

Airlines suffered tremendous losses since the beginning of the coronavirus pandemic and some of them even filed for bankruptcy. But the worst period for the industry is not over yet. The U.K.’s latest travel rule change affected airline stocks on Monday. Carriers including EasyJet and British Airways-owner AIG lost as much as 6% following a surprise shift in requirements for arrivals from France.

The travel industry criticized the U.K.’s harsh quarantine rules as well as last-minute changes to country qualifications. Despite the criticism, the country’s government made another unexpected decision on Friday. Britain said it was cancelling a planned easing of coronavirus rules for the fully-vaccinated U.K. arrivals into England from France. Rising cases of one variant in the country meant that arrivals from France would be no longer exempt from quarantine.

The government’s decision caused numerous issues as companies and people don’t know how to deal with the situation. The fully vaccinated people can travel to most parts of Europe without needing to quarantine in return. But that rule does not apply to France, so people are less likely to visit France.

Airlines stocks and the pandemic

Shares in EasyJet, whose biggest market is the U.K., dropped almost 6% in midday trading. Shares in British Airways-owner AIG fell 4% and TUI and Jet2 fell more than 3% each.

Airline stocks lost around 20% of their value over the last couple of months. New variants and ongoing travel rules, as well as restrictions, crushed hopes for a bumper summer. Stocks are all trading well below where they were before the coronavirus pandemic.

Apart from France, the government of the U.K. might impose similar restrictions on arrivals from Spain and Greece. Spain was the U.K’s no.1 destination before the pandemic, and the second place belonged to France. Greece is another popular destination for people from the U.K.

EasyJet’s Chief Executive Johan Lundgren made a comment regarding the U.K.’s traffic light system. The system classifies countries as green, amber or red depending on their coronavirus risk level. Lundgren stated that the system was falling apart and causing confusion and uncertainty.

The country’s travel recovery falls behind that of other European countries. Eurocontrol data showed that on July 12, U.K. flight numbers were 65% down on the same day two years ago. In the case of Spain, Germany, Italy, and France flight numbers were down between 30% and 45%.

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