Summary

• The United Kingdom has added Iceland, Denmark, and Slovakia to its list of countries, from where travellers will be subject to mandatory two weeks self-isolation, on account of rising infections in these countries.
• The number of countries in the list could very well go higher as the infection rates continue to rise in other parts of Europe as well.
• The travel companies in the UK who have taken advantage of the air bridge scheme announced by the government to help revive the industry could now see the number of destinations they could fly shrink significantly.

The much-feared resurgence of the coronavirus could very well spread doom for the travel and tour industry in the UK. The industry which had just started to build volumes when the news of spiking of infection levels in various pockets of Europe has come to the fore. On 24 September 2020 UK added three countries Iceland, Denmark, and Slovakia to its list of countries, from where travellers will be subject to mandatory two weeks self-isolation, on account of rising infections in these countries. Should this list continue to expand, the number of destinations the industry is currently serving will shrink considerably.

The dire state of affairs of the British travel companies

The travel and touring industry in the UK have already been witnessing scant numbers of travellers coming back to fly. The continuing safety restrictions on travellers, the compulsory fourteen days quarantine requirement for some travellers and general fear of catching the infection is dissuading people from travelling abroad. Hence most of the travel and tour businesses are witnessing a slow recovery over the past few months, which in most cases is unsustainable.

How is the air bridge scheme going to get impacted?

The air bridge scheme that was announced by the government whereby people from certain countries would be allowed into the UK and not be subjected to compulsory quarantine requirements for a reciprocal gesture was designed to boost recovery in the travel industry. However, the way things are developing now, the air bridge scheme may not expand over the next few months but might actually shrink. Large countries like Spain, Germany and Italy have also been witnessing an increasing number of infections, leading to fears that they might even go into lockdowns.

Travel and tour stocks that are likely to be affected the most

1. IAG Group Plc – (LON: IAG)
   

International Consolidated Airlines Group SA is a London Headquartered Airline holding company featuring amongst the world’s largest airline holding companies in the world. British Flagship carrier British Airways is a prime possession of the group. It ais also the owner of Italian flagship carrier Iberia apart from airlines like Aer Lingus, IAG cargo, Vueling, Avios Group LEVEL and Level Europe.

Source -Thomson Reuters

The shares of IAG Group Plc have been under pressure at the London Stock Exchange since the beginning of the year. As of 25 September 2020, the shares of the company were quoted at GBX 94.64 at the close of trade for the day. The stock has given a negative return of 85.12 per cent on a year-to-date basis.

2. TUI AG- (LON:TUI)

TUI AG is a British-German travel and tours operating company. Listed both on the London Stock Exchange and the Frankfurt Stock Exchange, the company is the largest leisure, travel, and tours company in the world.

Source -Thomson Reuters

The shares of TUI AG have not been performing well on the London Stock Exchange since the beginning of the year. On 25 September 2020 at the close of trade, they were trading at GBX 270.60, gaining 1.77 per cent over the previous day’s close. The stock has given a negative return of 72.70 per cent on a year-to-date basis.

3. EasyJet Plc - (LON:EZJ)

EasyJet PLC is a Luton, the United Kingdom-based low-cost European point-to-point airline company. The company has four geographic segments based upon the origin country. The segments include the Southern and Northern Europe apart from United Kingdom and other.

(Source – Thomson Reuters)

The shares of Easy Jet Plc have not been performing well at the London Stock Exchange since the start of the year. On 25 September 2020, the shares of the company were last quoted at GBX 486.20, down by 0.47 per cent from the previous day’s close. The stock has given a negative return of 66.00 per cent on a year-to-date basis.

4. Wizz Air Holdings Plc – (LON:WIZZ)

Wizz Air Holdings Plc is a holding company of the Hungarian low-cost carrier Wizz Air. The carrier serves different destinations in Europe, Middle East and North America. The airline, though not being the flag carrier of Hungary, is their largest carrier in terms of fleet size.

(Source -Thomson Reuters)

The shares of Wizz Air Group Plc started the year well at the London Stock Exchange rising till the second week of February. As on 25 September 2020, the shares of the company were quoted at GBX 3,054.00 per share at the close of trade, down by 1.36 per cent from its previous close. The stock has given a negative return of 23.46 per cent on a year-to-date basis.