Shares in airlines and package holiday providers jumped higher on Tuesday after reports emerged that the EU is set to approve the use of so-called vaccine passports to get travel and tourism going again in Europe ahead of the peak summer season.

The move would have big implications for budget airlines and tour operators in particular, with package holiday firm Jet2 (JET2:AIM) for example having made, pre-pandemic, around half of its revenue from Spain alone, which is currently on the UK Government’s amber list.

Rival operator TUI (TUI) also makes the bulk of its money from popular EU tourist destinations like Spain, Greece and Portugal, as do budget airlines EasyJet (EZJ), Ryanair (RYA) and to a lesser extent Wizz Air (WIZZ).

Summer is the key trading period for travel firms where they look to make big profits and offset losses typically made during the quieter winter months.

The EU scheme, set to be given approval on Wednesday, would see all member states adopt the same entry requirements, giving fully-vaccinated holidaymakers from low-risk countries like the UK unrestricted entry to EU states.

IAG THE BIGGEST GAINER

British Airways owner International Consolidated Airlines (IAG) doesn’t have the same concentrated exposure to Europe but would still benefit significantly and expects short haul demand to improve once the scheme is rubber-stamped.

It has been one of the most vocal in championing the use of vaccine passports, having developed its own version of a digital vaccine pass for passengers to use on its app.

The firm was the biggest gainer following the EU reports, rising 2.8% to 195p, while Jet2 rose 2.7% to £13.99, EasyJet climbed 1.9% to £10.04 and TUI gained 1.6% to 425.9p.

SHORING UP CONFIDENCE

A vaccine passport scheme could also help shore up confidence in holidaymakers to travel abroad, another headwind travel firms face this summer aside from the restrictions themselves, something which has not been helped by comments from politicians such as health secretary Matt Hancock.

He maintained that people ‘should not travel to amber countries’ and told Parliament there must be an ‘exceptional reason’ for travel to an amber list destinations and that ‘people should not travel for a holiday.’

Hancock added: ‘We will assess countries that might go on to the green list every three weeks. If a country is not on the green list you should not be travelling there unless you have an exceptional reason.’

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Issue Date: 18 May 2021