For many European airlines—and some entire economies—much is riding on the hope that vaccination campaigns save the summer season. Too much, in fact, for investors’ comfort.
Just a few weeks ago, financial markets were feeling optimistic about the tourism industry, carriers in particular. Airport passenger numbers in the U.S. have jumped. Global booking data tracked by analysts point to a big revenue improvement in May, driven by online travel agents.
This seems to confirm theories that there is a lot of pent-up demand. In the U.K., airlines reported a surge in bookings to southern Europe right after Prime Minister Boris Johnson said international trips might resume on May 17. A survey by Swiss bank UBS shows that 39% of people would be comfortable traveling now, compared with only 29% a month ago.
Over the past week, however, U.K. officials have discouraged Britons from booking overseas vacations, given severe vaccine-supply problems in Europe and the spread of new coronavirus variants. Investors should be similarly cautious.
Weekly Covid-19 cases in Europe are rising again, as are travel curbs. A full 86% of flight routes involving top nations in the Group of 20 are restricted in some way, according to UBS data. The world is undoubtedly heading to a better place, but it isn’t impossible that many tourism companies will have a worse summer season than in 2020.