The UK is expected to announce tighter requirements for international arrivals which are set to put further pressure on the travel industry.
Travellers will be required to take two COVID-19 tests on their second and eighth day of quarantine, as the government looks to bring new strains of the virus under control.
Currently, passengers are required to show a negative test taken up to 72 hours before departure and self-isolate for ten days at home or at a hotel depending on where they are coming from.
The market was foreseeing a somewhat swift rebound in travel plans once the COVID-19 vaccine was rolled out in late December, but the bumps on the way have hampered prospects.
TUI, the world’s largest tourism and travel operator, said summer 2021 bookings are down 44% compared to 2019 at 2.8mln, though it’s planning to run 80% of the usual programme with a focus on Greece and the Balearics.
Average daily bookings in January surged 70% compared to December but the average selling price is up by 20% as customers are opting for package deals rather than sorting out hotels and flights separately, which could make refunds more painful.
Nonetheless, analysts at JP Morgan see potential for significant pent-up demand for leisure travel, with low-cost airlines well placed to benefit from a ramp-up in vaccines, as half of EU citizens are forecast to be offered a jab by mid-2021.
“The decisions of governments around the world to allow international travel to resume more freely will be meaningfully influenced by the risk (actual and perceived) of new variants entering their countries,” they noted.
In fact, the International Air Transport Association (IATA) said last week this year’s global air traffic could surge by as much as 50% or as little as 13% compared to 2020, based on how restrictions will play out.
Companies will still have the upper hand when it comes to pricing, analysts at AJ Bell noted.
“While the travel and leisure industry may seem on its knees now, which implies scope for brave travellers to bag a bargain, as soon as the Covid vaccines have been administered to all over-50s there could be a large number of active people ready to travel,” said investment director Russ Mould.
“It is feasible to suggest that people will pay almost any price simply to reclaim their lives and get their two weeks in the sun. Holiday companies and airlines might try their luck at pushing up prices by a considerable amount as they need to claw back a considerable period of lost income.”
TUI shed 1% to 328.3p on Tuesday at noon, 39% last year’s levels.