Travel stocks slumped into the red on Friday despite news of the UK government updating its travel guidance and adding a number of countries to its green list.
People entering the UK from Spain’s Balearic Islands, Barbados, Madeira and Malta will not have to quarantine from 30 June under the new guidance.
Other destinations include Ibiza, Menorca, Majorca and Formentera in Europe, as well as Anguilla, Antigua and Barbuda, British Virgin Islands, Cayman Islands, Dominica, Grenada, Montserrat and Turks, and Caicos Islands in the Caribbean.
British overseas territories that have found themselves on the greenlist are Bermuda, British Antarctic Territory, British Indian Ocean Territory and Pitcairn.
Transport secretary Grant Shapps said that the government also intended to drop quarantine for fully vaccinated people returning from amber list countries "later in the summer". This will take place in phases, starting with UK residents.
"We're moving forward with efforts to safely reopen international travel this summer, and thanks to the success of our vaccination programme, we're now able to consider removing the quarantine period for fully-vaccinated UK arrivals from amber countries - showing a real sign of progress,” he said.
"It's right that we continue with this cautious approach, to protect public health and the vaccine rollout as our top priority, while ensuring that our route out of the international travel restrictions is sustainable."
Despite the news, and airlines adding extra capacity in preparation for the move, British Airways owner IAG (IAG.L) was 0.6% lower on the day, TUI (TUI.L) was down 0.8%, Wizz Air (WIZZ.L) shed 0.6%, easyJet (EZJ.L) slumped around 0.5%, and Ryanair (RYA.L) 0.7% lower.
Jet2 (JET2.L), which runs holidays to the Canary Islands, revealed that there had been a huge surge in bookings after the announcement on Thursday night.
It reported the highest volume of bookings to the Balearic Islands in almost a year, with bookings for next month up more than 3,000% alone. Bookings for Malta and Madeira also jumped by nearly 1,500%.
However, shares in the company, which called the move "a step in the right direction", were down 2% in London in afternoon trade.
“The industry is still frustrated at restrictions which continue to cast a cloud over whether the public will be able to freely visit popular destinations this summer such as mainland Spain and Greece,” Russ Mould, investment director at AJ Bell, said.
“Airlines continue to face pressure on earnings, yet other sectors are enjoying a post-lockdown boost.”
Sean Doyle, chief executive of British Airways, told the BBC that the announcement was not enough to help the sector recover from the pandemic.
"We cannot afford another missed summer. There are jobs at stake, Britons separated from family members and we cannot afford to allow the success of our vaccine programme to be wasted," he said.
Meanwhile, industry body Abta, which estimates that some 195,000 travel jobs have been lost or are at risk as a result of the COVID pandemic, said the announcement "will not on its own deliver the meaningful restart of international travel that the industry desperately needs".
It comes just days after the travel sector held a “day of action” to put pressure on the government for more financial support and to further reopen the troubled industry.
Hundreds of people, including pilots, cabin crew and travel agents, gathered to protest outside the Houses of Parliament on Wednesday, as well as Holyrood and Stormont.
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